How Free Wi-Fi Hurts the Poor: Page 2

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The City of Houston and others working on such schemes will most likely squander a lot of public money on Wi-Fi infrastructure that few people will use. People won't start using Wi-Fi just because it's free. Too many poor families don't have the knowledge, motivation or even the computers they need to start using Wi-Fi. Is the city going to provide all that, too?

The Solution

If cities want to motivate poor people to use Wi-Fi, they need to merely subsidize its use. Pay people to subscribe to Wi-Fi or mobile broadband plans. By all means, make it free for low-income users by refunding or making direct payments to the service providers. But don't cut private companies out of the deal. Don't kill competition and block innovation.

By subsidizing Wi-Fi, cities can put the private companies who provide wireless broadband on notice that there's a market in low-income areas for their services. Providers will scramble to compete with each other. They'll advertise to target customers, and thereby educate them on what they can use Wi-Fi for. They'll probably even provide free computers, if that's the barrier to uptake.

If the subsidy is set, but providers are allowed to charge any price, the companies will also have an incentive to drive down costs. For example, if the subsidy is $15 per month, that exact amount will be the sweet spot target for companies to hit, and they will.

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Like business travelers and coffee drinkers, low-income people will have consumer choice, and they'll choose the best combination of service, price and performance. If they get bad service, they can switch, rather than having to simply endure abuse by the provider.

Subsidizing is better for taxpayers, too. Instead of wasting money on infrastructure nobody will use, subsidizing wireless broadband means tax dollars are spent only when a family actually subscribes to broadband. It pays for use, not non-use.

Best of all, it leverages the market and puts the customer in charge -- and drives innovation, quality and low cost.

Mayors of America, listen up: Great Wi-Fi exists wherever people with expense accounts congregate. If you want to replicate that success, just replicate the expense accounts – don’t build the service yourself. Doing so is a recipe for disaster.

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Tags: services, wireless, IT, broadband, carriers

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