Only 6 Million US Homes Will Have Access to Municipal Broadband. City Wi-Fi Plans Pose Little Long-Term Threat to Incumbent Operators

Strategy Analytics: Public broadband networks planned by major cities and smaller municipalities could provide access to as many as six million homes within five years. Despite heated rhetoric for and against, municipal broadband will play only a small role in the rapidly growing US broadband market, with incumbent telecom and cable operators still attracting the vast majority of consumers.

By 2010 about five percent of all US households, some six million homes, will be able to access broadband networks operated by cities, towns and other municipalities. But with prices for commercial broadband services continuing to decline, only a small number of households will be likely to rely on low-cost or free public networks as their primary source of Internet access.

We expect a lot of consumers will supplement their cable or DSL service with municipal Wi-Fi, however they are not going to rely on it exclusively.

Philadelphia and other large cities have recently announced plans to offer inexpensive Wi-Fi service which may be better than dial-up Internet access, but is slow compared to the DSL service that is only slightly more expensive and usually offers better quality.

Instead of fighting municipal broadband projects, telcos and cable companies may be better off working with local authorities. Incumbent operators should be looking for ways to make money by cooperating with municipal broadband - not alienating local governments which may be able to help with more important regulatory issues, such as TV franchising or network neutrality. Municipal Broadband in the US: How Real a Threat to Incumbent Operators? Publ 20060609