Big City Community Networks: Lessons from Seattle and Gigabit Squared

[Commentary] We recently learned that the Gigabit Squared project in Seattle is in jeopardy. Gigabit Squared has had difficulty raising all the necessary capital for its project, building Fiber-to-the-Home to several neighborhoods in part by using city-owned fiber to reduce the cost of building its trunk lines. There are a number of important lessons, none of them new, that we should take away from this disappointing news. (This is the first of a series of posts on the subject.)

The first lesson to draw from this is what we say repeatedly: the broadband market is seriously broken and there is no panacea to fix it. The big cable firms, while beating up on DSL, refuse to compete with each other. They are protected by a moat made up of advantages over potential competitors that includes vast economies of scale allowing them to pay less for advertising, content, and equipment; large existing networks already amortized; vast capacity for predatory pricing by cross-subsidizing from non-competitive areas; and much more.

[Mitchell is the Director of the Telecommunications as Commons Initiative with the New Rules Project of the Institute for Local Self-Reliance.]