| By: Tom Giovanetti, Barry M. Aarons | Published Outlet: |
| 03/25/2005 |
| URL to original published op/ed: | Original: |
Just Say No to Government Building the High-speed Information Super Highway
The Texas Legislature is putting its final touches on a telecom bill. As you might expect, there is intense lobbying going on by both industry and consumer groups, with each hurling accusations at the other, and each claiming the moral high ground about what is “best” for consumers.
Also, as you might imagine, there are controversial provisions in the bill. One of the most controversial provisions is one that would forbid municipalities in Texas from building municipal broadband networks. In other words, making it illegal for cities, counties, or regional associations of cities to go into the broadband business.
This provision has been pushed at the state level in a number of states by the usual suspects: the large telecom and cable companies. It’s also opposed by the usual suspects: “consumer” groups. And now it’s being pushed in Texas, and looks to be included in the aforementioned telecom bill.
But the main reason that a ban on municipal networks is in the telecom bill is that it’s a very good idea to make it illegal for Texas municipalities to do something stupid. And municipal broadband networks are a very bad idea.
Since when did we in Texas believe that government should own the means of production? Don’t we believe that, generally speaking, if a particular job can be done by a private sector company, using its own risk capital, shouldn’t the government stay out of the way?
When government gets into business, government doesn’t play fair, because governments aren’t just competitors—they’re also the referees. Let’s say a town goes into the broadband business and builds a fiber or wireless network. Then, let’s say that 2 years later, a new technology comes down the pike and some bright entrepreneur wants to provide a faster connection at a lower price. But he needs rights-of-way approval. He needs a permit. Do you think he’ll get such approvals from the town who will also be his competitor? Of course not. And the net result (no pun intended) will be that the residents of that down will be stuck with an out-of-date and over-priced network, and won’t be able to avail themselves of the new competitor.
This is why government ownership of the means of production is a tenet of communism, not of capitalism. Government chokes out the dynamic competition that is a hallmark of a growing, capitalist economy—the kind of economy we think Texas wants to be. A government enterprise is almost certain to be a monopoly, and a government monopoly is by far the worst kind of monopoly.
This is why municipal networks have a horrible track record. All over the country, the cities that have been on the “bleeding edge” of municipal networks are, well, bleeding. They are selling off their gauzy techno-dream networks to private companies at substantial losses, in the best cases. At worst, they can’t even find a buyer at a loss for their mistakes. And taxpayers are having to bail out the mistakes of their mayors and county councilmembers.
In many places, like the Tri-Cities area of Illinois, voters have twice voted down efforts to implement a municipal network. So the determined so-called “representatives of the people” in places like Lafayette, Louisiana have refused to subject their municipal network proposals to referendum, and are ram-rodding their utopian vision down taxpayers throats without their consent
In Texas, we know better. We know that private companies using their own risk capital are in the best position to rollout the new broadband networks that many of us crave. We know that we don’t want government doing what the private sector does best. We know we want a thriving, dynamic, entrepreneurial economy. And we know we don’t Texas municipalities being lured by the siren’s song of those infrastructure socialists who are pushing municipal networks as some kind of dizzying new techno-utopian vision of “free broadband for all.” In Texas we know—there ain’t nuthin’ free.
If you don’t believe me, ask the folks in Marietta, George, who sold their municipal network at a $24 million loss.
By banning foolish experiments in municipal networks, the Texas Legislature is doing the right thing—even if the telemarketer working the phone bank tries to convince you otherwise.
_____________________________________________________________
Tom Giovanetti is the President of the Lewisville, TX based Institute for Policy Innovation (IPI). Barry M. Aarons is an IPI Senior Research Fellow.
