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February 21, 2005 (Computerworld) -- What would your boss say if you proposed providing low-cost wireless broadband access to the public in your local industrial park? You'd probably be sent packing -- unless you're an IT manager for a municipality. In that case, providing Wi-Fi- or WiMax-based broadband access to your neighbors downtown is a hot topic.
As an increasing number of municipalities consider going into the wireless broadband business, the New Millennium Research Council issued a report this month concluding that municipal wireless services aren't necessarily a good thing. Supporters of the idea fired back, stating that the NMRC research was commissioned by Issue Dynamics Inc., a lobbying firm for the major telecommunications companies. But whether the report is biased is really beside the point; you don't need a study to know that turning the IT organizations of municipalities or any other government entity into vendors of wireless services is a bad idea.
The NMRC report -- and legislative efforts by the telecom industry to block municipalities from pursuing such projects -- have changed the focus from whether it's a good idea for municipalities to provide such services to whether they should have the right to provide those services at all.
In cities with municipal wireless initiatives, the IT organization will have a major distraction from its core mission. Even large, well-run companies that stray from their core business models by diversifying into new markets often fail -- a phenomenon that stock market guru Peter Lynch calls "diworsification."
A municipal IT department that moves from supporting its internal client base to selling low-cost broadband services to the public is clearly changing its mission. It's moving from an IT support role to selling a service and building and maintaining a wireless broadband infrastructure. It's moving from a bureaucratic model to a business model. And it's creating a quasi-monopoly by using tax dollars to fund a low-cost access scheme.
Even if a municipality succeeds, creating a price structure with a zero or below-market margin is likely to hamper a transition to competitive alternatives, leaving customers with a government utility that's likely to be less responsive than a private business. Would anyone really rather talk to city hall when his broadband connection fails? And those low prices won't help the city continually upgrade and rebuild its wireless infrastructure as technology leaps forward.
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