Many municipalities around the country have struggled, and failed, to either stand up to communications networks or partner with private companies to get into the business of broadband. The reasons for failure are numerous, and while some would nitpick the details of the failures, the fact remains that taxpayer money was put at risk, and most often was lost. Nonetheless, in North Carolina some municipalities want to take things one step further and undertake providing a whole package of telecommunications services, from voice to broadband to video.
There are several inevitable problems with municipal broadband systems. Technological innovation continues to far outpace the speed of government, which simply cannot compete with the market, and as online services continue to become more sophisticated, customers have become accustomed to regular upgrades, challenging the ability of government to keep up with demand.
These arguments miss a far larger point. While municipalities in the Tar Heel State apparently can enter into the communications marketplace with taxpayer money, should they be doing so? Should a government entity be risking taxpayer funds in competition with private enterprises? If these governments have that much extra revenue, enough to invest the millions or even billions of dollars necessary to start and maintain a competitive communications business, shouldn’t that money be returned to taxpayers or tax rates reduced?
A legislative proposal in North Carolina addresses municipal involvement in broadband provision by defining a minimum standard of a level playing field. Government entering into competition with the private sector must play by the same rules and not rig the game in government’s favor.
The proposal allows governments to provide phone, cable and broadband services, so long as they do such things as complying with laws and regulations applicable to private providers--including the payment of taxes, not cross-subsidizing their competitive activity using taxpayer or other public monies; and giving those funding the venture, the citizens, a vote before incurring debt.
When government business ventures fail, it is the taxpayers who must pay for the loss. Hopefully those in North Carolina will seek wisdom rather than folly but if not, at least they should have to play fair.