Involvement of municipal electric utilities in broadband services

Abstract

Thesis (S.M.)--Massachusetts Institute of Technology, Engineering Systems Division, Technology and Policy Program, 2004.Includes bibliographical references (leaves 99-105).Municipal electric utilities have been increasingly involved in telecommunications during the last decade. This research investigates why, with three hypotheses. First, the probability of MEUs involvement in telecommunications responds to technology-based economies of scope from internal services deployed to support their power business. Second, MEUs' likelihood for offering telecommunication services decreases in presence of restrictive regulatory framework and low levels of local discretionary authority (LDA). Third, MEUs involvement in telecommunications decreases in the presence of competitive alternatives. The hypotheses are tested using quantitative response models, controlling for deployment cost and demographic characteristics. Results confirm the existence of a technology-push generated by economies of scope between internal services supporting the power business and offering external telecommunication services. One reason for this, as qualitative analysis supports, would be the uniqueness of MEU communities as resulting from historical and technological path-dependence, which makes the MEU phenomenon unlikely to be repeated by local governments in non-MEU communities. Additionally, results support that MEUs' likelihood for offering telecommunication services is reduced by regulations explicitly prohibiting it, but shows that low LDA, as measured by Dillon's Rule, does not have a significant effect. Results show a complex effect for competition. MEUs likelihood for offering telecom services in residential markets decreases with cable modem competition, but their activity in business market increases with competition from DSL. This suggests that MEUs' services substitute for cable television companies', but are non-redundant(cont.) relative to telephone companies. Results support the need for further research, especially in competition and deployment dynamics and their effects. Based on these results, the recent US Supreme Court decision on Nixon vs. Missouri Municipal League and stakeholder analysis suggest various policy implications. First, APPA and MEUs need to build a broader coalition for active lobbying the US Congress for clarification on Section 253(a) of the Telecommunications Act of 1996, and states' legislatures for passing explicit authorizations for MEUs' involvement in telecommunications. Second, states and MEUs need to assess how banning MEUs from telecommunications would affect the reliability of power distribution and underserved areas. Finally, states, MEUs and private parties would need to better understand, evaluate and innovate in policies and public-private collaborative initiatives for taking advantage of the mutual potential benefits existing between power distribution and telecommunication services.by Carlos A. Osorio Urzúa.S.M