Opponents of municipal broadband initiatives contend that public broadband projects are “failures” if they do generate “profits” in the amounts, and within the short time periods, that investors and the financial community expect of private corporations. To define success this way is to miss two fundamental points: (1) public entities have fundamentally different ways of creating economic benefits for the community than the private sector; and (2) municipalities often undertake a public communications initiative precisely because the project would not be profitable enough for a private company.
Cable Monopoly Result of Private Sector, not Public
A common misconception is that local governments award exclusive (or monopolistic) franchises to cable companies and that is why the US has so little cable competition. However, no local government has done this since the
1996 Telecommunications Act 1992 Cable Act made the practice illegal.
But even before the
'96 Telecom Act '92 Cable Act, local governments tended to award non-exclusive contracts to cable companies because they wanted more competition, not less -- as illustrated in this article about Cox preparing to renew its franchise agreement with New Orleans.
Federal laws and Federal Communications Commission decisions also have sharply curtailed the city's negotiating ability.
Even if other companies were seeking permission to provide cable to local customers, said William Aaron, a legal adviser to the council on telecommunications issues, council members could not arbitrarily refuse to renew the Cox franchise. The council could do that only on the basis of certain limited criteria, such as that the company has not lived up to the terms of the 1995 agreement.
Cox has had a nonexclusive franchise to operate in Orleans Parish since 1981, meaning that other companies also can apply to provide cable services, though none has done so. The franchise was renewed in 1995.
For years, state and federal policies have limited local authority to require just compensation for access to the valuable right-of-way because the cable and telephone companies pretended that they would invest more and create competition if local authority were preempted.
Local authority has been significantly preempted in many communities without any real increase in competition or lowering of prices. No surprise there - another victory for companies better at lobbying than providing essential services.