http://arstechnica.com/telecom/news/2010/04/arkansas-rules-when-it-comes-to-isp-competition-but-so-what.ars

People make a lot of noise about municipal broadband efforts. I can see the good and the bad of them. For the good, they wouldn’t be constrained by what’s economically feasible and what the competition can put out in that area. On the negative, after the short term span of them being superior wears off, they could lead to a stagnation of bandwidth and capabilities in the area as the competitive forces all drop out, unable to compete with something that can be subsidized by taxpayer dollars. 

The biggest problem with competition in ISPs is that typically, all households can only choose from 2 things. Cable, or DSL. These are pretty much franchised and kept from competition by the cities that they inhabit. DSL’s have a tiny bit of competition in the form of leasing the lines, but you’re still limited by how fast they build out the DSL network, and everyone who chooses a third party ISP reduces the incentive for the DSL company to build more locations. Most wireless options are horrendously slow and not stable enough to really use. In some areas, like where I am now, the DSL option is horrifically slow (640/256k) and not worth using (1500 byte packets can’t get through often, have to lower MTU to about 1450 or so…) So we’re at the mercy of Cable, charging $48 per month for the basic option, and $58 per month for the faster speed (15mbit/1mbit)

Most people still think that limiting it to these two is necessary because otherwise you’d have the expense and mess of wires with a dozen people running cables everywhere.

What if they combined the municipal buildout of last mile fiber with the pattern of the DSL companies leasing out the lines? Instead of stifling competition, the municipal networks could jumpstart competition, if they installed the last mile fiber, then allowed ISPs to build their networks out to nearby locations and link into that fiber. Fiber is one thing that shouldn’t get TOO obsolete, and should last for decades. Companies could come and go without as much of a massive investment in the area. You could open it up for a dozen choices in every neighbourhood… You wouldn’t have the DSL companies complaining about being price controlled on how much they lease out their lines for, because it would be the tax payers who own those lines. *shrug* Maintaining things and keeping them running is usually a problem with government. With this, they could set it up and forget it mostly, letting the parts of the infrastructure that requires maintenance be run by people with a vested interest in keeping it operating well. (If they don’t, a competitor comes in and takes their customers.)

I’m not certain it’s a good idea, but perhaps it would be a better compromise than any of the others I’ve seen… While they’re at it, they could run a number of fibers in one cable. I think it costs far more to dig the holes than what the cable costs, so they could run multiple cables and eventually it will be cheap enough to multiplex them up for multiple-gigabit networking to every house… For me, I’d love to see either the FCC freeing up more bandwidth to actually make wireless a viable option, or getting the city to permit more companies to run cables to people’s houses to increase competition. But this option would be maybe #3 on my list.