Abstract:
This case tells the story of the decision by the city government of Philadelphia to develop a publicly-owned competitor to private high-speed internet connection systems ("broadband"). The case describes both the city's rationale, its desire to attract new business and its fear that a "digital divide" was leaving poorer residents without affordable access to the World Wide Web, and its means of implementing its decision, through a new not-for-profit arm of city government, which would contract with a private provider. That private provider would agree to provide relatively low-cost wireless web access throughout the city, thereby creating the largest wireless network in the US to date; in return, the city would steer its own information technology business to the new system, which was designed to compete with the private firms Verizon and Comcast.
Learning Objective:
The case is designed to promote a discussion of the nature and causes of monopoly by raising issues of whether the incumbent cable and telephone companies enjoy market power in any of the services they offer and, if so, whether it is advisable to build a new municipal system to promote competition. It can also be used to discuss the merits and demerits of creating public enterprises in competition with public enterprises.
