Karl Bode at Broadband Reports accuses various free-market think tanks of inconsistency and even hypocrisy in their approaches to the question of broadband internet regulation: “Wouldn’t banning towns and cities from offering broadband be regulation? And wouldn’t it be ‘un-necessary regulation’ considering companies like AT&T have discovered they can simply compete in the muni-wireless sector? Strange how such rabid fans of a free-market aren’t interested in allowing market darwinism to play out,” he observes (HT: Slashdot).
It seems to me not to be the case that the advocates of the municipal broadband compact aren’t in favor of competition. They simply want to guard against the unfair advantage that municipal and city governments would enjoy if they entered the internet provider business.
“While incumbent providers have every right to declare an area unprofitable, they should not have the right to then ban these communities from wiring themselves. These broadband black holes were created by the providers. They should either fill them or get out of the way, taking their cadre of subjective experts with them,” says Bode.
Actually, these “broadband black holes” have always existed…they just haven’t been noticeable until broadband was invented and the market began servicing surrounding areas. It’s not as if cable internet providers have taken away access these places previously had. Presumably their economies have not yet developed to the point where they can utilize this kind of technological innovation in a sustainable way.
But Bode doesn’t really understand the economics of markets: “Fans of a free market should be eager to see the organic free-market at work. If these municipal broadband operations are such a flawed idea: let them fail.”
It’s hard to put it any simpler than this: government-run services are not part of “the organic free-market at work.”
Despite Bode’s claims, there’s no real inconsistency here. And the fact that a current area may not be a profitable market for broadband provision does not mean that it will not be so in the future…but cities and municipalities wiring themselves and providing internet service on their own removes the possibility that these communities will ever be serviced by the market.
Update: Thanks to Broadband Reports for the equal time, noting my contrarian blog post along with a few others (all of which agree substantially with the original piece).
I also owe them thanks for noticing that I misspelled “noticeable” (corrected above), although, in due course, they mis-identified the Acton Institute as the “Action” Institute, a la “Action” Jackson, not Lord Acton.
Further Update: I’d also like to clarify that I’m not necessarily in favor of a federal-level restriction on the actions of city governments in this area. This may not have been obvious from my original post. I do think it is unwise for cities and municipalities to provide wireless access, but from this it does not follow that such should be outlawed. I was simply trying to clarify some of the reasons to oppose government provision of internet access and am not interested in defending the “municipal broadband compact” in detail.