The essence of the objection to municipal involved in communications is that public intervention will undermine the private sector due to the cost advantages uniquely available to governmental entities, thus creating a barrier to public entry. As we have shown, however, this objection fails in two ways: First, municipalities tend not to become involved in communications in markets characterized by effective competition; and second, where municipalities do become communications providers, private entry into the market tends to be stimulated rather than suppressed.
Muni FTTH Snapshot - Kutztown, PA
Kutztown, a small community in Pennsylvania, built a fiber-to-the-home network in 2002 run by the public power utility called Hometown Utilicom. The small town network was taken very seriously by major networks, like Verizon, that pushed to create laws in Pennsylvania that would make it difficult for other communities to build the networks they needed.
This snapshot from Broadband Properties offers some history and technical specifications of the network. This was the economic development impact:
Several businesses relocated to or expanded in the area because of the network. The amount of student housing has increased. The municipality itself has saved significantly on telecommunications costs. Residents have saved $1.5 million due to Hometown Utilicom’s lower rates and the competitive discounts offered by other local service providers.