Money isn’t everything in P3 plans for networks

Private-public partnerships (P3s) might be one way for municipalities to fund in-city wireless networks, according to the managing director of investment firm BMO Nesbitt Burns. But cities must also consider factors other than financing before deciding if the P3 model is right.In a presentation at the Canadian Municipal Wireless Applications Conference and Exhibition in Toronto on May 30, Rick Byers outlined the P3 paradigm, whereby public and private organizations combine financial forces to build or repair public infrastructure, such as roads and hospitals. Byers pointed out that P3s offer many advantages over the all-public-funding route. For one, P3s offset the costs of construction, taking some of the burden out of the public sector's hands, and placing them with commercial entities, which might be better prepared to manage the load.Public-private partnerships also help spread the costs of construction and maintenance over long periods of time. They can even help stabilize costs: maintenance prices can be locked into the contract, so public organizations won't be blindsided by rising costs in the future."On balance, they should lead to lower overall costs," Byers said.But the P3 model is "not a perfect fit" for municipal wireless networks, he said: These types of partnerships tend to apply to very large projects - those costing $100 million and up. Metro wireless networks might not make that threshold.P3s also usually apply to projects that include a substantial physical entity, such as a highway or a hospital. With its measly access points, the average municipal wireless network might fail that test.Still, Byers figures it's only a matter of time before financiers devise a P3 paradigm that works for smaller projects. "We're hopeful to see it expand to new asset classes," he said.Cities might be wary of P3s, given some high-profile failures, Byers said, citing the City of Toronto's scandalous contract with MFP. Starting in 1999, the leasing company was supposed to supply computers for a low price. But by 2001, the city realized costs had jumped from $43 million to more than $80 million. An inquiry into the situation found that a city councillor had accepted a bribe to ensure MFP received the contract.Municipal IT leaders at the wireless applications conference had mixed feelings about P3s. Louis Shallal, chief information technology officer of York Region ON, seemed skeptical. "I'll only say that they are very hard to do," he said.Garry Bezruki, director of information systems at the City of Waterloo ON, pointed out that certain public stakeholders of the municipality's network infrastructure had sold out to private enterprises, and the newcomers are excellent partners. "It's been a success for me," he said.Regardless of their applicability to municipal wireless projects, P3s are bound to proliferate, Byers said. He explained that many public institutions are in dire need of repair or replacement, and the burden is simply too great for public coffers alone to support.

Money isn’t everything in P3 plans for networks

News | June 1, 2007

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