College students are constantly complaining about campus Wifi, and honestly rightly so. But why? I mean, why can’t a multi-billion dollar private institution like BU provide WiFi that isn’t riddled with constant connection instability. Turns out the answer lies economically, rather than technically.

To answer our question, it’s important we make a cost-benefit analysis. We have to understand that WiFi is a shared public resource, which means that as more people use that resource, the more congested it will be, and the worse the WiFi becomes for everyone. This is best explained when we understand Diseconomies of Scale. Instead of marginal costs decreasing as the system expands, at a certain point they will dramatically increase. In our case, this happens because WiFi infrastructure has a fixed capacity. So once the limit has been reached, the marginal cost of serving additional users skyrockets. Essentially, as the university grows, it becomes more and more expensive to keep up with the costs without restructuring a whole new WiFi framework.

But everything we do relies on WiFi? Don’t the benefits outweigh the costs?

Unfortunately not quite. To understand this we should consider the Principal-Agent Problem. This explains when conflict of priorities between a group of people and their authority figure leads to misaligned interests. In our case, universities hire external contractors to manage the WiFi. Students (the principals) want reliable WiFi, but school administrators (the agents) who actually negotiate the contracts, have different incentives. Allocating more funds towards wifi just isn’t flashy. Universities would rather direct the funds towards projects that boost prestige, like expanding athletic facilities or research programs. Upgrading the quality of Wifi doesn’t help with revenue, rankings, or status, which means the opportunity cost benefit is lower. This is important to our analysis because the costs outweigh the benefits for the party that makes the decisions. This misalignment of incentives is a large reason for the underinvestment towards WiFi infrastructure, which is what leads to poor quality.

Essentially, Universities bear all the burden of the cost, with little benefit. So until those underlying incentives change, we students might be stuck with the same old frustrating Wifi quality for the foreseeable future.














Work Cited

Erika Rasure and Ryan Eichler, The Investopedia Team, “Diseconomies of Scale: Definition, Causes, and Types” https://www.investopedia.com/terms/d/diseconomiesofscale.asp

David Kindness and Yarilet Perez, The Investopedia Team, “Principal-Agent Problem Causes, Solutions, and Examples Explained” https://www.investopedia.com/terms/p/principal-agent-problem.asp