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.

  • Interesting piece

    Intersting point that we here in the sticks should just ‘wait it out’ because we may become profitable for the megatelcos in the future. Without the REA none of us would even have electricity to power these new-fangled computators.

  • Anonymous

    “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.”

    This comment makes no sense and doesn’t address the issue.

  • http://blog.acton.org/ Jordan

    Don’t you think that governmentally-provided “free” wireless internet access would hinder, if not destroy, commercial incentives to deliver access in new ways to these areas (e.g. broadband over power lines [BPL], or broadband over gas lines)?

  • RD

    Karl’s not known for checking facts so his misidentifying your organization is nothing new. He’s also not versed in market economics, preferring instead to kite Utopian visions of a perfect broadband world where things like return on investment or taxpayer bailouts are irrelevant unless you are a nasty, dirty RBOC.

    He will, however, harp at your spelling and overuse words like “nuance”.

    Thanks for the opposing viewpoint, however there is a middle ground where the co-op model can (and is, oddly enough) provide rural broadband. Many of the New Deal telephone co-ops are starting to add broadband products to their networks. While it is not GigE or fiber it is wiring the countryside and is being paid for by the people who use it. We need more of that instead of government projects and ranting bloggers.

  • http://blog.acton.org/ Jordan

    The point, perhaps inelegantly stated, was simply that these areas don’t have any [i]less[/i] wireless access than they had 1000 years ago…the “black hole” only exists/becomes recognizable in comparison with the access of surrounding or neighboring areas.

    There seems to be this kind of thinking at play: whenever a new technology comes around, and some or even most people start to get it, it becomes a universal “right” for everyone to have this technology at all times and in all places…and very often the government is the instrument to enforce these “rights”.

  • Interesting piece

    Nobody said anything about ‘free.’ REA wasn’t free – we all paid our own electric bills. What we’re talking about here is removing the legal obstacles that the incumbent providers can afford to put in our way….

  • Interesting piece

    The government’s involvement should be limited to providing simple technical planning or organizational support, instead of funding the buildout and operation of these networks. Futher, the government needs to step in to prevent the RBOC’s from filing frivolous lawsuits designed to intimidate people providing themselves with something the incumbent providers will not….

    Please note ‘government’ in the first sentence refers to local or municipal governments. ‘Government’ in the second sentence refers to the feds. Thanks.

  • http://blog.acton.org/ Jordan

    See my further update above. I’m sympathetic to those concerns of yours, although I do think that it may be more harmful than beneficial in the long-term.

    There’s something to be said for a diversity of regulation at local levels, so that there is some actual empirical data to work from in examining the consequences of policy.

  • Anonymous

    The chorus is saying that if the incumbents (telco and cable) don’t provide service to an area, they don’t or shouldn’t have a right to ban others to provide it. They want to have their cake (service the most profitable areas, not service the less profitable, more rural areas) and eat it too (ban others from providing services).