Does a municipal electric's supply of communications crowd out private communications investment? An empirical study

There are 2007 municipalities across the United States providing electricity service to their constituents. Of these, over 600 provide some sort of communications services to the community. An important policy question is whether or not public investment in communications crowds out private investment or whether such investment encourages additional entry by creating wholesale markets and economic growth. We test these two hypotheses, the crowding out and stimulation hypotheses, using a recent dataset for the state of Florida. We find strong evidence favoring the stimulation hypothesis-public investment in communications network increases competitive communications firm entry by a sizeable amount.