Municipal Wireless Network - Potential Externalities

Potential Externalities

Unintended externalities are possible as a result of local governments providing Internet service to their constituents. A private service provider could choose to offer limited or no service to a region if that region’s largest city opted to provide free Internet service, thus eliminating the potential customer base. This could prevent other municipalities in that region from benefiting from the services of the private provider. The smaller municipalities would at the same time not benefit from the free service provided by the larger city. Overuse could be another issue. If usage of the publicly provided network became heavier than existing private options network overload issues could arise, forcing the municipality to invest more heavily, thus spending more revenue, on infrastructure to maintain the existing level of service. This issue could be compounded if private providers begin exiting a market as mentioned above.