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When I first learned that the City of Burlington, Vermont was investing in a fiber optic telecom network, I knew I had moved to the right place. Competition is essential in narrow industries such as cable television and Internet service, which outside major metro areas are often dominated by a single for-profit provider. Publicly-owned networks can provide a competitive alternative that is especially important for small businesses, nonprofits and local residents.
What Happened? The number of cable subscribers increased steadily since cable became wide spread in the early eighties, due in large part to deregulation of small service providers that gave them a chance to compete with established cable systems. In spite of the re-regulation of the 1992 Cable Act, which re-established certain price controls in a patchwork manner, cable rates have risen steadily. Very few cities have more than one major provider. Where there was competition between providers, there was better service and sometimes lower prices. Internet service has a similar history, though the time line is compressed and more recent. In the mid to late nineties, when the Internet was just starting its mainstream popularity, there were only a handful of Internet service providers (ISPs) and almost all Internet traffic was routed through telephone lines.
Monopolies and Service Quality. I won’t bore you with the history of both cable television and the Internet. It suffices to say that the two have come a long way and are now often offered together by the same service provider, which is why the ownership and regulation of cable providers is such a hot topic. One thing that hasn’t changed is that there are relatively few major service providers and these providers rarely compete in the same local market. The result is that in any given metropolitan area, the service provider has a near, if not outright, monopoly. Corporations with monopolies can charge consumers as much as they think the majority of consumers are willing to pay, without regard for the quality of service. If they’re the only game in town, what recourse does a customer have if they don’t like the service? Go without cable TV and/or Internet? Most Americans don’t really see that as an option for today’s lifestyles.
Municipally owned telecommunication companies (telecoms) provide a buffer against the unchecked price increases that a monopoly can get away with. They also have the added benefit of keeping money within city government that would otherwise be given to a service provider whose headquarters may be thousands of miles away. Through their publicly owned networks, cities like Lafayette, Louisiana, and Monticello, Minnesota, are recognized for offering the fastest speeds at the lowest rates in the entire country. Many critics of municipally owned endeavors say that government has no business meddling in private enterprise. Similar arguments were made against the creation of fire departments, police departments, Medicare & Medicaid, just to name a few of the heavy hitters that haven’t been around since the beginning but are now widely accepted as appropriate government services.
Public or Private Sector? Similarly, protection from foodborne illness and industrial pollution weren’t always considered rights. They were considered the privileges of those who could afford the protection or service until society, and eventually government, declared they be made available to everyone. Keeping prices in check and making corporations compete for customers pushes innovation and provides society with a more democratic marketplace of ideas, information, services and products. When customers can’t afford the basic access to hear about a service or product offered by a businesses, or a business can’t afford to advertise, it hurts both sides of the equation. Net Neutrality is good for both consumers and for small businesses because it preserves equal access rather than ever-increasing price points for tiered access.
Telecom Network Access is a Basic Necessity Now. Whether citizen network access is protected through competition or government regulation, or a combination of both, is a debate worth having. The argument that there is a stark line between the business world and the government, however, is a demonstrably and historically false argument.
Resources:
Community Broadband Networks (an association of municipal networks)
Breaking the Broadband Monopoly
FCC Moves to Place Restrictions on Cable TV, Washington Post
Public policy toward cable television: the economics of rate controls, by Thomas W. Hazlett, Matthew L. Spitzer
