If a government network could be set up, the city would then consider serving homes and businesses. But that could cost nearly $300 million, according to one estimate. The city doesn't have that kind of cash, but believes it would be possible to issue bonds to build the network and pay off the debt by leasing access on the network to multiple providers, who would compete for customers.

Comcast and Qwest say they could easily increase speeds on their networks as demand for bandwidth goes up. Comcast's Twin Cities network could deliver connections faster than 100-megabits-per second if necessary, spokeswoman Mary Beth Schubert said. The company says it is testing 100-megabit traffic between facilities in Philadelphia and McLean, Va.

But the two providers say they've seen no indication that anyone is clamoring for the kind of broadband that the two cities are envisioning, and they warn that municipal systems are more trouble than they're worth. They both point to Provo, Utah, where a municipally owned fiber-optic network has been drowning in red ink for several years. Earlier this month, the city of Provo decided to sell iProvo to a private provider called Broadweave.

said by TKJunkMail :

The city bureaucrat making the "use bonds" claim doesn't have to pay the higher taxes if wrong. Hopefully the pols and the taxpayers(if they get to vote on the bond issue) are more intelligent about the chances of the project making economical sense.