Tuesday, September 02, 2014

How so-called private enterprise loves government intervention in the market

Several days ago, I found a blog post by Anne Veigle, Senior Vice President, Communications, US Telecom, a broadband business association. US Telecom seems to be a sort of union of businesses dedicated to maintaining and extending the private monopoly of internet access so thoroughly enjoyed by the companies we hate the most: AT&T, Time-Warner, and Comcast. Check any consumer poll and you will find them there, at the bottom of the list as the most hated companies in America.

In her blog post, Ms. Veigle sought to criticize the FCC for it's intention to pre-empt state laws that prevent cities and towns from building their own broadband services when the private monopolies fail to meet their needs. I just could not let that go without a response, so I posted a response as a comment to her blog. Note that the comment was never published. Had I gushed with support for her position, I might have seen my comment published. Unfortunately, the incumbent carriers have no interest in an honest debate on this subject.

Ms. Veigle says that municipal broadband has been a mixed bag with many failures. I know of one of those so-called failures: Utopia. Utopia is a municipal broadband service here in Utah. Had Utopia been able to proceed without intervention by the incumbents, it would have been fine. But the incumbents sought to make sure it would fail by lobbying for legislation that would prevent it from meeting the objective of serving every home and business with high speed internet access. Then the incumbents like Comcast and Quest (now Centurylink) sued to stop it, only to lose. Ms. Veigle cherry-picks the failures while ignoring the vast majority of successes like Chattanooga, TN and Wilson, NC. It's also worth noting that I've talked with people who are connected to the Utopia network and they love it.

As noted previously, I could not let this go without a response. I would have published this article sooner, but I've been studying for an exam I'm taking today, so I had to set priorities. Today, I'm taking a break. My brain is pretty full. So here is my never published comment, in its entirety:


You say that the feds should not interfere with how states choose to regulate municipal broadband, as if self-determination is very important. Yet, you choose to ignore the fact that cities and small towns should be able to choose how internet is provided since they are the closest to the problems they need to solve. After all, they are the ones who granted franchises to your association members and trusted them to build the service needed to keep up with the rest of the world.

What you propose then, is to let the state governments tie the hands of the local governments that are trying to meet the needs of the residents, when private service providers fail.

In a truly free market, where there is a need, a private provider will appear. But your members, like Comcast and Time-Warner, aren't just concerned with municipal broadband. They are also seeking to hinder or eliminate the possibility of private competition as well. The incumbent carriers seem to want the entire market to themselves, while taking their sweet time providing world class service to people who ask for it, but can't get it.

That's why we have Utopia here in Utah. Even when Utopia seeks to work with a very large infrastructure finance firm like Macquarie to build out and manage the network, we see that private firms like Comcast and Centurylink are using their political connections to nix the deal.

Your words ring hollow and inconsistent. No serious economist would call a duopoly a highly competitive market, but that is what you are trying to do. You seem to want the rest of us to shut up and wait for your incumbent carriers to provide the service we need when they're good and ready, while at the same time, you and your cohorts are lobbying to prevent competition with government intervention in the market.

You might disagree with this post, and you might even delete it (don't worry, ti's going on my blog tomorrow). Your response is appreciated. I would love to know how you justify top down intrusion from the state to local level while criticizing federal intervention on behalf of municipal broadband.

For someone who talks about the free market, you sure seem to like government intervention in the market when it benefits your members.

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That is it, in a nutshell. Municipal broadband is here to stay, and with any luck, here in Utah, we'll have it up and running in a few years. So far, 6 of the 11 remaining Utopia cities have committed to working with Macquarie on a deal to connect every business and every home to a network that would provide gigabit access to the internet. I live in one of those cities but I am not connected just yet.

Municipal broadband is our only real hope of breaking a private monopoly on internet access that is so pervasive and powerful, there are no other competing interests that can break it. Let's hope that reasonable minds prevail and let municipal broadband build the networks we need to keep up with the rest of the world.
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