OTI’s Cost of Connectivity 2020 Report: A Critical Review

Advocates for municipal broadband are, if anything, persistent. For example, the Open Technology Institute at the New America Foundation recently released a report entitled Cost of Connectivity 2020 which purports to show that municipal broadband networks “offer the fastest, most affordable” broadband services and that “locally-owned networks yield significant cost savings for consumers.” Supporters of municipal broadband praised OTI’s analysis. A close look at the OTI Report and its data, however, reveals severe problems. The proper question is not whether prices among firms in a single market differ, but rather whether average prices differ between markets that do or do not have a municipal provider. Using OTI’s data, I find that average prices are about 13% higher in cities with a municipal provider than in cities without a government-run network.