FTC Report: Should Municipalities Provide Wireless Internet Service?

For Release: October 10, 2006
http://www.ftc.gov/opa/2006/10/muniwireless.htm

Should Municipalities Provide Wireless Internet
Service?
FTC Staff Report Provides Guidance to Promote
Competition

Improving consumer access to broadband Internet
service is an important goal for federal, state, and
local governments. The possibility of competitive
risks arising from municipal participation in wireless
Internet service, however, calls for a careful
analysis by policymakers considering if, and to what
extent, a municipality should involve itself in such
service, according to a report prepared by Federal
Trade Commission staff.

The report, “Municipal Provision of Wireless
Internet,” offers guidance for policymakers
considering these questions. According to Maureen K.
Ohlhausen, Director of the FTC s Office of Policy
Planning, “Many leaders in the U.S. acknowledge that
broadband Internet service is crucial to the American
people and our economy. However, municipal provision
of wireless Internet service raises important
competition issues that policymakers should consider
when determining whether and how municipalities should
provide that service.”

Rather than attempt to provide a one-size-fits all
answer for every municipality, the report sets forth a
decision-tree framework with a variety of options,
recognizing that the potential benefits and risks of
municipal involvement in wireless Internet may vary
with a municipality s circumstances, such as the
availability of broadband in the area and possible
improvements in providing government services through
increased broadband access.

Guiding this approach is a concern for competition
principles, and the decision-tree framework seeks to
reduce the possible competitive harms arising from a
municipality operating as both a market participant
and a regulator. By identifying a range of operating
models, the framework outlines a variety of options
that offer reduced competitive risks while still
achieving benefits from increased broadband access.
The report also discusses process considerations, such
as transparency and accountability, that can improve
the decision-making process overall.

The report describes the various wireless Internet
technologies currently in use or under development,
identifies a range of operating models that have been
used to provide or facilitate wireless Internet
service, summarizes the major arguments for and
against municipal participation, and describes various
types of legislative proposals related to municipal
Internet service.

The report is the first publicly released work from
the FTC’s Internet Access Task Force, convened by
Chairman Deborah Platt Majoras in August 2006. Led by
Ohlhausen with participants from throughout the
agency, the Task Force seeks to enhance the FTC’s
expertise in the area of Internet access, which has
become an important public issue. The Task Force
currently is studying the so-called “net neutrality”
issue.

The FTC and its staff have engaged in advocacy related
to competition in the cable industry and the
allocation of radio bandwidth spectrum before state
and federal entities. The FTC also has reviewed
numerous cable industry mergers, and mergers involving
providers of Internet technology and content. To
prepare the report, FTC staff researched technologies,
legislative proposals, and case studies of
municipalities that have deployed, or are in the
process of deploying, wireless Internet systems.

The Commission vote to authorize the staff to file the
report was 5-0, with Commissioner Jon Leibowitz
issuing a separate concurring statement that can be
found as a link to this press release on the FTC’s Web
site.

MEDIA CONTACT:

Office of Public Affairs
202-326-2180

STAFF CONTACT:

Maureen K. Ohlhausen,
Office of Policy Planning
202-326-2632

(FTC File No. V06-0021)

(http://www.ftc.gov/opa/2006/10/muniwireless.htm)

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