public v private

"My issue is that cities should not be competing with private enterprise." - Senator Hoyle of North Carolina

Given this Senator's opposition to the public sector competing with the private sector, I assume he is fighting just as hard to shut down the libraries (or have Borders and Barnes and Noble neglected to donate enough to his candidacy?), as well as the schools (there are private schools), and the police (security guards are readily available on the private market). This is not merely a snarky attack on someone with whom I disagree, but a nod to the very serious problem that these massive companies can push their protectionist legislation everywhere.

Senator Hoyle, the driving force behind using state law to protect incumbent providers like Time Warner and AT&T from competition in broadband admitted his motivation at the beginning of a video from the recent committee hearing available on Stop the Cap!.

In it, the Senator also makes it clear that he is either unaware of what his legislation does or he is lying about it when he claims it does not affect the communities that have already built the most state-of-the-art networks in the state. His legislation would severely handicap each of them from upgrading despite his false claims that they are exempted. The post on Stop the Cap offers more background and discussion and I encourage readers to check it out.

As usual, I'll add my own short commentary about it. I previously explained why this bill's requirement for cities to use General Obligation Bonds is terrible policy.

Senator Hoyle claims the town of Mooresville did not know what they were doing. Listening to his discussion, it is abundantly clear that he doesn't know what he is talking about. I spoke with folks from Mooresville before they bought the cable system and I have spoken with them since. They got screwed by Adelphia and Time Warner in the deal and have had to take on additional debt. However, the idea that they have failed or were foolish in starting the network because they had an operating loss demonstrates the Senator's ignorance on broadband networks.

When anyone takes over a poorly maintained, old network and invests in massive improvements, they will run a loss in the following year, two years, and maybe longer. The massive front end investment takes time to pay off -- there is no other way to build these broadband networks. This is one of the reasons the incumbents are so slow to invest in upgrades. They maximize their profits by upgrading only slowly because the lack of competition gives subscribers no choice but to wait for better service.

Proponents of this bill are all over the map. They have said that using taxpayer money is unfair competition and that people shouldn't have to pay higher taxes to finance a broadband network. Yet this bill would require cities to use General Obligation Bonds to finance networks, meaning that local governments have to back the bonds with taxpayer money -- No Choice. These are mutually exclusive arguments. And such a law would even prevent local governments from partnering with a foundation or receiving federal loans to build a network. Insane.

With regards to the merits of a required referendum, Senator Stein raised a good point 36 minutes into the video that a referendum on this issue has a very powerful interested party with unique access to advertising to influence the issue. As many have noted, previous referendums all over the country, including Longmont, Colorado; Lafayette, Louisiana; the tri-cities in Illinois; and both North St. Paul and Monticello in Minnesota. A referendum in this situation plays right into the all the advantages of incumbent operators.

For those unfamiliar, my report, "Breaking the Broadband Monopoly," examined the many barriers communities already face to building these networks. Communities do not need extra barriers from the state to pile on the existing barriers to building this essential infrastructure.

Fortunately, this important issue is getting some coverage - the Associated Press recently covered it. We can only hope that outside scrutiny will help bury this legislation, increasing the level of broadband competition North Carolina.

This editorial overstates the ease of building a community network but gets the intent of the legislature correct:

This trend is alarming to corporations like Time Warner and others in the broadband business, because municipal systems don't need to make a profit and can get money for infrastructure easily and at cheap rates. It's not, to use a phrase often used in this growing debate, a level playing field.

That's why the telecommunications industry is backing a bill that will force municipal officials to get voter approval before setting up a network like Wilson's or Salisbury's. The sponsors say they're trying to level the field. In reality, in this time of tight budgets and fed-up taxpayers, it's more like kicking local government off the field and eliminating competition.

While I was researching recent developments in the BVU OptiNet, I stumbled across a hilarious comment to a news post. I have tried to track down the original source but have not been able to find anything. I am going to reprint it here, assuming the author would appreciate it...

This was written by someone apparently fed up with all the claims about what is socialism and what isn't. I think it simply serves as a good reminder of the role government plays in our lives -- often transparently.

This morning I was awoken by my alarm clock powered by socialist electricity generated by the public power monopoly regulated by the US Department of Energy. I then took a shower in the socialist clean water provided by the municipal water utility. After that, I turned on the socialist radio to one of the FCC regulated channels to hear what the socialist National Weather Service of the National Oceanographic and Atmospheric Administration determined the weather was going to be like using socialist satellites designed, built, and launched by the National Aeronautics and Space Administration. I watched this while eating my breakfast of socialist US Department of Agriculture inspected food and taking the socialist drugs which have been determined as safe by the Food and Drug Administration.

At the appropriate time, as kept accurate by the socialist National Institute of Standards and Technology and the US Naval Observatory, I get into my socialist National Highway Traffic Safety Administration approved automobile and set out to work on the socialist roads build by the socialist local, state, and federal departments of transportation, possibly stopping to purchase additional fuel of a quality level determined by the socialist Environmental Protection Agency, using socialist legal tender issued by the Federal Reserve Bank. On the way out the door, I deposit any mail I have to be sent out via the socialist US Postal Service and drop the kids off at the socialist public school. If I get lost, I can use my socialist GPS navigation technology developed by the United States Department of Defense and made available to the public in 1996 by President Bill Clinton who issued a policy directive declaring socialist GPS to be a dual use military civilian system to be managed as a national socialist asset.

After spending another day not being maimed or killed at work thanks to the socialist workplace regulations imposed by the Department of Labor and the Occupational Safety and Health Administration, enjoying another two meals which again do not kill me because of the socialist USDA, I drive my socialist NHTSA car back home on the socialist DOT roads, to my house which has not burned down in my absence because of the socialist state and local building codes and socialist fire marshal’s inspection, and which has not been plundered of all it’s valuables thanks to the socialist local police department.

I then get on my computer and use the socialist Internet which was developed by the Defense Advanced Research Projects Administration and browse the socialist World Wide Web using my graphical web browser, both made possible by Al Gore’s socialist High Performance Computing and Communication Act of 1991. I then post on freerepublic.com and fox news forums about how SOCIALISM in medicine is BAD because the government can’t do anything right.

Opponents of publicly owned broadband networks often hold up examples of wireless networks that did not turn out as planned -- more often than not, they ignorantly use examples of privately owned networks like Earthlink networks in Philly, Houston, or proposed privately owned networks in San Fran and Chicago.

It is true that many wireless networks (especially those using Wi-Fi) came in above projected costs and late. It is also true that this happened across all manner of network ownership types. GoMoorhead, a publicly owned Wi-Fi network in Minnesota, was recently sold to a private company - and I am working on a report about that. However, there was also a recent announcement that the privately owned wireless network being built in Burnsville, Minnesota, is behind schedule.

Frontier Communications expects to extend its Wi-Fi hot spot service to Burnsville's performing arts center this fall, but a company official admitted Friday that knitting together complete citywide coverage has gone more slowly than expected.

The phone provider for the southern part of Burnsville as well as Apple Valley, Farmington and Lakeville, Frontier had expected to have 90 percent of the city covered with a network of broadband Internet Wi-Fi hot spots by now.

But Frontier is still moving its wireless service from the south, where it kicked off service in October 2007, into the northern parts of the city.

Additionally, the public-private partnership in Minneapolis remains behind schedule (privately owned but built with substantial amounts of public money).

The problem is the technology - not the ownership. We continue to believe that the future should feature wireless as a complement to the more reliable and faster wired connections that should be available to everyone. But the more we talk to communities, the more we learn that wireless is more difficult to work with and often more expensive than expected.