Report shows municipal broadband is not economically feasible
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, such as for a fully constructed municipal internet systems. One comparison used in the analysis is Chattanooga, Tennessee, but Chattanooga isn’t comparable – it installed a system 15 years ago. Technology didn’t stand still, and 15 years is ancient history in technology. If we had done this 15 to 20 years ago, it may have been a good idea. But Cambridge missed that opportunity.
The report hypothesizes that the $70 per month “average” for Comcast broadband would be the same as a municipal system. The report also theorizes that a municipal system would grab 40 percent 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 it 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 and 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 – as Comcast’s?
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 said in his excellent oped (“Why does Cambridge need a municipally owned broadband system?” March 21), 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 offers high speed 5G-UC internet at $25 to $30 a month. T-Mobile is already available in many parts of the city, and 5G-UC is fast enough for most residential applications. Verizon offers Internet access at $25 a month. Astound/RCN (serving Somerville) has just lowered their price to $49 a month with a $25 per month sign-up promotion. A large number of Comcast subscribers are paying promotional rates of approximately $50 a month. Starlink and Kuiper, low-orbit satellite service, are focusing only 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 and Meta, Twitter, Google, Microsoft and Apple) wouldn’t be affected by changing to a municipal Internet system, nor would online scams, spam and hacking. Computer professionals typically use “virtual private networks” to provide security. These cost typically from nothing to $100 a year.
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 and will be for the coming years. 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. There are more cost-effective ways to establish Internet equity in Cambridge than municipal broadband, though. Furthermore, Comcast offers $10 per month Internet for qualified households.
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.
Phillip Sego is a Norfolk Street resident.
There is nothing “outdated” about symmetrical gigabit fiber to the home service, and nothing that remotely compares. Certainly not Comcast’s copper cable network and extortionate business model nor the spectrum constrained wireless and satellite providers.
The only thing I agree with in this letter is that a municipal fiber network was a good idea fifteen years ago. The second best time is now.
Some of the provider pricing surprises me.
I have T-Mobile 5G internet and it’s $50.month – not $25. Just checked Verizon and it’s only $25/month with their mobile plan and $60/month without. While Starry is great, it required major unit infrastructure and is only found in multi-unit apartment buildings. Kuiper isn’t even available.
Cambridge needs high-speed internet for school, work-from-home and small business.
I agree that the second best time is now. Why are we still waiting?
A citywide fiber system would cost up to $194 MILLION, and would likely cost residents many thousand of dollars per household, whether they sign up for fiber or not. Furthermore, with monthly fees falling, there will be a significant annual deficit – again to be paid by all of us.
Maybe those who want fiber should bear the cost instead of getting others to foot the bill?
Costs: if this were borne only by those who signed up for municipal cable, the costs would be
$9,785 per household (at 40% market share)
$19,571 per household (at 20% market share)
I don’t like Comcast very much, but with new internet technologies coming online now, and more being offered soon, spending $194 MILLION on an old technology just doesn’t make sense.
Instead of spending $194 MILLION of taxpayers’ money to give consumers an additional internet choice, here are a few examples of what we could do instead with $194 MILLION:
We could install solar panels on 13,000 residential rooftops, generating a whopping 65 megawatt-hours of green energy per year.
We could buy a fleet of 194 electric buses.
We could build 388 completely paid-for apartments.
Or we could get into the internet delivery system and compete with Comcast, T-Mobile, Starry, Verizon, AT&T, Starlink, and a host of others who are offering home internet.
Walter – I keep getting emails from T-Mobile for $25/month — and good for 3 years.
TYPO: We could install solar panels on 13,000 residential rooftops, generating a whopping 65 GIGAWATT-hours of green energy per year.
Phil, Fiber-to-the-premises is the highest performing technology of all the available commercial offerings. Calling it old technology doesn’t change that.
In addition, Cambridge needs to see what funding is available via the Infrastructure Deal. That legislation will deliver $65 billion to help ensure that Americans have access to reliable high-speed internet.
Cantabrigian both need and deserve an internet provider better than Comcast – which services 80% of Cambridge users.
Walter – My point is that I need a small car that gets good mileage, can travel on Cambridge’s streets and the Mass Pike. If my neighbor wants a Ferrari that can travel at 200 mph, I have no problem with him buying one. BUT I SHOULDN’T HAVE TO PAY FOR IT. Comcast, T-Mobile, and many other services are just fine for almost all Cantabrigians. $194 MILLION works out to ~$4000 cost per household whether they sign up for the Ferrari or not.
Phil, It’s $194M in future dollars and more like $165M in today’s dollars. No small sum but still a worthwhile investment – just like good roads. I’m sure your small car would just as well on unpaved dirt roadways, so why spend so much money on paving and upkeep?
It’s good and proper to invest in the future,
Intuitively we know that the 194 number will be much higher. Has there ever been a large project in Cambridge that has not had a large cost overrun.
And, as I showed in a post a month ago, the numbers in the consultants (which I’ve read in its entirety do not make sense. Additionally, thinking that there will be a 40% take rate is wishful thinking.
I really dislike Comcast. However, spending a great deal of money based on faulty assumptions, and digging up every street in Cambridge, just doesn’t justify municipal broadband.
@concerned43 Well, you’re entitled to your opinions which is all that you’re offering with “intuitively”, “do not make sense” and “wishful thinking”.
In addition, streets won’t need to be dug up. Other cities have cut narrow trenches or used utility poles to distribute fiber.
I use the internet for banking, paying bills, investing, entertainment, getting the news and zooming with friends. I don’t think I’m an outlier. It’s the most versatile, useful resource I use and such a vital piece of infrastructure shouldn’t be managed by an indifferent (at best) commercial entity. We need to treat the internet as a utility.
Costs will obviously be much higher than any quoted number. I largely agree with Phil here. What I haven’t heard from anyone is why we should invest in this? I think our money would be much better spent and we’d get a much better return on something like universal pre-k. That being said it seems like the Council spends the entirety of “free cash” every Monday night. They haven’t had to exist in an economic down turn and often spend based on outdated nexus studies and lean heavily on anticipated revenues. If anything we as a city should be tightening our economic waistband not letter it out further.