Municipalities Need to Own Broadband Infrastructure as a Utility: Banker
Migrating into a full utility may take decades, but municipalities should be prepared.
WASHINGTON, July 21, 2023 – Municipalities need to own broadband infrastructure because internet service will eventually evolve into a form of utility, said Chris Perlitz, managing director at investment banking firm Municipal Capital Markets Group at the Fiber Broadband Association event, “Where’s The Funding?”, on Wednesday.
Municipalities currently do not have the expertise or capacity to operate a network which is where internet service providers come in and form a partnership, Perlitz said. However, in the future, artificial intelligence and machine learning will simplify the operation and the system will become a utility and managed by a municipality, he said.
Perlitz predicted that migrating into a full utility format may take decades. He urged municipalities to invest in networks now in preparation for the “long game.”
The cost of capital in building infrastructure is a lot cheaper for municipalities than for private, for-profit service providers, Perlitz said. Municipalities do not need high margins to pay off investors and aim to operate a zero-sum game with no profits.
Nonprofits are good recipients of grants, he added, claiming that the government should consider how they can motivate a municipality to enter into the internet.
Many experts claim that a utility-based broadband model is the only solution to bridge the digital divide, claiming that utilities understand how to operate large infrastructure projects that connect hundreds of homes and have core internal communication capabilities.
