Report Shows Municipal Broadband is Not Economically Feasible

Report Shows Municipal Broadband is Not Economically Feasible

Each household could face thousands in costs or more, regardless of whether you sign up for it.

After waiting for years, the City Council has finally been given a cost analysis for building a municipal fiber-optic cable system. This detailed analysis makes some serious errors highlighted below, and estimates a cost of up to $194 MILLION for installation.

The analysis provided to the city uses old models, e.g. fully constructed municipal internet systems. One comparison used in the analysis is Chattanooga TN, but Chattanooga isn’t comparable – they installed their system 15 years ago. Technology didn’t stand still, and 15-years is ancient history in technology. If we had done this 15-20 years ago, it may have been a good idea. But Cambridge missed that opportunity.

The report hypothesizes that the $70/month “average” for Comcast broadband would be the same as a municipal system. The report also theorizes that a municipal system would grab 40% of the market.  But this estimate is unrealistic; while some will switch because of their bad experience with Comcast’s notoriously awful customer service, gaining and keeping customers will require an expensive and long-term marketing effort. Comcast is already offering lower prices to new customers, and one can expect that they will aggressively undercut any price point the City establishes for its broadband in an effort to retain customers. If the city prices new customers at $50, Comcast can counter with $25. The end result of a price war will barely make a blip in Comcast’s revenue, but will force the city to pass along the operating costs to residents, whether or not they subscribe to municipal broadband.

There would be resistance to changing providers by those people who have a Comcast email address -- which they would lose. Additionally, many people have Comcast-owned modems/routers. Those people would need to wait for in-home installation, and potentially make changes to their home systems. And why would they do this if the Cambridge system were the same cost – or higher? – than Comcast?

There needs to be a reason to change, which the report seemed to gloss over. Simply exchanging one bureaucracy for another isn’t a reason to spend $194 million. .  

As Ben Compaine stated in his excellent oped, https://www.cambridgeday.com/2023/03/21/why-does-cambridge-need-a-new-municipally-owned-broadband-system/, there are already competitors to Comcast: Starry, Verizon, T-Mobile, and others. Internet access fees are plummeting worldwide due to the recent introduction of numerous technologies. Already, T-Mobile is offering high speed 5G-UC internet at $25 - $30/month[1]. T-Mobile is already available in many parts of the city, and 5G-UC is fast enough for most residential applications. Verizon is offering internet access at $25/month. Astound/RCN (serving Somerville) has just lowered their price to $49/month, with a $25/month sign-up promotion. A large number of Comcast subscribers are paying promotional rates of approximately $50/month. Both Starlink and Kuiper (low orbit satellite services) are only focusing on underserved locations, but their business models require extensive coverage regardless of location.

One argument that some have advanced for a municipal broadband system is “online privacy.” Unfortunately, the largest collectors of data (Facebook/Meta, Twitter, Google, Microsoft, Apple) wouldn’t be affected by changing to a municipal internet system, nor would online scams, spam, and hacking. Computer professionals typically utilize “virtual private networks” (VPNs) to provide security. (These cost typically from $0 to $100/year.)[2][3]

Most significantly, tech pundits have noted that a hard-wired system has little future beyond the next three years except for the highest bandwidth needs of businesses. Residential applications for computers, TV, audio, and telephone are well within the bandwidth of satellite and ground-based microwave system[4] and will be for the coming years.[5]  Satellite will become ubiquitous in the next three years; and Cambridge will still be installing broadband, which will be an outmoded technology.

All Cambridge residents deserve access to high quality internet, starting NOW.  However, there are more cost-effective ways to establish internet equity in Cambridge than municipal broadband. Furthermore, Comcast offers $10/month internet for qualified households.[6]

There is no reason to spend years building a system that will be out of date before it is completed, at an unacceptable cost to residents. We're at the tail end of the hard-wired internet era and entering the wireless internet delivery era.   Support immediate access for those who need it through Comcast, and avoid the construction disruptions and costs of putting in a soon to be outdated system. 

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[1] https://www.t-mobile.com/home-internet Get high-speed 5G home internet service. $30/month.

[2] https://www.opera.com/features/free-vpn Free VPN for Android and computer

[4] https://vectus.com/advantages-of-microwave-fixed-wireless-internet-vs-fiber/ Advantages Of Microwave Fixed Wireless Internet Vs Fiber

[5] https://www.lifewire.com/5g-internet-wifi-4156280 5G Internet: The High-Speed Replacement for Cable

[6] https://www.xfinity.com/support/articles/comcast-broadband-opportunity-program Internet Essentials or Internet Essentials Plus From Comcast

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