But Wait, Wasn't Muni-Fiber Supposed To Take Away Incentive For Private Fiber?
from the caught-in-a-lie dept
Over the past few years, there have been numerous lawsuits by telcos against various municipalities that have decided to launch municipal fiber broadband projects. Most of these lawsuits have failed -- but the main argument from the telcos is that it's unfair to have to compete against the government, and it would take away incentives for the telcos to actually invest in infrastructure to provide for those towns. Of course, that doesn't make much sense. That would mean that any competition would decrease incentives to invest. One of the nastier legal battles took place in Monticello, Minnesota, where the local telco TDS fought hard (and lost) its battle to stop muni-fiber from showing up. But, now, suddenly TDS is announcing its own fiber broadband, giving people 50 Mbps service for $50/month. What's the likelihood that TDS would have done this if it didn't have competition from muni-fiber? The reason municipalities look to muni-fiber is because there isn't enough competition and the telcos aren't investing in infrastructure (or really serving customer needs). So the end result here is that by introducing more competition, consumers and citizens are better served. So what's the problem with it again?
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Filed Under: broadband, competition, muni-fiber
Companies: tds
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It's perfectly fair, they just don't want to
Personally I love muni-fiber, and think its a great way for cities fed up with the majors to change the rules of the game.
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Re: It's perfectly fair, they just don't want to
So yes, in that way, it is unfair.
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Re: Re: It's perfectly fair, they just don't want to
What? Rules that it does not have to what?
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Re: Re: It's perfectly fair, they just don't want to
It turns out that this did not happen.
I think it is useful to remember that, especially at a local level, "teh government" is made of people. Telcos, more so than many other industries, are rather good at recognizing that and creating rules under which they thrive. Bitching about it and then essentially shooting their own argument in the head is absolutely their right, but I can't summon up much sympathy.
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So we could call this
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Re: So we could call this
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But I thought there is a bandwidth shortage and that this sort of thing is impossible due to some obscure economic model of bandwidth (never mind that the model seems not to exist in other countries).
Face it, whenever some corporations try to justify high prices (ie: pharmaceutical corporations with their alleged high R&D costs) it's mostly just lies.
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I live in Ottawa, Canada (Canada's Capital) and both DSL and Cable have been available 2km away from me for over 4 years, and yet I still don't have those available to me.
It is obvious that the big telco companies do not wish to invest in their infrastructure and even expand it. They would rather sit on their profits, go play golf with one another, and brag about who has the most money.
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and by work I don't mean handing over taxdollars to rich telco/cableco companies to do nothing with it. I mean opening up the infrastructure to competition.
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Anyway, you are right on the mark... telcos are not interested in expanding their network capabilities, only their network subscriber areas.
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Government is Part of the Competative Landscape
Furthermore, there is nothing wrong with the taxpayers authorizing the government to provide services such as cable to its citizens.
An often overlooked aspect of this whole debate is that the government is still buying equipment from private companies (such as Cisco) and is employing people. So what is the difference, in terms of the economy, if the cable staff works for you local municipality or Time-Warner. None really.
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Re: Government is Part of the Competative Landscape
Capitalism will only truly thrive with the other essential factor-- Competition.
Lacking competition there will be minimal incentive to produce, no incentive for efficiency, and no incentive for improvement. Competition is the driver that makes all of us better, even though we would often like to be able to take the easy path.
If allowing a government agency to provide a service increases competition in a marketplace, then that service may indeed become available at a less expensive price. However, government agencies need competition from private enterprise as well. This is why communism didn't work and socialist systems are usually inefficient. The government employees in such systems do not feel the pressure of competition. Neither unrestrained government nor unregulated business can be allowed to enjoy the lazy path of monopoly.
I am small business owner and I know that competition motivates me to provide better service, (even though I am pleased when a competitor leaves town). So when I hear a business or corporation complaining about government performing a service that private enterprise "should" be doing, I view that as simply the whining of someone who doesn't want to make the effort to compete and excel.
I believe the underlying reason the US economy has been so dynamic over the past 150 years has been that our system has tended (at least until recently) to maintain a very healthy competitive environment in most markets.
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Re: Government is Part of the Competative Landscape
Capitalism will only truly thrive with the other essential factor-- Competition.
Lacking competition there will be minimal incentive to produce, no incentive for efficiency, and no incentive for improvement. Competition is the driver that makes all of us better, even though we would often like to be able to take the easy path.
If allowing a government agency to provide a service increases competition in a marketplace, then that service may indeed become available at a less expensive price. However, government agencies need competition from private enterprise as well. This is why communism didn't work and socialist systems are usually inefficient. The government employees in such systems do not feel the pressure of competition. Neither unrestrained government nor unregulated business can be allowed to enjoy the lazy path of monopoly.
I am small business owner and I know that competition motivates me to provide better service, (even though I am pleased when a competitor leaves town). So when I hear a business or corporation complaining about government performing a service that private enterprise "should" be doing, I view that as simply the whining of someone who doesn't want to make the effort to compete and excel.
I believe the underlying reason the US economy has been so dynamic over the past 150 years has been that our system has tended (at least until recently) to maintain a very healthy competitive environment in most markets.
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Re: Government is Part of the Competative Landscape
In the U.S. it's not the taxpayers or the voters that authorize anything, it's the industry lobbyists. They have to authorize the government to allow competition on the infrastructure before they allow anyone to compete. Until that happens the government keeps things as they are.
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cool
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Still, competition is good and Monticello just proved that. It is too bad that we hear so little about those types of things.
ps: If you had a company and was in charge of making the rules would you let other in? That is the peril with state sponsored initiatives it may not happen but the potential to abuse is there, that is why people in the past made rules about competition from the government. But if the players in the field are not up to the task and people cannot do it because laws don't allow common people to organize then the government should do something :)
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I'm done
As a side note, I've enjoyed this blog for a long time but have seen it's views slowly deteriorate into a clone of Karl Bode's BroadbandReports.com, where somehow the only worthy companies are government entities. Time to unsubscribe.
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Re: I'm done
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Re: I'm done
I follow this site for great IP related articles which are based on thorough and deep analysis of the matter, as demonstrated by lengthy series about economics of free.
But some articles outside the IP field strike me as not nearly as well thought-out and rather ad hoc without first thinking about fundamentals. Maybe if there would be some series about economics of monopolies on techdirt ...
CP would you care to suggest some sites worth checking?
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Re: I'm done
That said, competition is competition. Everyone needs it. Monopoly cannot be allowed or condoned merely because it is private.
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Re: I'm done
The nature of all government programs is to move towards bloat and waste. Resulting in a massive wasteful bureaucracy that the public pays for but has no clue what it actually costs.
Furthermore, the public loses the advantages of downward market forces on the whole industry by providing a false bottom to the market.
We've seen the resulting skyrocketing costs in other industries that suffer from intervention.
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Re: I'm done
Really? When have I ever suggested such a thing? I'm a pretty strong free market believer. I believe you have misread what I wrote.
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Telcos need a nudge, dont they? See what happened in France
Another thing: something as important to our country's competitiveness and growth and to our fellow citizens' education and well-being, shouldn't be left solely to "competitive forces". Because it is real clear by now private firms work for their shareholders, not for the public good - meaning they won't invest where it doesnt make economic sense to do so. We shouldn't hold it against them, that's the nature of the system. But let's stop fooling ourselves: fiber development is "regional development planning," and can't be left to market forces, because RDP is not what markets do.
Shouldn't it be clear to all of us by now that private forces left to themselves will sometimes create serious trouble?
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huh
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not so simple as presented
But if municipal project is alive only thanks to subsidies we have to look at the total cost of providing the subsidized product. And make sure that subsidies are lower than benefits of this competition (is it even economically possible?).
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It is possible to have the latest in fiber. But without competition in the market the usual players don't feel the need to upgrade anyone.
It is dangerous to let the government be a player because they can create the rules that they need to vanguish the competitors, but to do that they would have to bypass the public opinion and would need to be squeaky clean otherwise the telcos would surely tell the world what is happening :)
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In the particular case of the telcos, they have been provided government money, and saddled with government regulation, which actually hampers other firms from moving in and providing competition.
Folks will blame the free market and say that it's defective, and not providing enough competition, but that is a farce. The free market is merely people seeking what they want (in this case faster, better internet). When the incumbent, who is subsidized, and therefore more invested in looking out for the people subsidizing it (so say the people that justify subsidizing the incumbent in the first place), fails to provide what the free market (people) want, the people find another way to get what they want. Because of regulations placed on the industry, no new provider can step in and provide these services, so the only recourse is government provided service. This is inherently inefficient. The optimal solution would be to make it easier for others companies to move into the area and provide the desired service (via removal of incentives given to the incumbent, and removal of government created barriers to entry).
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As even Adam Smith mentioned, an unregulated free market is unsustainable: it will eventually devolve into a monopoly. The only way that a "free market" can exist at all is through regulation. In this sense, there is no such thing as a "free market" at all. It's not a question of "too much" or "too little," it's a question of "appropriate".
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"Public options" are a bad idea
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"Public Option"
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