5 ms·

The title is sort of misleading. A municipality offering broadband service isn't really an economic actor since it can use tax receipts to subsidize the service

by minimax 13y ago

The title is sort of misleading. A municipality offering broadband service isn't really an economic actor since it can use tax receipts to subsidize the service. Offering a choice between service provided by local government and a private business isn't really the kind of competition most people have in mind when they think of healthy markets. The laws should incentivize competition between multiple telcos not between telcos and government. Also, generally speaking, running big telco networks is hard, capital intensive, and requires a lot of expertise that municipalities don't really have. I've never used a municipal internet service that was any good.

PaulHoule 13y ago
The quality of private telecom services in the U.S. isn't that good. Try using your cell phone in a major city without making excuses like "everybody else was trying to hail a cab after getting out of a Pink concert" or "I was staying in a hotel that has a lot of metal in the frame". Private companies are consistently making bad decisions as to infrastructure. For one thing, they've wasted money building high-cost fiber-to-the-node and hybrid-fiber-coax networks. Yes, the initial cost of FTTH is more than the alternatives, but the running costs of FTTH are much less and if you consider a time span of five years or more, FTTH comes out ahead. In places like Austin where carriers have wasted money on xDSL deployments, they find they have to go to FTTH once a competitor goes to FTTH. Why? Since the running costs of FTTH are so low, an FTTH provider is the low cost provider and will win the value segment, not just the high-end segments. The main problem is that rich people are full of themselves and think they deserve credit card interest rates for their investments rather than the low market rates that capital markets provide (which are telling them that they've got too much money and nobody needs them.) They know they can build expensive (to run) networks because they can make their customers pay the operating costs, rather than putting some more money up front to produce something that will produce more profits in the long term.
- minimax 13y ago
  In places like Austin where carriers have wasted money on xDSL deployments, they find they have to go to FTTH once a competitor goes to FTTH. Why? Since the running costs of FTTH are so low, an FTTH provider is the low cost provider and will win the value segment, not just the high-end segments. I'm not sure exactly what you're trying to say, but I think that means you agree with me that competition between telcos leads to better/cheaper product for consumers? To your last point, that telcos don't invest in infrastructure basically because they're greedy (is that even what you're saying?), I think that fits into H. L. Mencken's idea that "for every complex problem there is an answer that is clear, simple, and wrong." I have worked at the periphery of a big telco and from what I saw there are many challenges to controlling costs. To name a few: inefficient internal bureaucracies (ugh), strong unions (not a criticism, just pointing out that union labor is more expensive than nonunion labor), and mainly the fact that the network is enormously huge (like, physically huge) and it's extremely expensive to refresh the technology every few years.
the_real_bto 13y ago
The telcos have been granted a monopoly on the copper (or fiber), is it really accurate to think of them as a private business competing on equal footing with other private businesses?
_delirium 13y ago
It's not precisely the same thing as regular competition, but I don't think it's necessarily a bad idea. One model I like is for the public sector to provide a baseline level of service using public funding, and then let the private sector compete to provide premium service.
drewcrawford 13y ago
But the nature of being an ISP is to run expensive (both in outlay and maintenance) cable/fiber to your house, and it doesn't make economic sense to run 2 or 3 or 4 lines to a customer that only uses 1 ISP. It follows directly from your argument that a person should have a healthy market of water companies serving their house, or sewer companies, or electric companies. > running big telco networks is hard, capital intensive, and requires a lot of expertise that municipalities don't really have Capital-intensive, expertise-intensive things is exactly what municipalities do well. They do water, sewer, utilities, police, fire, EMS, etc. My city spent just over $3b last year, meanwhile Time Warner Cable spent roughly $3b on capital expenses in the entire United States.
- minimax 13y ago
  To follow up with your water analogy: we don't expect the water company to deliver 400x the water to our homes than we did 20 years ago, but that's exactly what we expect of our broadband providers. It's hard to imagine a scenario where a municipal (or monopoly) broadband service will upgrade its network as fast as we expect. Competition is the answer. My city spent just over $3b last year, meanwhile Time Warner Cable spent roughly $3b on capital expenses in the entire United States. This is about as apples to oranges as it gets, but if your city spent $3B just maintaining water and sewer, and time warner spent $3B over the entire country then TW is winning in my book.
  - Retric 13y ago
    Wait, do you want them to upgrade there service or not? If the goal is to maintain service without upgrades then minimizing cost is great, if you want improvements then minimizing cost is a stupid way to evaluate things.
    - welterde 13y ago
      Once the fibre (if you don't buy junk) is in the ground upgrading becomes very very cheap. And given that the required access speeds aren't very high (100M-1G), they can be had rather cheaply second hand/new. So you can direct all the money from the cost savings to upgrading your backbone, where it does get rather expensive.
lukeschlather 13y ago
Please read the article. The bill goes further than simply outlawing municipal broadband. It actually bans municipalities from offering any infrastructure to private entities that want to offer broadband. (So for example in a city like Seattle where we have tons of dark fiber owned by the government, the city would be prohibited from leasing that fiber out to private enterprise under this bill.) Though I also disagree with the sentiment of your post, even if the bill were more narrow.
avn2109 13y ago
>> "I've never used a municipal internet service that was any good." Naperville, Illinois, while being a loathsome, sprawling mess in many respects, has pretty snappy municipal internet. And, in fairness, a semi-charming waterfront path.
jessaustin 13y ago
OK, I get it. Municipalities are very unskilled, so their services suck. Which is why they can't be allowed to compete with cablecos, because all cableco customers would immediately decide to switch to the municipalities for better prices and service. I think we need to work a little harder on this chain of logic...
- minimax 13y ago
  My point was that governments should incentive competition between private companies rather than trying to provide services directly. Sorry if that wasn't clear.
  - jessaustin 13y ago
    The latter clause was clear; the former not so much. But anyway it would be better to focus less on neoclassical theory and more on the specific factors that are observed to hurt competition in the USA data services market. Municipal services are far from the most salient of those.
bobwaycott 13y ago
> I've never used a municipal internet service that was any good. Not sure where you're located, but I'd encourage you to make a trip & try out the fiber optic internet service (gigabit available) that is offered by Chattanooga's municipal power utility, EPB. I've never experienced anything better. I can now honestly say, after being a customer for 3+ years, that I've never used a commercial internet service that was any good. There's a big difference between running a municipal telco network and a 'big' telco network. Focusing on delivering excellent service to a municipal area is very attainable.
booruguru 13y ago
> I've never used a municipal internet service that was any good. Well then corporations have nothing to worry about.
moocowduckquack 13y ago
Offering a choice between service provided by local government and a private business isn't really the kind of competition most people have in mind when they think of healthy markets. Is the sort of choice that has been available in markets going back as long as governments and markets have existed though, so given there has never been a complete market that fulfils your definition of a healthy market, can we just look at whether there is some general economic benefit here rather than worrying about whether it is healthy, as if it is sick, it has managed fine so far for a good few thousand years, so it can't be too bad.

by minimax 13y ago

PaulHoule 13y ago

The quality of private telecom services in the U.S. isn't that good. Try using your cell phone in a major city without making excuses like "everybody else was trying to hail a cab after getting out of a Pink concert" or "I was staying in a hotel that has a lot of metal in the frame". Private companies are consistently making bad decisions as to infrastructure. For one thing, they've wasted money building high-cost fiber-to-the-node and hybrid-fiber-coax networks. Yes, the initial cost of FTTH is more than the alternatives, but the running costs of FTTH are much less and if you consider a time span of five years or more, FTTH comes out ahead. In places like Austin where carriers have wasted money on xDSL deployments, they find they have to go to FTTH once a competitor goes to FTTH. Why? Since the running costs of FTTH are so low, an FTTH provider is the low cost provider and will win the value segment, not just the high-end segments. The main problem is that rich people are full of themselves and think they deserve credit card interest rates for their investments rather than the low market rates that capital markets provide (which are telling them that they've got too much money and nobody needs them.) They know they can build expensive (to run) networks because they can make their customers pay the operating costs, rather than putting some more money up front to produce something that will produce more profits in the long term.

minimax 13y ago
In places like Austin where carriers have wasted money on xDSL deployments, they find they have to go to FTTH once a competitor goes to FTTH. Why? Since the running costs of FTTH are so low, an FTTH provider is the low cost provider and will win the value segment, not just the high-end segments. I'm not sure exactly what you're trying to say, but I think that means you agree with me that competition between telcos leads to better/cheaper product for consumers? To your last point, that telcos don't invest in infrastructure basically because they're greedy (is that even what you're saying?), I think that fits into H. L. Mencken's idea that "for every complex problem there is an answer that is clear, simple, and wrong." I have worked at the periphery of a big telco and from what I saw there are many challenges to controlling costs. To name a few: inefficient internal bureaucracies (ugh), strong unions (not a criticism, just pointing out that union labor is more expensive than nonunion labor), and mainly the fact that the network is enormously huge (like, physically huge) and it's extremely expensive to refresh the technology every few years.

the_real_bto 13y ago

The telcos have been granted a monopoly on the copper (or fiber), is it really accurate to think of them as a private business competing on equal footing with other private businesses?

_delirium 13y ago

It's not precisely the same thing as regular competition, but I don't think it's necessarily a bad idea. One model I like is for the public sector to provide a baseline level of service using public funding, and then let the private sector compete to provide premium service.

drewcrawford 13y ago

But the nature of being an ISP is to run expensive (both in outlay and maintenance) cable/fiber to your house, and it doesn't make economic sense to run 2 or 3 or 4 lines to a customer that only uses 1 ISP. It follows directly from your argument that a person should have a healthy market of water companies serving their house, or sewer companies, or electric companies. > running big telco networks is hard, capital intensive, and requires a lot of expertise that municipalities don't really have Capital-intensive, expertise-intensive things is exactly what municipalities do well. They do water, sewer, utilities, police, fire, EMS, etc. My city spent just over $3b last year, meanwhile Time Warner Cable spent roughly $3b on capital expenses in the entire United States.

minimax 13y ago
To follow up with your water analogy: we don't expect the water company to deliver 400x the water to our homes than we did 20 years ago, but that's exactly what we expect of our broadband providers. It's hard to imagine a scenario where a municipal (or monopoly) broadband service will upgrade its network as fast as we expect. Competition is the answer. My city spent just over $3b last year, meanwhile Time Warner Cable spent roughly $3b on capital expenses in the entire United States. This is about as apples to oranges as it gets, but if your city spent $3B just maintaining water and sewer, and time warner spent $3B over the entire country then TW is winning in my book.
- Retric 13y ago
  Wait, do you want them to upgrade there service or not? If the goal is to maintain service without upgrades then minimizing cost is great, if you want improvements then minimizing cost is a stupid way to evaluate things.
  - welterde 13y ago
    Once the fibre (if you don't buy junk) is in the ground upgrading becomes very very cheap. And given that the required access speeds aren't very high (100M-1G), they can be had rather cheaply second hand/new. So you can direct all the money from the cost savings to upgrading your backbone, where it does get rather expensive.

lukeschlather 13y ago

Please read the article. The bill goes further than simply outlawing municipal broadband. It actually bans municipalities from offering any infrastructure to private entities that want to offer broadband. (So for example in a city like Seattle where we have tons of dark fiber owned by the government, the city would be prohibited from leasing that fiber out to private enterprise under this bill.) Though I also disagree with the sentiment of your post, even if the bill were more narrow.

avn2109 13y ago

>> "I've never used a municipal internet service that was any good." Naperville, Illinois, while being a loathsome, sprawling mess in many respects, has pretty snappy municipal internet. And, in fairness, a semi-charming waterfront path.

jessaustin 13y ago

OK, I get it. Municipalities are very unskilled, so their services suck. Which is why they can't be allowed to compete with cablecos, because all cableco customers would immediately decide to switch to the municipalities for better prices and service. I think we need to work a little harder on this chain of logic...

minimax 13y ago
My point was that governments should incentive competition between private companies rather than trying to provide services directly. Sorry if that wasn't clear.
- jessaustin 13y ago
  The latter clause was clear; the former not so much. But anyway it would be better to focus less on neoclassical theory and more on the specific factors that are observed to hurt competition in the USA data services market. Municipal services are far from the most salient of those.

bobwaycott 13y ago

> I've never used a municipal internet service that was any good. Not sure where you're located, but I'd encourage you to make a trip & try out the fiber optic internet service (gigabit available) that is offered by Chattanooga's municipal power utility, EPB. I've never experienced anything better. I can now honestly say, after being a customer for 3+ years, that I've never used a commercial internet service that was any good. There's a big difference between running a municipal telco network and a 'big' telco network. Focusing on delivering excellent service to a municipal area is very attainable.

booruguru 13y ago

> I've never used a municipal internet service that was any good. Well then corporations have nothing to worry about.

moocowduckquack 13y ago

Offering a choice between service provided by local government and a private business isn't really the kind of competition most people have in mind when they think of healthy markets. Is the sort of choice that has been available in markets going back as long as governments and markets have existed though, so given there has never been a complete market that fulfils your definition of a healthy market, can we just look at whether there is some general economic benefit here rather than worrying about whether it is healthy, as if it is sick, it has managed fine so far for a good few thousand years, so it can't be too bad.