March 3, 2011
Why “free” public Wi-Fi may be the silliest public policy we have.
Free wireless internet is available at a coffee shop, business, restaurant, study hall, hotel lobby (even a park bench) near you!
Saskatchewan! Connected links residents and visitors to the internet free of charge in the downtown and other select business districts and post-secondary institutions of Moose Jaw, Prince Albert, Regina and Saskatoon.
The service is now available in all four centres.1
Saskatchewan! Connected is a provincial government program provided by contractor Cisco Systems under the auspices of the Information Technology Office (ITO). It originated in the 2007 Youth Summit, where Cisco reported that youth expressed a desire to be online at all times.2 The ITO claims that the network is the largest in Canada, while Cisco claims it is one of the largest in North America.3
These boasts seem impressive. Saskatchewan is embracing the 21st century with mobile public internet access and, best of all, it is free at the point of consumption. While the cost of the service is practically inconsequential in the broader context of the government of Saskatchewan’s budget, the service offers several lessons in public policy. In this Frontier Backgrounder, it will be argued that offering such a service may be one of the silliest public policies Saskatchewan has. It shows that governments ignore the role of prices at their peril, or at least the peril of their citizens, and it shows that governments should be aware of the distinction between public and private goods when launching new programs. It demonstrates that the act of governments giving away private goods eventually erodes the quality of what is given and leads to shortages. These outcomes mean that once the cost of providing the service is accounted for, a government giving away private goods can be worse than a government doing nothing. (See sidebar, page 7, for a discussion of private versus public goods.)
While neither costs nor performance data for the service are available from the provincial government budget,4 the public accounts,5 the Information Technology Office’s website,6 its annual report7 or its otherwise rigorous performance plans,8 the practices of other public and private institutions within the area where Saskatchewan! Connected wireless coverage is ostensibly available are a strong indictment of the service’s quality. They do not buy into the promise of Saskatchewan!Connected, instead offering their own wireless internet services.
The public libraries of Regina and Saskatoon offer wireless internet services, as do the universities of Regina and Saskatchewan and numerous private businesses in the zones. (The Public Library of Saskatoon even goes to the trouble of listing private wireless sites in Saskatoon on its website.)9 Clearly, these organizations do not have as much confidence in the free public wireless service as the ITO suggests they should.
The reason free public wireless internet fails is easy to understand. If Saskatchewan! Connected really did offer reliable high speed internet in the most densely populated areas of the province, every business and resident in the area would abandon their paid connection and take advantage of it. With each additional user, the service would have to expand its bandwidth capacity until it had effectively nationalized Internet provision in its areas of operation. This is obviously not a viable option; the cost to taxpayers would be prohibitive.
Instead, there has to be some disincentive for more people to use more and more of the service, and in the absence of any kind of price mechanism, the only remaining rationing mechanism is inconvenience. While no performance data is publicly available, anecdotal evidence suggests the service is slow and unreliable. To sum up, the only way that the service can work economically is if it does not work technically.
The main purpose of this paper is to use Saskatchewan! Connected as a case study in public policy, stressing the importance of prices, the difference between public and private goods, and the role of government. In so doing, it examines in detail the economics of a government providing a service. It recommends that this particular service be reformed by having better performance reporting, charging a fee for access, and by being privatized.
View entire study as PDF (12 Pages)
direct the Centre’s Saskatchewan office from 2007 to 2011. He holds degrees in Electrical Engineering and Philosophy from the University of Auckland, where he also tutored Economics. In four years working for the Frontier Centre, David carried out extensive media work, presenting policy analysis through local and national television, newspapers, and radio. His policy columns have been published in newspapers in every province as well as the Globe and Mail and the National Post. David has produced policy research papers on telecommunications privatization, education, environmental policy, fiscal policy, poverty, and taxi deregulation. However, his major project with the Frontier Centre is the annual Local Government Performance Index (LGPI). The inaugural LGPI was released in November 2007 and comes at a time when municipal accounting standards in Canada must improve if the municipal government sector is to reach its potential as an economic growth engine for Canada. David is now a policy advisor in Wellington, New Zealand.