Lehi is quickly becoming or already is a hub for Utah's booming technology sector. When we chose to buy our house in Lehi we were sure that buying a house near all this new development in north Lehi would be a sure bet. What worker would hate living minutes away from their work place? The doubling in value of our home since 2012 speaks to the benefit all of us in Lehi get from having this tech hub in our backyard.
With that in mind it's frustrating to many in the city that it still is hard to access reasonably priced dependable internet access in some parts of the city.
While having options and a well functioning market is preferable to many in our community. It is my observation that there are several reasons that despite the city not being involved in stopping competition, competition is naturally stifled due to costs.
If you were an internet provider and had to invest in wiring up whole neighborhoods, is it profitable to only have some of the neighborhood paying for that infrastructure? No, instead you would you prefer to have all the neighborhood subscribed to your service. To that end service providers generally push deals to put infrastructure into a new development that generally give them exclusivity for a given amount of years in exchange for not costing the developer anything. Even if there is no exclusivity the capital cost to wire a neighborhood for only a few customers is not viable for most providers. In the end we end up with monopolies in neighborhoods even though we have a market.
Given the state of the market I see internet access as infrastructure that everyone needs, or at least a super majority needs, and installing multiple infrastructures is not cost effective. So similar to water or electric it makes sense to put it in and maintain it ourselves for the benefit of all.
As part of an HOA in Pleasant Grove that I served as President for we went through this process with my leadership.
When we moved into the complex the internet was unexpectedly terrible, worse yet the contract put the provider in a position that they felt no need to fix things to the great frustration of the residents including me. Being a full stack web developer access to quality internet is a big deal to me.
Working initially on a technology committee we recommended to replace the current provider with a fiber infrastructure. This advice was not taken and a wireless infrastructure was put in place that failed miserably to the great frustration of the residents again.
With a plan to fix the situation I was able to get on the HOA board and led an effort to convince the board that investing in the infrastructure would be worth it in the long run. Assessing 303 units a one time nearly $400 assessment was a tough pill for many residents. We moved forward and when I stepped down, after seven years of service as President, we were on our second ISP providing service for us using our infrastructure providing 100 Mb up and down to our residents for $19 a month. We were in active negotiations with the ISP to upgrade equipment to allow 1000 Mb speeds to all residents and increase the rate to only $23 per month. I personally pay 3x that for 60 Mb on the open market!
In summary the market is broken and we must be open to using our power as a group to protect our pocketbooks by looking to encourage a pure public infrastructure or a creative public/private partnership that ensures our residents pay less and get more!
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2 thoughts on “Improving Broadband for Lehi”
Economics textbooks will say that monopolies make sense in the case where significant infrastructure costs are needed. I’m confused about if you’re pushing a particular policy here. Are you saying city-level fiber? Or more like tmma- level? Or do I just misunderstand?
I think current market dynamics show that there is too high a capital cost to the infrastructure leading to monopolies as a practical consequence. Putting the monopoly in public hands increases accountability and price control so I’m supportive of city wide infrastructure. I’ve implemented it at a neighborhood level and that works well too but city level is likely a sweet spot IMO.
Appreciate your question!
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