Swimming pools. Movie stars. Government broadband.
Beverly Hills – yes, that Beverly Hills – is the latest municipality to find the going tough when trying to build its own taxpayer-funded high-speed internet network.
The Beverly Hills City Council recently agreed to move forward with the first phase of its broadband project, but council members expressed concern over the long-term viability of the plan.
“I do think we have to take a step back from this and make some hard decisions about how to move forward,” Beverly Hills City Councilman Julian Gold said, according to the Beverly Press.
The city wants to extend fiber to all of its nearly 35,000 residents, at speeds of up to 1 gigabit per second, while also offering voice and video services. Broadband will also be available to businesses and is designed in part to boost economic development in the city.
In April, the Beverly Hills Courier reported the project was 20 percent over budget and nine months behind schedule. Council members expressed concerns over delays and costs for the project, which had ballooned from $32.2 million to $38.9 million. The first phase is being constructed now at an estimated cost of $2.5 million.
Delays were primarily caused by issues with the pole attachment permitting process. Many permits were denied due to deterioration of Southern California Edison poles to which much of the fiber was to be attached and a lack of coordination with Edison on its pole-replacement schedule.
Council member Bob Wunderlich said in an April council meeting that some of the problems should have been uncovered before the work was begun.
“The tone is optimistic, but I also think there are reasons to be concerned,” he said.
Gold had stronger words, accusing Edison of “extortion.”
“I have no confidence you can deliver this for the price you said,” he told chief information officer David Schrimer during the discussion.
One of the drivers of the project includes “concerns over existing providers,” according to a slideshow presented to city leaders by Schrimer in July 2018. Those concerns include the price of services in a city where the median income is $193,000.
Speed and customer service were also cited. While some cities that have chosen to build their own networks point out they are only serviced by one wireline provider, and therefore have no switching options, Beverly Hills cannot make that claim.
The website Broadband Now, which tracks internet availability city by city, reports that Beverly Hills has two wireline providers, AT&T and Earthlink, offering 100 megabits per second download speeds, with Spectrum offering download speeds of 400 mbps. Broadband Now further reports that Spectrum covers the entire municipality, while AT&T and Earthlink offer services to all but 1 to 2 percent of residents.
Tom Struble, technology policy manager at R-Street Institute, told the Taxpayers Protection Alliance Foundation that he can be sympathetic to towns in rural areas with little-to-no service from private providers creating their own networks, but Beverly Hills doing it is more of a head-scratcher.
The concept of high-speed municipal broadband being a big economic driver is questionable, to say the least.
“While building a municipal broadband network will likely stimulate the local economy to some degree, those economic gains may not be enough to offset the costs of deploying the network in the first place and operating it over time,” Struble said.
He points out also that the studies Beverly Hills used to decide to build the network has a glaring error, citing an anticipated demand for bandwidth that defines that measure of how much data will flow over a network over a period of time. Instead, bandwidth measures how much data flows over a connection simultaneously.
“Extrapolating future bandwidth needs in this way seems like a glaring mistake, and it's exactly the sort of thing that leads municipal broadband networks to overestimate demand, fall short on uptake and ultimately lead their networks into financial ruin,” Struble said.
He further points out that the Beverly Hills project faces an even more uncertain future than municipal broadband networks built in recent years, with 5G wireless services soon to create more competition in the marketplace, especially in a dense urban area like Los Angeles.
“Given these current trends, the actual broadband needs of consumers today and in the near future, and the seemingly flawed analysis in Beverly Hills' initial projection, I suspect the municipal network will fail to recover its costs (much less turn a profit) and be sold off at a loss to private industry before the end of the next decade, leaving local taxpayers to cover the difference,” Struble said.