Girth (2014) - What Drives To A Partnership Decision in Local Governments

International Public Management Journal
ISSN: 1096-7494 (Print) 1559-3169 (Online) Journal homepage: https://www.tandfonline.com/loi/upmj20
What Drives the Partnership Decision? Examining

Structural Factors Influencing Public-Private
Partnerships for Municipal Wireless Broadband
Amanda M. Girth
To cite this article: Amanda M. Girth (2014) What Drives the Partnership Decision? Examining
Structural Factors Influencing Public-Private Partnerships for Municipal Wireless Broadband,
International Public Management Journal, 17:3, 344-364, DOI: 10.1080/10967494.2014.935240
To link to this article: https://doi.org/10.1080/10967494.2014.935240
Published online: 27 Aug 2014.
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WHAT DRIVES THE PARTNERSHIP DECISION?

EXAMINING STRUCTURAL FACTORS INFLUENCING
PUBLIC-PRIVATE PARTNERSHIPS FOR MUNICIPAL
WIRELESS BROADBAND
AMANDA M. GIRTH
THE OHIO STATE UNIVERSITY
ABSTRACT: Municipalities across the United States are in various stages of wireless
broadband implementation. Policymakers establish wireless broadband networks for a
number of reasons, including promoting economic development, supporting internal
operations, and providing affordable access to citizens. While some governments provide
wireless broadband access as a public service, others partner with private firms. This
article exploits the variation in approaches and examines the structural factors that give
rise to public-private partnerships. The results show that partnerships for wireless
broadband are more likely among municipalities with political-administrative autonomy
and greater economic viability. For municipalities seeking to address inequities in
broadband access, these results can have profound implications, as partnerships are
often the most viable deployment option. In addition to examining determinants of
wireless broadband partnerships, this study aids in understanding which municipalities
are more likely to benefit from partnership approaches as this form of alternative
service delivery increases.
INTRODUCTION
Broadband access to the Internet has changed the way we communicate, transact in
the global marketplace, and engage in civic affairs. The Federal Communications
Commission (2010, 19) regards broadband as more transformative than any other
infrastructure network in American history, and acknowledges ‘‘broadband is the
great infrastructure challenge of the early 21st century.’’ Highlighting the underdevel-
oped state of infrastructure, estimates reveal that one-third of U.S. households
are without broadband access.1 While some households elect not to participate in
the digital domain, others cannot participate because of the lack of broadband
infrastructure or high cost of access. Due in part to efforts to bridge the gap,
International Public Management Journal, 17(3), pages 344–364 Copyright # 2014 Taylor & Francis Group, LLC
DOI: 10.1080/10967494.2014.935240 ISSN: 1096-7494 print /1559-3169 online
MUNICIPAL WIRELESS PARTNERSHIPS 345
municipalities across the U.S. have responded by deploying municipal wireless

broadband networks.
The business model to provide municipal wireless broadband varies. Some local
governments have partnered with private firms to share cost, risk, and administrative
burden, whereas others have chosen to provide wireless access as a public service,
similar to a municipal utility. There are no discernable patterns as to why municipa-
lities vary in their approach to implementation, although partnerships are more domi-
nant. Public-private partnerships are part of the broader market-based toolset
available to policymakers for providing goods and services. The marketization of
public services, stemming from the rise in New Public Management (NPM), empha-
sizes smaller government and shifts away from public service provision and toward
privatized delivery (Hood 1991). For these reasons—among others—there has been
substantial growth in public-private partnerships around the world (Boviard 2004).
The purpose of this study is to determine why U.S. municipalities decide to partner
with a nongovernmental entity to provide wireless broadband. Structural factors of
local governments are examined to answer this research question, drawing from pri-
vatization and related literature. The study is unique in that it provides empirical
analysis of the factors that influence the development of public-private partnerships,
and in doing so contributes more broadly to our understanding of alternative service
delivery choices in local governments.
This study addresses two gaps in the existing literature. First, there are few empiri-
cal studies of public-private partnerships that assess the partnership decision—akin to
the make-or-buy decision in contracting research. There is an opportunity to more
broadly apply our knowledge of the factors that contribute to market-based service
delivery in local governments to the partnership model. Second, municipal wireless
implementation has been primarily studied from a telecommunications policy or
engineering perspective (Tapia, Kvasny, and Ortiz 2011; Tahon et al. 2010; Bar
and Park 2006; Gillett, Lehr, and Osario 2006; Lehr, Sirbu, and Gillett 2006; Sirbu,
Lehr, and Gillett 2006), and little research has incorporated a public management
perspective (for exceptions, see Park and Lee 2010; Jain, Mandviwalla, and Banker
2007; Shaffer 2007). This study incorporates knowledge of the policy environment,
but also utilizes the privatization literature to guide hypothesis development and test
whether some of the structural predictors for other alternative service delivery
arrangements, such as contracting, perform as expected for the decision to enter
public-private partnerships.
There are clear implications for public management and policy resulting from the
growth in this new public service. With nearly 170 local governments with operational
wireless broadband networks across the U.S. (Vos 2010), the mere novelty and rate at
which municipalities are entering the wireless broadband market is compelling and
worth exploration. This phenomenon is perplexing, in part, because municipal broad-
band networks are likened to a public utility, and the prevailing trend in public uti-
lities has been deregulation and privatization (Bar and Park 2006). Understanding
how municipal wireless broadband is delivered provides insight into a market-based
approach to providing this innovative public service. This study also helps us to
understand which municipalities are more likely to benefit from partnership
346 International Public Management Journal Vol. 17, No. 3, 2014
approaches—and which might be left behind—as this type of implementation

strategy increases in the U.S. out of market preference and=or fiscal necessity.
The article proceeds as follows. First, the policy environment within which
municipal wireless broadband operates is described and the rationale to support
the development of these public or hybrid networks is addressed. Second, the litera-
ture on public-private partnership development is reviewed. Broader attention to the
privatization literature and other forms of alternative service delivery is also pre-
sented, which contributes to hypothesis development. Next, data and methods are
outlined and regression results specified. The implications of the study’s findings, lim-
itations, and opportunities for future research are captured in the discussion section.
MUNICIPAL WIRELESS BROADBAND NETWORKS

Municipal wireless broadband has had a tumultuous history in the U.S. In the early
2000s, wireless broadband technologies were quickly evolving, new firms were enter-
ing the market to provide the service, and cities, counties, and states were exploring
large-scale deployment plans. The promise of low-cost broadband infrastructure,
compared to steep infrastructure costs for wired broadband, made wireless solutions
particularly attractive. The exponential growth in the municipal wireless market
halted during the Great Recession (2007–2009) as emerging programs were among
the first to be cut in public agencies and as private firms scaled back development.
In early 2009, the American Reinvestment and Recovery Act (ARRA) included
$7.2 billion in appropriations for broadband expansion. The injection of ARRA funds
helped to renew interest in municipal broadband networks and revive shelved projects.
This is in part reflective of federal policy that promotes equitable access and supports
the notion that digital inclusion through broadband access is essential for participat-
ing in the economy of the twenty-first century. It is also important to note that the
U.S. currently lags behind other industrialized nations in per-capita broadband
penetration (Organisation for Economic Co-operation and Development 2011)—thus
devoting federal funds would contribute to mitigating the international gap.
Broadband is most commonly supplied to homes and businesses via high-speed
cable modems and digital subscriber lines (DSL). During the 1990s, private firms,
principally cable and telephone providers, were responsible for laying the ‘‘last mile’’
of fiber to homes=businesses, thereby providing the infrastructure for broadband
access.2 The first customers to receive broadband access were those in high-density,
high-income areas. In many cases, however, it has proven too costly to establish
the high-speed infrastructure for rural and economically disadvantaged metropolitan
locations because the financial return does not justify the significant investment.
Although the primary source of broadband access continues to be cable modem
and DSL, advancements in wireless technology have changed the market landscape.
Wireless solutions3 are attractive to municipalities primarily given the relative low
acquisition cost and ease of implementation.4 Technology for enabling wireless access
requires a power source such as streetlights, traffic signals, and utility transformers.
Municipalities benefit because, unlike private providers, they often have unfettered
access to these sites and do not have to negotiate access rights (Bar and Park 2006).
Wireless technologies are also easier and generally less costly to execute compared
to wired solutions because disruption and repair of infrastructure (roads, sidewalks,
etc.) is avoided.
Public-private partnership and municipal ownership are the two principal models
for municipal broadband provisioning. There are a number of existing public-private
partnership models; however, the most dominant approach is a single-owner=
operator that directly provides service to residents, similar to cable franchise arrange-
ments (Bar and Park 2006). In these cases, the municipality typically provides and=or
leases access to antenna sites to the private firm, which in turn builds and operates the
wireless network. The City of Cerritos, California, has adopted this model. Other
municipalities, such as Minneapolis, Minnesota, have partnered with private industry
to provide subscription-based services, but have also negotiated ‘‘community benefits
agreement’’ whereby the firm provides free wireless service at various sites throughout
the city in an effort to mitigate the digital divide (Williams 2006). The City of Chaska,
Minnesota, operates Chaska.net, a municipal-owned network whose goal is to
provide affordable high-speed subscriptions (Tropos 2007).
Municipalities deploy wireless broadband networks to promote economic develop-
ment and maintain=attract new businesses, to bridge the ‘‘digital divide’’ by providing
affordable broadband to all citizens, and to support their own internal operations (Bar
and Park 2006; Gillett 2006; Federal Trade Commission 2006; Stover and Berquist
2001). In some cases, municipalities that initially developed the infrastructure to sup-
port internal operations have found that expanding the network to include service to
the public was a relatively simple extension of the existing network. In Corpus Christi,
Texas, implementation of a single-use wireless network for meter reading prompted
the city to later launch a public safety network and 30 citywide public hotspots for
residents and visitors (Clancy 2010), illustrating how a limited solution can lead to
a large-scale deployment.
Economic development is a strong rationale for promoting wireless broadband
initiatives, as findings suggest the economic effect of broadband access on a com-
munity is significant (Gillett et al. 2006; Ford and Koutsky 2005). A study conducted
of communities with broadband access from 1998 to 2002 concluded that these areas
grew more rapidly in terms of employment and new business (Gillett et al. 2006).
Furthermore, in their analysis of wireless technology and spectrum rights, Hazlett
and Spitzer (2006, 600) find that ‘‘the lack of wireless broadband thwarts economic
development.’’ Municipalities with insufficient access to broadband are justified in
providing high-speed alternatives by the potential for economic growth and the
positive externalities associated with economic gain.
Perhaps most importantly, municipalities seek to establish wireless networks to
bridge the ‘‘digital divide’’—the disparity between those who regularly access the
Internet and those who do not. While access to the Internet is increasing for all
Americans, it is increasing at a slower rate for minorities, lower-income households,
rural communities, and those with less education (Zickuhr and Smith 2012; van Dijk
2005; Mossberger et al. 2003; Gabe and Abel 2002; National Telecommunications
and Information Administration 2001). There is also a significant age gap associated
with the Internet, but this is largely explained by a lack of interest from older
Americans and is less of a systemic equity issue.5
In addition to the other demographic factors, the digital divide that exists in rural
America is closing at a rate slower than those of all other demographic categories
(Horrigan 2006; Prieger 2003). Spatial analysis reveals an uneven distribution of
broadband services across urban and rural areas, and rural areas are significantly
underserved (Grubesic and Murray 2004). Rural communities are disadvantaged
because of prohibitive infrastructure costs given the number of potential subscribers,
and also subscription costs relative to the lower income of rural populations (Strover
2003). Advancement in wireless technology has provided new alternatives for rural
areas lacking access, providing a more cost-effective solution for less-populated
communities (Federal Communications Commission [FCC] 2005).6
A number of states have passed laws limiting or banning municipal communica-
tions networks (Tapia and Ortiz 2006; Gillett et al. 2006). These initiatives, largely
initiated at the behest of telecommunications providers, claim public wireless deploy-
ment projects amount to unfair competition and pose a threat to private investment
(Dyck and Van Wart 2010; Bar and Park 2006; Tapia and Ortiz 2006). In addition to
raising concerns about unfair competition, those opposed to municipal broadband
contend governments can distort markets by choosing technology winners and losers
(Bar and Park 2006). Governments are also criticized for reduced financial trans-
parency via ‘‘off the books’’ intergovernmental loans (from municipal utility to gen-
eral services, or from partner to government), which can hide the true cost of wireless
partnerships (Arrison, Rizzuto, and Vasquez 2007). When deciding whether to enter
the municipal broadband market, opponents advise policymakers to weigh the avail-
ability of these options and broader concerns about market distortions against the
need to create an alternative route to broadband access.
MARKET-BASED PUBLIC SERVICE DELIVERY

This section provides an overview of the literature on public-private partnerships.
Consideration is given to the broader literature on privatization and market-based
public service delivery to include contracting. Hypotheses are generated based on
the scholarship presented here and establish the framework used to analyze the deter-
minants of municipal wireless partnerships.
Public-Private Partnerships
Public-private partnerships are generally defined as a long-term contract between
a government entity and a private firm for ‘‘some combination of services, con-
struction, or financing in return for some combination of public funds, public
assets, or user fees’’ (Bloomfield 2006). Partnerships inherently require cooperation
and synergy among collaborators toward the development and=or delivery of a
project or service (McQuaid 2000). While NPM serves as the theoretical justifi-
cation for public-private partnerships, it is the budgetary benefit of partner-
ships—costs paid through user fees, extended amortizations, or other non-tax
arrangements—that serves as the practical force behind the use of the partnership
mechanism (Yescombe 2007). The increasing need for information technologies
among government agencies, as Boviard (2004) maintains, is also a strong partner-
ship driver as these projects require intense capital investment as well as access to
technical expertise.
Partnerships for large capital outlays feature opportunities for shared risk, relaxed
regulation and legal constraints, shared up-front investments in capital infrastruc-
ture, and creative financing (Bloomfield 2006; Daniels and Trebilcock 1996; Hirsch
1991). Many municipalities are simply not able to fund large-scale capital projects
and partnerships are the only option for policymakers (Tapia et al. 2006). Moreover,
some states limit the ability of local governments to raise funds, affecting their ability
to pursue capital investment.7 As a result of this constraint, local governments
increasingly rely on public-private partnerships for capital-intensive initiatives.
In addition to the financial benefits, partnerships also provide advantages in terms
of efficiency, expertise, and innovation. Partnerships allow the exchange of skills and=
or development of expertise in an area that is not a core competency (e.g., private
sector skills tend to be stronger in project management and technical expertise)
(McQuaid 2010). Shared experiences in developing new initiatives can also lead to
innovation as both sectors are challenged to work in a unique environment and
produce new solutions (Yescombe 2007). The introduction of a profit-maximizing
partner can also enhance efficiency for the public-private operation (Yescombe
2007). Finally, partnerships can yield enhanced efficiencies and cost savings through
the cooperation of public and private entities by eliminating duplication and creating
stability in the operating environment (McQuaid 2000).
One of the most important features of public-private partnerships is shared risk.
Partnerships inherently presume that both the public and private partner have a
financial stake in the success of the project. The risks associated with public-private
partnerships include financial risk, construction risk, usage risk, performance risk,
and operating risk (Yescombe 2007). Sharing or transferring some of these risks with
private industry is one of the motivations behind entering a public-private partner-
ship. The private partner may be able to find and use creative sources for project
funding that would otherwise not be available to the public agency.
Partners differ, however, in their perceptions of risk. Public partners have a need
to ensure transparency, hedge against private discontinuity such as bankruptcy, and
protect the public interest (Van Ham and Koppenjan 2001). Private partners risk
uncertainty with long-term commitment, cash flow constraints, and political
discontinuity (Van Ham and Koppenjan 2001). Furthermore, determining which
partner assumes the greater part of these various types of risk affects project cost
(Ghere 2001).
Managing political risks are important in public-private partnerships for both the
private partner and public entity (Klijn and Teisman 2003; Van Ham and Koppenjan
2001). As Koppenjan (2005, 141) notes, ‘‘Private companies often consider the public
partner to be a multi-headed monster with contradicting strategies.’’ Thus, maintain-
ing political support for the partnership, particularly when there is a leadership change,
is a key concern. ‘‘Unless there is a strong political will on the public-sector side of the
table, and the ability to communicate the case for pursing PPPs clearly and fairly,
political winds can easily blow the process off course and a PPP programme will
struggle for success’’ (Yescombe 2007, 27). As a result, Koppenjan’s (2005) case studies
show that partnerships are more likely when private firms perceive political stability.
The consideration of risk leads to the first hypothesis tested in this article. Scholar-
ship reveals that successful partnerships hinge on political stability and administrative
continuity. As a result, I suspect that municipalities with political-administrative
autonomy will be more likely to enter a partnership:
H1: Public-private partnerships to provide municipal wireless broadband

networks are more likely among municipalities with political-
administrative autonomy.
Preference for Market-Based Public Service Delivery

While there is some debate in the field on the type of local government that is more
likely to prefer market-based approaches, findings indicate suburban governments
are more likely to privatize services (Warner 2006; Warner and Hefetz 2002; Greene
1996; 2002). This is due in part to the lower likelihood that suburban areas have
an entrenched institutional structure compared to more established American cities
(Brown and Potoski 2003).
Municipalities that are in fiscal distress or have lower fiscal capacity are also likely
to pursue market-based solutions (Fernandez, Eungha Ryu, and Brudney 2008;
Joassart-Marcelli and Musso 2005) as they have less flexibility to increase the scale
and scope of publicly provided services. ‘‘The realistic choice, given budgetary con-
straints, is generally not between a PPP and public-sector procurement . . . but
between a PPP and no investment at all’’ (Yescombe 2007, 17). When deciding
whether to contract or provide the service in-house, local governments weigh the
impact of tax revenue as well as expenditures. Unlike public entities, private firms
are required to pay taxes, thereby creating a revenue stream for the municipality that
did not previously exist. For example, in the electric utility market, franchise fees and
taxes can constitute significant revenue for a municipality (Hirsch 1991). Privatizing
services that will thereby generate revenue is an attractive solution for local
governments with lower fiscal capacity.
Experience with market-based approaches can also influence the decision to enter
a public-private partnership. As Bloomfield (2006, 406) notes, ‘‘The unique
challenges posed by long-term contracts further complicate the tasks of fostering
meaningful competition, crafting contracts that equitably allocate project risks
and guarantee contractor performance, and ensuring appropriate transparency.’’
Public agencies able to draw on extensive contracting experience are likely better
equipped to navigate these complex partnership arrangements.
The factors that contribute to a municipality’s preference for market-based
solutions lead to the development of the second hypothesis. Municipalities that have
greater experience with and are more generally positioned toward market-based
public service delivery will be more likely to provide municipal wireless through
public-private partnerships:
H2: Public-private partnerships to provide municipal wireless broadband

networks are more likely among municipalities with greater prefer-
ence for market-based public service delivery.
DATA AND METHOD

Data is collected from numerous industry and government sources to determine the
factors that increase the likelihood that a municipality will partner with a nongovern-
mental entity to provide municipal broadband wireless. Data on municipal wireless
broadband providers is collected from an industry report (Vos 2007) and further vali-
dated by crosschecking each municipality with external sources.8 Observations are
limited to U.S. cities with fully operational or in-process deployments to ensure a
common unit of analysis (n ¼ 111).9 Seventy-eight deployments are partnerships.10
Municipalities are captured in 2007 because they are observed at the height of munici-
pal broadband deployments and in doing so best represent partnership selection
before broader economic effects slowed growth in this area.
Rare events logistical regression is used to analyze the data. This technique has been
primarily used in political science, international relations, and applied economics,11
but seldom used in public management research. It is useful in this context because
multiple logistic regression cannot be reliably used due to concerns with selection bias
as this is a choice-based sample.
King and Zeng (2001b; 2002) developed rare events logit to approximate unbiased
and lower-variance coefficients while accounting for rare events and choice-based
sampling. This is done, in part, by generating randomly selected non-event observa-
tions in the population (non-events in this study are municipalities not partnering to
provide municipal wireless) to construct the dependent variable. The outcomes are
also weighted to control for the proportion of the sample relative to the population;
approximately 1% of the population of U.S. municipalities is included in the sample.
Rare Events Model

Dependent Variable
The dependent variable is a binary indicator reflecting the partnership status of a
municipality providing wireless broadband access. The partnership variable is coded
0 if the municipality does not partner (n ¼ 111 or 59% of observations) and 1 if the
municipality partners with a nongovernmental entity (n ¼ 78 or 41% of observations).
To create the variable, I used Vos’s (2007) report to first identify active deploy-
ments. Municipal deployments were then independently researched to both validate
the industry report and code the implementation by partnership status. Implementa-
tions designated as public-private partnerships establish the ‘‘1’’ values. To obtain
the ‘‘0’’ values of the dependent variable, I randomly selected 111 U.S. municipali-
ties.12 This is a 1:1 ratio of active deployments (public-private partnerships and
municipal-provision) and a 3:2 ratio for partnered deployments, consistent with
recommended thresholds (King and Zeng 2001a).
The dependent variable is unique for two reasons. To my knowledge, consolidated
data on partnership status do not exist elsewhere as this is the first empirical study to
address implementation and provisioning choice in municipal wireless broadband
deployment. The variable is also distinct in its methodological design by using the rare
events logit technique to create the variable.
Explanatory Variables
Political-administrative autonomy. Firms seek to minimize risk in large-scale

partnerships. That is, what may have been a high priority for one administration
may be eliminated with the next. Political-administrative autonomy is measured by
form of municipal government. This is a dummy variable coded 1 if the municipality
is a council-manager structure. This measure is used because city managers tend to
have a high degree of autonomy in policymaking (Selden et al. 1999), considerable
budgetary influence (Ammons 2008), and authority in partnership arrangements
(Walzer and York 1998). Council-manager municipalities, wherein city managers have
more administrate authority, may be more attractive to private partners concerned
with ongoing commitment to the project. Council-manager cities are also more likely
to contract to provide public services (Levin and Tadelis 2010; Fernandez, Eungha
Ryu, and Brudney 2008; Hefetz and Warner 2004; Brown and Potoski 2003).
Preference for market-based service delivery. Three measures create the construct:
percent of public services the municipality contracts out, metropolitan=suburban=
rural status of the municipality, and government expenditures per capita. The U.S.
Census Bureau’s 2002 Local Government Directory Survey is used to identify the per-
cent of services a municipality contracts. The measure includes contracting status for
nine public services: electric, gas, and water utilities; fire protection; law enforcement;
parks=recreation; streets=bridges; sewage services; and solid waste management.
Dummy variables are created for each of these service areas, coded 1 if the municipality
contracts out the service and coded 0 if the municipality does not contract out the
service. Percent of services contracted is an index variable generated from an average
of the nine public-service dummy variables. Municipalities with higher levels of con-
tracting out have a lower marginal cost of contracting than those with few contracted
public services. The more services contracted, the greater the likelihood the munici-
pality will choose to partner due to their experience with market-based service delivery.
Suburban areas are more likely to favor market-based approaches compared to
urban or rural areas. Urban cities tend to have an institutional bureaucracy that
opposes privatization efforts whereas wealthier suburban municipalities are more
likely to oppose redistributive efforts and prefer to curb bureaucratic expansion
(Greene 2002). Rural areas are less likely to have experience with market-based
approaches as they have fewer available private vendors to provide public services
TABLE 1
Summary of Hypotheses
Hypotheses Predicted Relationship
H1: Political-administrative autonomy þ

H2: Market-based service delivery preference, as measured by:
Percent of services contracted þ
Suburban governments þ
Government expenditures per capita –
compared to urban or suburban areas (Warner 2006; Warner and Hefetz 2003). The
2003 U.S. Department of Agriculture (USDA) Rural-Urban Continuum Code is used
to create three dummy variables indicating whether the municipality is in a county
designated as metropolitan, suburban, or rural.13 It is expected that suburban areas
are more likely to enter public-private partnerships than metropolitan and rural areas.
Governments with lower fiscal capacity are more likely to seek market-based
approaches to public service delivery (Greene 2002; Schneider 1989). Furthermore,
fiscally strained municipalities do not have the capacity to expand public service
provision, increasing likelihood of partnership. Fiscal capacity is measured by govern-
ment expenditure per capita (Fernandez, Eungha Ryu, and Brudney 2008; Hefetz and
Warner 2004; Greene 2002). The measure is logged to normalize distribution.
Control Variables
Municipalities that are wealthier are more likely to prefer privatization efforts
(Greene 2002). Likewise, resident income may also have an effect on a community’s
ability to attract a private partner—that is, firms will calculate willingness to pay for
service. Median income of municipal households from the 2000 census captures this
effect. Similarly, population from the 2000 census is used to control for population
TABLE 2
Descriptive Statistics
Variables N M SD Min. Max.
Partnership 189 0.412 0.493 0 1

Political-administrative autonomy 189 0.497 0.502 0 1
Market-based service delivery preference
Percent of services contracted 189 0.192 0.214 0 0.875
Gov’t expenditures per capita (log) 189 7.257 0.461 6.423 9.030
Metro area 189 0.663 0.474 0 1
Rural area 189 0.141 0.349 0 1
Suburban area 189 0.196 0.398 0 1
Median income (log) 189 10.689 0.314 9.882 11.821
Population (log) 189 9.152 2.446 3.611 15.896
effects because communities with higher populations might be more attractive to

private business (i.e., greater potential for subscribers), thus affecting the likelihood
a municipality partners.14 The log of municipal population and log of median house-
hold income is used in the model to normalize the distribution of these two variables.
Table 1 provides a summation of hypotheses and measures. Descriptive statistics
are presented in Table 2.
RESULTS
Table 3 reports the regression results of the rare events logit model with robust
standard errors. Political-administrative autonomy is positive and statistically signifi-
cant (p < 0.01), supporting H1. Predicted probabilities reported in Table 4 show that
TABLE 3
Rare Events Logit Estimation
Independent variables Coeff. Robust Std. Err.
Explanatory variables

Political-administrative autonomy 1.706 0.507
Market-based service delivery preference
Percent of services contracted 1.005 1.662
Gov’t expenditures per capita (log) 0.260 0.297
Metro area 0.413 0.797
Rural area 1.557 1.176
Control variables

Median income (log) 1.323 0.815

Population (log) 1.061 0.297

Constant 32.342 11.111
Notes: Adj. count R2 ¼ 0.56; N ¼ 189. Sample weighted at 1%.

p < .01; p < .05; p < .10, two-tailed tests.
TABLE 4
Predicted Probabilitiesa
Independent Variables Partner (Y ¼ 1)
Political-administrative autonomy (yes ¼ 1) 0.87%

Political-administrative autonomy (no ¼ 0) 0.16%
Population logged (25th percentile ¼ 7.72) 0.03%
Population logged (75th percentile ¼ 10.91) 0.81%
Median income logged (25th percentile ¼ 10.50) 0.12%
Median income logged (75th percentile ¼ 10.91) 0.21%
a
Percentages are sub-1% due to the number of events relative to the population. This is accounted for by
weighting the sample in the rare events logit estimation (from which these values are derived).
when a municipality has political-administrative autonomy, it is nearly five and a half

times more likely to partner to provide municipal wireless than those municipalities
without political-administrative autonomy, as measured by form of government.
H2 is not supported in this model as none of the three measures of preference for
market-based service delivery reach statistically significant thresholds.
Of the control variables, population is statistically significant (p < 0.01) and positive.
Municipalities with higher populations (75th percentile) are 27 times more likely to
partner than those municipalities with lower populations (25th percentile). Median
income is also statistically significant (p < 0.10) and positive although, as Table 4 shows,
the difference is not substantively meaningful. Both effects are in the expected direction.
DISCUSSION
This section addresses the significance of the study’s findings for public manage-
ment research and policymakers. Limitations of the study are defined and opportu-
nities for future research are also discussed.
The results presented here speak to the importance of structural factors in determin-
ing whether a municipality partners to provide municipal wireless broadband.
Municipalities with higher political-administrative autonomy are more likely to enter
partnerships. By its very nature, a public-private partnership encompasses shared risk
among the parties. As a result, partners seek stability and commitment to help allay risk
in a potential venture. Because political-administrative autonomy was measured by
form of government, it is likely that council-manager municipalities are more attractive
to private partners because this functional form allows for greater administrative auto-
nomy and authority to city managers. This might also be a signal to private partners
that there is executive continuity to carry forward the project. This suggests that one
way private partners mitigate risk is to seek out municipalities with institutional
characteristics that demonstrate politically and administratively stable environments.
Alternatively, this result may indicate that administrators in council-manager
governments are more aggressive in pursuing private partners. Consistent with the
contracting literature, council-manager governments are more likely to engage in
alternative service delivery rather than in-house development (Levin and Tadelis
2010; Fernandez, Eungha Ryu, and Brudney 2008; Hefetz and Warner 2004; Brown
and Potoski 2003). Further, there is some evidence to suggest that council-manager
governments are more likely to be innovators and early adopters of policy tools
(Kwon, Berry, and Feiock 2009; Moon 2002). Municipal wireless broadband
networks are a salient example of an innovative policy adoption.
It is surprising that the variables measuring preference for market-based service
delivery failed to reach statistical thresholds of significance. Perhaps the interdependent
nature of partnership means that there is less emphasis placed on the other factors that
often matter in alternative service delivery decisions, such as fiscal capacity, suburban
areas, and experience with contracting. It tends to suggest that these factors may not be
as important in partnership agreements as they are in traditional contracting arrange-
ments, at least in this service area.
The results for the control variables underscore the importance of the attractiveness
of the municipality to a private partner; that is, the likelihood of partnership hinges
upon the financial viability of the community. What is troubling about this finding is
that rural communities and other disadvantaged areas are not likely to benefit from
partnerships to provide municipal wireless broadband. Unless municipalities go it
alone, residents are not likely to enjoy the significant advantages of this new technology.
With this in mind, this research raises broader issues related to rural broadband
policy. Although policymakers assert universal broadband access is a priority, their
actions do not support this position. For instance, there has been little effort to relax
anti-trust regulation for rural broadband, unlike previous efforts to correct for imbal-
anced supply and demand (e.g., telephone cooperatives, rural electric cooperatives).
Rural areas have not only failed to receive sufficient support from federal policy-
makers to correct for inadequate access, but also many state governments have passed
legislation prohibiting or limiting municipal broadband deployments. Rural com-
munities are at a disadvantage from both sectors—a lack of investment by the private
sector and regulatory constraint by the public sector.
Limitations of the Study and Opportunities for Future Research

The primary limitation of the study is that it fails to capture measures of supply and
demand for broadband in the marketplace. It is probable that municipalities seeking
to partner to provide municipal broadband are those with high demand and low
supply; likewise, those municipalities not partnering to provide the service do not
perceive inadequate supply and demand in their market. Reliable data do not exist
to control for supply and demand factors, in large part due to inadequate measures
of supply (see note 1). Demand is equally challenging to measure. For instance, while
demographic factors such as education, income, and age suggest there might be lower
demand for broadband in rural areas, Picot and Grove (2010) find that demand for
broadband in rural areas is not only high but that rural areas exceed national averages
in adoption once communities have access. Despite the limitations in accounting for
supply and demand, the findings presented here are based on the best data available.
This study raises a number of possibilities for future research. Municipal wireless
broadband implementations have experienced a number of successes and failures
early in their lifecycle. Evaluating attributes of implementation success and=or failure
may provide insight into the factors that contribute to effective partnership agree-
ments. Examining characteristics at the partnership level—partner analysis of varied
risks, behavioral and relational factors such as trust—which were not included in
this analysis may yield interesting results on the dynamics of partnerships and their
potential for success.
This research is unique in that it represents a policy area in which technologies are
rapidly changing, and may be an exception to other market-based public services, pre-
senting an alternative explanation for the lack of significance of the marketization
measures.15 Further investigation into the relevance of contract management experi-
ence, impact of fiscal capacity, and place on the development of public-private
partnerships is deserved.
Assessing additional risk factors is warranted as recent developments in the

municipal wireless broadband landscape indicate the calculation of risk has changed
over time. For example, Philadelphia partnered with Earthlink in 2005, an early
mover in municipal wireless implementation. At that time, the city’s Chief Infor-
mation Officer, Dianah Neff, characterized the partnership as virtually risk-free.
‘‘The biggest contribution the city will make to the network will be in providing access
to city infrastructure, such as utility poles . . . a private company will operate the net-
work once it starts running . . . and taxpayers won’t be on the hook if business doesn’t
live up to expectations’’ (Gomes 2005, B1). Earthlink eventually deemed their part-
nership model unviable due to unbalanced risk (Keen 2007), and later divested of
their many municipal wireless initiatives nationwide. One might argue that in nego-
tiating free wireless broadband for city residents, Philadelphia failed to appropriately
consider their partner’s risks in the decision. Unsuccessful partnerships can not only
result in loss of taxpayer funds but, as importantly, unmet expectations and political
fallout as evidenced by recent partnership failures.
Another area for future research is an evaluation of the type of partner a munici-
pality pursues. There is limited variance in partnership models across the population
of cases in the sample, as only seven municipalities have partnered with a nonprofits
or cooperatives to provide the service (all others have partnered with for-profit firms).
However, a means test reveals there are statistically significant differences in the per-
cent of services contracted and median income of residents. Further exploration of
these factors, coupled with the rationale public officials employ in selecting a partner,
can provide insight on sectoral differences as the variance in partner type increases
across deployments.
The type of partner that a rural community attracts might also be different than
those in suburban and metropolitan areas, and thus increase the likelihood of part-
nership. In contracting arrangements, larger firms tend to dominate larger municipa-
lities while smaller firms are more prevalent in less-populated local governments (Bel
and Fageda 2011). Similarly, Wood (2008) finds in an analysis of cable and phone
providers that small firms are more aggressively pursuing broadband in rural areas
(see note 6).
Although rural area did not reach statistical thresholds (p < 0.18) as a predictor of
partnerships in the multivariate model, this remains an area for further exploration as
the number of rural areas deploying municipal wireless networks increases. Among
the reasons for study is feasibility—as implementation costs are largely driven by size
(in terms of square miles), it is more likely for a small town to become financially
attractive and thus lend itself to finding a business partner. Alternatively, policy-
makers in rural communities may be more aggressively pursuing partners because
of disparate access and take a more participatory role in the partnership. This com-
ports with empirical findings that rural communities are more likely to pay increased
attention to civic concerns and participate in the service delivery process (Warner
2009). As population is also a significant driver of the partnership decision, the results
are likely less relevant for the remotest rural areas. That is, while rural communities
may be finding viable ways into the market, partnership opportunities also depend on
economic factors—the very issues the drive the digital divide. Questions remain for
the most disadvantaged rural areas, including whether, as Warner (2006) discusses,
they will be able to compete in the new marketized public service environment.
There is opportunity to research the performance of municipal wireless broadband
(both partnerships and public networks) in terms of access, adoption=subscription,
cost, and other relevant factors. Bel and Warner (2009) find that collaborative
approaches to market-based public service delivery, such as public-private
partnerships, can produce improved service delivery outcomes. Research is merited
to assess whether partnerships yield better outcomes—particularly in terms of
addressing the digital divide—in municipal broadband implementation.
There is also an opportunity to study positive externalities associated with
municipal-owned networks versus private networks. In a quasi-experiment of two cit-
ies, Oxendine et al. (2007) found that civic involvement was higher in the city with a
community-based network versus a market-based network. Expanding the research
to focus on municipal wireless networks may provide insight into the ‘‘democratic
divide’’ described by Mossberger et al. (2003). Examining issues related to political
and civic participation can have implications for policymakers, such as the need to
create more outlets for low-cost or free broadband access, to mitigate the effects of
this growing disparity.
CONCLUSION
Structural and demographic factors are most significant in identifying whether a
community partners to provide municipal wireless broadband. The results show that
public-private partnerships are primarily determined by a municipality’s economic
viability and political-administrative autonomy. Both of these factors relate to the
community’s ability to attract a partner, which is often the most politically and finan-
cially feasible option for municipalities desiring to deploy municipal wireless broad-
band. These implications can be particularly profound for municipalities entering the
market to correct for disparate access, as the Internet has arguably become an
essential tool for navigating business, personal, and civic affairs.
Prior to this study, there were neither clear data on provision mechanisms for
municipal wireless broadband nor, more broadly, on the determinants of a munici-
pality entering a public-private partnership. The uniqueness of the findings presented
here are that they shed light on the elements that influence the development of public-
private partnerships, and in doing so contribute to our understanding of varying
market alternatives to service delivery in local governments in the U.S.
Public-private partnerships are appealing to policymakers because they allow gov-
ernments to avoid or minimize debt financing, to work around regulatory limitations,
and to balance risks associated with capital investment. As governments continue to
do more with less, there will be an ongoing need for creative solutions and cross-
sector participation in public service delivery. As O’Leary and Van Slyke (2010,
s10) predict, ‘‘There will be a greater role for the public, a greater need for collabora-
tive governance, and a greater appreciation for deliberative democracy. Clearly,
partnerships are at the heart of the future of public administration in 2020.’’
In this service area, public-private partnerships are an attractive alternative to

policymakers to reduce the widening disparity between communities with broadband
access and those without. However, considering that ‘‘access to broadband is the
latest challenge to equal opportunity’’ (FCC 2010, 129), equity issues might persist
in the absence of partnership agreements with these values in mind. While this
remains an empirical question, partnerships that fail to address underlying public
values will likely do little to meet broader policy goals for digital inclusion.
ACKNOWLEDGEMENTS
I am grateful to Irfan Nooruddin for his insightful recommendations. I also thank
the anonymous reviewers and symposium editors, Mildred Warner, Trevor Brown,
and Germà Bel, for their valuable comments and support.
NOTES
1. Estimating broadband coverage in the U.S. is problematic. The FCC has long been
under fire for erroneously reporting that 99% of Americans had broadband access, arriving
at this figure by claiming that when at least one household in the zip code reported access
to a high-speed Internet service provider, the zip code was coded as having access (Bosworth
2008). Recognizing the perils of biased reporting, Congress passed The Broadband Data
Improvement Act of 2008 and charged the FCC with improving the quality of the data on
broadband access.
2. The last mile represents the costly extension of fiber between the residence=business
and the back-end infrastructure that supplies broadband service.
3. Wireless is provided primarily using Wi-Fi and WiMax solutions. Wi-Fi is a wireless local
area network (LAN) with service range of 100 yards, whereas WiMax covers a broader service
area (3 to 30 miles); however, WiMax can be less successful than Wi-Fi for indoor use. Municipal
wireless networks are sometimes a combination of the two technologies (e.g., Houston, Texas).
4. Three dominant reasons are identified for achieving affordability in wireless technolo-
gies: (1) Wi-Fi operates in unlicensed spectrum (WiMax operates in either licensed or
unlicensed spectrum), which means that there has been high participation in developing solu-
tions in this area; (2) strong levels of interoperability through industry-led early efforts to stan-
dardize technology; and (3) low unit cost for equipment—spurred in large part through the
mass integration of Wi-Fi chipsets in laptops and mobile devices (Bar and Galperin 2004).
5. There is a correlation between age and rural living; the Pew Internet and American
Life Project (2006) cites that rural America is ‘‘older’’ than metropolitan counterparts (43%
of rural Americans are over 50 whereas 37% of non-rural Americans are over 50).
6. Consider the town of Thomaston, Maine, with a population of 3,748. Thomaston
entered a public-private partnership with a local startup firm, RedZone, to provide municipal
wireless access. RedZone’s mission is to bring wireless broadband solutions to towns with
small populations that are underserved by affordable broadband (Graychase 2006).
7. Mullins and Pagano (2005) note that 46 states have passed legislation limiting revenue
generation and expenditures.
8. The dataset includes demographic data collected from the U.S. Census Bureau 2000
Census, 2002 Census of Governments, and U.S. Department of Agriculture 2003 Rural-Urban
Continuum identification. Crosschecking was conducted via municipal and industry Web sites.
9. A total of 152 cities met the criteria but were dropped due to missing data because they
failed to complete the U.S. Census Bureau’s 2002 Local Government Directory Survey. The
response rate for said survey is 70.3%; the response rate among the cities providing municipal
wireless technology is 77.1%.
10. Of the 111 provisioning cities, 78 are partnerships and 33 provide the service in-house.
As municipal-provision is not the unit of analysis of this study, these 33 municipalities are not
included in the study.
11. For examples, see Nielsen et al. 2011; Davis and Bermeo 2009; Wade and Reiter 2007;
Maestas, Maisel, and Stone 2005; King and Zeng 2001a.
12. The random selection of municipalities was generated using U.S. Census Bureau 2002
Census of Governments data. I limited the dataset to general purpose governments coded by
the U.S. Census Bureau as municipalities, towns, or townships. Next, I assigned a random
value between 0 and 1 to each observation (municipality, town, or township) and then sorted
numerically on the random value. The first 111 observations (i.e., 111 lowest values between 0
and 1) were selected and assigned ‘‘0’’ values to create the non-events in the dependent
variable. Two observations randomly assigned in the 111 set were already included in the data-
set as partnering providers (‘‘1’’ value), therefore I included the 112th and 113th observations
to complete the non-events selection of 111 observations.
13. The USDA uses a nine-point scale, but given the number of observations in the model,
some of the categories required collapsing due to insufficient variance. In the statistical
models, suburban area is the omitted comparison category.
14. Factor analysis reveals that population and the metropolitan=suburban=rural indica-
tors are not measuring the same underlying factor; metropolitan=suburban=rural is measuring
density of the surrounding area while population is measuring the number of residents in a city.
15. The U.S. Census Bureau’s 2002 Local Government Directory Survey does not include
contracting data on information technology functions.
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ABOUT THE AUTHOR

Amanda M. Girth (girth.1@osu.edu) is an Assistant Professor at the John Glenn
School of Public Affairs at The Ohio State University. Her research examines
government contracts, focusing on performance and accountability in the implemen-
tation process. She also studies the development and management of public-private
partnerships.

Girth (2014) - What Drives To A Partnership Decision in Local Governments

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International Public Management Journal

ISSN: 1096-7494 (Print) 1559-3169 (Online) Journal homepage: https://www.tandfonline.com/loi/upmj20

What Drives the Partnership Decision? Examining

To link to this article: https://doi.org/10.1080/10967494.2014.935240

Published online: 27 Aug 2014.

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WHAT DRIVES THE PARTNERSHIP DECISION?

municipalities across the U.S. have responded by deploying municipal wireless

approaches—and which might be left behind—as this type of implementation

MUNICIPAL WIRELESS BROADBAND NETWORKS

MARKET-BASED PUBLIC SERVICE DELIVERY

H1: Public-private partnerships to provide municipal wireless broadband

Preference for Market-Based Public Service Delivery

H2: Public-private partnerships to provide municipal wireless broadband

DATA AND METHOD

Rare Events Model

Political-administrative autonomy. Firms seek to minimize risk in large-scale

Hypotheses Predicted Relationship

H1: Political-administrative autonomy þ

Variables N M SD Min. Max.

Partnership 189 0.412 0.493 0 1

effects because communities with higher populations might be more attractive to

Independent variables Coeff. Robust Std. Err.

Notes: Adj. count R2 ¼ 0.56; N ¼ 189. Sample weighted at 1%.

Independent Variables Partner (Y ¼ 1)

Political-administrative autonomy (yes ¼ 1) 0.87%

when a municipality has political-administrative autonomy, it is nearly five and a half

Limitations of the Study and Opportunities for Future Research

Assessing additional risk factors is warranted as recent developments in the

In this service area, public-private partnerships are an attractive alternative to

Bosworth, M. H. 2008. ‘‘FCC Releases Broadband Report, Admits Data is Faulty.’’

Tapia, A. H. and J. A. Ortiz. 2006. ‘‘Municipal Responses to State-Level Broadband Internet

ABOUT THE AUTHOR

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