Policy Reports Wilson’s Fiber-Optic Cable Boondoggle: City Invests $28 Million in a Technology That Could Be Obsolete Before It’s Paid For
January 06, 2009
Fast facts:
The City of Wilson’s $28 million investment in a fiber-optic cable system for Internet, phone and television could be obsolete even before it is paid for, leaving city taxpayers and electric utility users to pay the balance on the 25-year bonds.
City officials promised that fiber-optic cable users, not taxpayers, would pay the entire cost of the system, but WiMax wireless Internet technology is rapidly leapfrogging fiber-optic cable technology, making it obsolete. This would leave Wilson’s fiber-optic system at a competitive disadvantage because it would provide only television and phone service on this high-capacity system.
WiMax wireless Internet technology is similar to WiFi systems except it can achieve at much faster speeds and greater distance, currently about 10 mbps (million bits per second) and 30 miles. At this distance, the entire city of Wilson could be covered by just one WiMax installation.
Even if WiMax technology is delayed in reaching Wilson, the Wilson fiber-optic cable system is a bad idea.
If the system fails to attract customers or becomes obsolete, the city has promised to pay the outstanding balance on the 25-year bonds by increasing property taxes and electric rates for all Wilson residents, even for those who don’t use the fiber-optic cable system.
Most residential users do not benefit from the system: prices are not appreciably lower, the phone and TV quality are not significantly higher, and the high Internet speeds (100 mbps) are not needed and are too expensive ($300/month) for the average homeowner.
Who benefits? City officials admitted from the start that the fiber-optic cable system was an economic development (corporate welfare) strategy to be used to attract new business. Thus, large business users benefit with deep discounts for the high-speed service at the expense of average residential consumers who pay market prices for a package of Internet, phone and television.
