SAN FRANCISCO — Despite being awash in tech start-ups and the latest innovations, San Francisco has a surprising lack of connectivity. As many as 1 in 8 people here — more than 100,000 residents — don’t subscribe to home Internet, city officials say.

To close that digital divide, the local government has come up with an entrepreneurial solution: Build a high-speed network of its own that could compete with the likes of AT&T and Comcast.

If the estimated $1.9 billion proposal is approved, San Francisco would become the biggest U.S. city to undertake a project that would turn high-speed Internet access into a kind of public utility — and set an example for others across the country. The core question for policymakers here is whether competitive broadband service is a luxury — or a necessity that’s as essential as public transportation or homeless shelters.

Supporters say a city-owned Internet service could have a profound impact on life in San Francisco: Lowering broadband costs for everyone because of increased competition and, in particular, helping the poor connect to job opportunities, education and city services.

“Over 100,000 San Francisco residents don’t have [home Internet] in the middle of the technology capital of the world,” said Mark Farrell, the former mayor who spearheaded the proposal, in an interview. “As I sit here two blocks from Twitter, and down the road from Salesforce and Dropbox, Square, you name the technology company — I mean, it’s criminal.”

But the initiative has been wildly divisive, drawing opposition from both powerful Internet service providers and other city leaders who question whether spending money on Internet access is as important as providing more affordable housing. As many as 7,500 San Franciscans — or roughly 1 percent — are homeless, according to a 2017 survey by the city.

“San Francisco has a history of running over budget for large infrastructure projects,” said Malia Cohen, a member of San Francisco’s board of supervisors. “ Although they estimated $1.9 billion, it wouldn’t surprise me if it gets above $2.5 billion, easily.”

Federal officials have made it a priority to bring high-speed Internet access to many rural parts of the country where Americans do not have even one broadband provider to speak of. But even though broadband may technically be available in many cities, tens of millions of urban Americans are in the same position as their rural counterparts when it comes to connectivity, said Adie Tomer, a Brookings Institution fellow who co-authored a report on the digital divide last year.

“Whether the wire is there or not, if you can’t use it, it has no utility and you’re disconnected — and that’s the simple truth,” Tomer said. “There are huge swaths of metropolitan areas where, in particular, low-income neighborhoods with a high share of people without advanced education have really low subscription rates. And it absolutely speaks to some of the biggest economic inclusion problems in this country.”

Without broadband, Tomer added, many Americans face difficulty performing even basic tasks, such as applying for jobs at restaurants.

Officials charged with closing the digital divide here have found in their surveys that cost is the biggest deterrent to signing up for Internet service among those who do not have it at home. The vast majority of that population makes under $25,000 a year. Many use mobile data as their sole connection to the Web — but that still isn’t enough to navigate daily life, said Alexander Banh, digital inclusion officer for the city and county of San Francisco.

Poorer residents could stand to benefit the most from San Francisco’s broadband plan. Under the proposal, qualifying low-income San Franciscans would gain free or discounted access to the network, while affluent residents could purchase up to gigabit speeds at competitive prices, according to city officials.

San Francisco won’t be shouldering the job alone. While the city would own the cables and other infrastructure associated with the network, it would hire a private ISP to build and run the municipal network on a 15-year contract. Proposals for the project could roll in over the coming six months, after San Francisco finalizes a request for bids. The result would be a public asset that’s managed by private industry.

Whoever builds it, the network would be required to abide by strong net neutrality rules and a robust privacy policy — flouting recent moves by the Federal Communications Commission to strip away similar regulations at the national level.

“The Trump administration’s pushback on net neutrality, consumer privacy protections, as well as some of the dialogue around the recent Facebook privacy issues, has created tailwinds for this project in San Francisco,” Farrell said.

Meanwhile, the provider would also have to share the network with rival Internet providers that want to compete for the same customers.

It’s this last point that makes San Francisco’s proposal extremely ambitious. In many parts of the country, including San Francisco, Internet providers enjoy exclusive use of the cables they place in the ground and on telephone poles, making it prohibitively expensive for new ISPs to start their own competing services. But under San Francisco’s approach, anyone could rent access to the city’s fiber network on a wholesale basis and resell that capacity to consumers under their own brand.

That could mean a dramatic increase in the number of providers serving each neighborhood, said Rudy Rucker, whose company, a local ISP called Monkeybrains, is competing for the city contract. Instead of just Comcast, for example, many neighborhoods may get as many as a dozen broadband companies to choose from.

Should San Francisco’s network move forward, it would become one of only a few in the United States to operate this way, analysts say, making it a bold experiment not just as an infrastructure project but also as a matter of Internet policy. Today, fewer than 200,000 U.S. households benefit from these types of open-access infrastructure policies, said Christopher Mitchell, a broadband advocate at the Institute for Local Self Reliance.

San Francisco’s proposal faces opposition from incumbents such as AT&T and Comcast. (AT&T declined to comment for this story. Comcast didn’t respond to a request for comment.) Industry officials routinely show up to community meetings on the city project to stay abreast of it, Farrell said, and they’re engaged in heavy marketing of their own services. AT&T has also rapidly increased its own fiber deployment in San Francisco “in part because of the municipal threat,” Mitchell said.

The two providers have also worked to fight the project through local representatives. SF.Citi, a local trade association funded by both major ISPs, argued in May during a public hearing on the issue that homelessness and housing are more urgent issues for San Francisco.

“While well-intentioned, we believe this concept needs much further vetting,” said Jennifer Stojkovich, the group’s executive director. “Is a multibillion-dollar effort to build a municipally owned and managed fiber network the best expenditure of taxpayers at this time? In the midst of an extreme housing shortage and homelessness crisis, we think not.”

To some housing advocates in San Francisco, the issues are more closely linked than it appears.

Low-income residents without Internet who apply for subsidized housing, for example, must file repeat applications by hand if they are not selected. But those with the ability to apply online enjoy a distinct advantage: If they are unsuccessful in the lottery, their applications are automatically placed into the next lottery pool.

“It’s a false choice to be saying we have to choose between broadband or housing,” said Todd David, executive director of the San Francisco Housing Action Coalition.

The future of the broadband project falls to San Francisco’s new mayor London Breed, who took office Wednesday as the city’s first black female mayor after a close race against Mark Leno. It’s unclear what position Breed takes on the broadband initiative; a spokeswoman for Breed, Tara Moriarty, declined to comment for this story.

Still, some San Franciscans say the city must be able to multitask.

“You can’t let our ineptitude in [housing and homelessness] be an excuse for a lack of progress or ineptitude in other areas,” said Matthew MacInnis, a longtime resident. “So while the city is struggling with these really big headline issues, that alone doesn’t justify a lack of investment in some of these progressive projects.”





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