Yankee finds muni love

It's too early to do those end-of-the-year news roundups that publications routinely use to fill space while the staff goes to holiday parties and on vacations, but I don't think it's too much of a stretch to say that municipally owned broadband networks, and all the controversy they've generated, are among the bigger stories of 2005.

I sincerely doubt that most incumbents took seriously the notion that cities, towns and villages were going to get into the broadband business. But then, I'm not sure how seriously either service providers or regulators have taken the notion that many within the U.S. are still starved for broadband.

Unfortunately, the collision of those two realities has not only produced a flurry of both fiber optic and wireless network projects at the municipal level but also more than its share of acrimony, legislation--proposed and actual--and conflicting reports on the track record of current projects and the prospects for success of future ones.

All of this strikes me as counter productive, if the goal is to increase broadband penetration in the U.S.

That's why I found last week's report and Webcast from Yankee Group so interesting. The organization is well within telecom's mainstream and the analysts involved--Matt Davis and Tara Howard--are respected. Yet their conclusions are very different from that of other telecom analyst/consultants.

"Like It or Not, Here Comes Municipal Broadband" doesn't whitewash the risks that municipalities face when they tackle the complex process of building, maintaining and upgrading a telecom network. But it directly addresses the fact that rather than fighting, incumbents would do better joining--at least where their interests match.

"If I'm a telco, I'd want to kill wireless or WiMAX projects but I should be encouraging fiber optic networks," Davis said.

The reason, he adds, is that even as telephone companies are building out their own broadband networks, they can't be everywhere at once and the places where cities want to build out fiber tend to be the areas where service providers can't justify the cost.

By becoming retail service providers on those new fiber networks, the telcos quickly and cheaply extend their own service footprint, leveraging the cost of video headend infrastructure and programming costs over a broader footprint, Davis said.

Likewise, cable companies can use the muni wireless networks to jump start that part of their service offering.

It's at least food for thought for those who see municipally owned networks as the obvious enemy. Things don't have to go that way.

E-mail me at cwilson3@primediabusiness.com