Sunday, March 06, 2005

"Competition: why we need to keep the muni option open"

Muniwireless gives space to an excellent walk-through of the competition-based argument for municipal broadband. It's always a pleasure to read someone whose reasoning is so tight and well-organized. Here is the Cliff Notes version, culled from the article. (Rember, Cliff Notes always cheat you of the complexity and side notes that make the real thing interesting; go get it at Muniwirelesss.)
I won't say that every municipality should deploy its own system. But every municipality needs to have that option. I can sum up the reason in one word -- Competition.

With merger mania going full tilt, competition is evaporating in most broadband markets.

But we see what happens in an unregulated, uncompetitive broadband market. Fiber goes only to the wealthy neighborhoods. Prices stay high, while quality of service remains low. Speeds remain ridiculously low (the United States has the highest price for broadband in the developed world, measured on a dollars-per-bit basis).

In addition, innovation in network services comes to a stand-still in a market with a duopoly between cable and DSL. Cable and DSL companies will block any services that challenge the cable video monopoly and the telco voice monopoly.

Nor can states regulate the incumbents to prevent these things from happening -- even if they were interested in doing so. The FCC has pre-empted the ability of states to regulate "IP enabled services"

In this nightmare world of no competition municipal systems -- or the threat of municipal systems -- remain the last hope for keeping big cable and big telecom from exploiting their near monopoly control of customers.

Opponents of municipal entry say this is about competitive markets. What it's really about are monopolists who would rather regulate than compete. States should keep the muni option on the table if they want their residents and businesses to enjoy the benefits of a competitive market in broadband.

[Emphases in the original]

2 comments:

GumboFilé said...

A corporation may not always give us what we want, when we want it, but the corporation can never oblige us to anything against our will. If a corporation overestimates demand and fails, it costs me nothing. If a politician overestimates demand, it costs us all. I prefer the market solution to the political.

John said...

Gumbofile,

I think you are missing the point of the argument here. Or choosing not to respond to it.

What the author is saying is that this is a monopoly market, not a competitive one. And that in a monopoly market eliminating any competition is unwise. Your response seems to mean that you prefer a monopoly to municpal competition.