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One way to address the private utility companies' argument -- that a publicly owned utility has a natural advantage over for-profit companies -- is to change th
by jawns 12y ago
One way to address the private utility companies' argument -- that a publicly owned utility has a natural advantage over for-profit companies -- is to change the corporate structure of the utility so that it's no longer publicly owned.
For instance, it might be converted into a for-profit company, with the city retaining a portion of the shares, or into a cooperative (as many utilities, particularly those in rural communities, are incorporated). In fact, it could even sell off its shares in times of need to finance other municipal needs.
If it's converted into a cooperative, it would become 100% member-owned, and any profits would not go to outside shareholders, as with a publicly traded company, but would instead go back to its member-owners in the form of lower costs.
The more I think about it, the more I think this is the way to go for other cities of a similar size. Clearly, Comcast/Verizon weren't very interested in laying down their own fiber there if the city beat them to it. And once a utility company (in this case, publicly owned) has an effective monopoly in a certain area, it's going to be hard for others to introduce competing infrastructure. BUT, I would think that the ability to then sell the publicly owned utility would have significant value to the municipalities.
- toomuchtodo 12y agoThanks for touching on the coop model. I think that's a phenomenal way of addressing the muni broadband situation. http://stopthecap.com/2012/01/03/want-rural-21st-century-broadband-form-a-co-op-or-wait-indefinitely-for-someone-else-to-provide-it/ http://stopthecap.com/2012/01/03/want-rural-21st-century-bro...
- Lagged2Death 12y agoOne way to address the private utility companies' argument... The private ISP's argument is a perfect flip-flop and doesn't really deserve addressing.
- deleted 12y ago[deleted]
- rrradical 12y agoGenuinely curious-- what would stop Comcast from then buying it and then raising the rates to match the rest of their prices?
- mseebach 12y agoA couple of reasons: 1: A coop generally can't have outside ownership. 2: Before Comcast can buy them, someone would need to sell it. It's not clear why they'd want to sell to Comcast. 3: If they did sell, they then (by definition) have the value of a community-wide network in their pockets. They could use that to build another community-wide network to compete with Comcast (then Comcast could buy that, but...) But more fundamentally, if Comcast had a lot of money lying around for stuff like this, they could just invest it in becoming a properly good ISP that people would actually want to be customers of.
- pyre 12y agoFrom Comcast's perspective, it's probably easier to invest in buying a company that already exists, than to invest in building something that may or may not work. The existing company already has financials that can be evaluated, rather than estimates that may not hold once the risk is taken.
- mseebach 12y agoThe form of investment is irrelevant, and yes, that would be a very reasonable way to invest in getting a quality network. They just don't seem all that interested in making that investment in the first place. When you buy an asset, it's not like you're not paying for the risk of building it in the first place, the risk is just firmly priced into the value of the asset.
- JustSomeNobody 12y agoFrom Comcast's perspective its probably cheaper to simply invest in politicians.
- mseebach 12y agoThe problem isn't the ownership model after the fact, it's who underwrites the risk of the initial investment. Most of the time, when public organizations make bold investments, they're mis-pricing the risk (which is easy to do when you have someone else around to pick up the tab if things goes wrong). In Denmark, the utilities did a fiber-laying frenzy around a decade ago and the business case did not follow through and the consequence was enormous cost to electricity consumers who never had a say in the matter (OK, technically they did through politically appointed oversight at the utilities). I think the coop model for getting fiber to the home is awesome. Nobody benefits more from laying last-mile fiber than the homeowner. But forcing neighbors to invest in the project if they're happy with the state of the art isn't really fair IMO. I've actually been thinking quite a bit of how a provisioning and operations consultancy that would help eg. home owners associations and the like build and run a fiber network and essentially be their own local ISP. Does such a thing exist?
- streptomycin 12y agoI've seen some apartment buildings that buy a T1 line (or whatever) so they can give their tenants "free" Internet included with their rent. That's basically the same thing.
- Scoundreller 12y agoOr they could form their own internet cooperative and do wireless links between apartment buildings and a NOC somewhere in town with the actual downlink. The equipment to do it (Ubiquiti makes some gear that appears quite nice) is getting cheaper by the year.
- pfitzsimmons 12y agoI would love for someone to start a company that could bring fiber to cities via the kickstarter model. Getting the money upfront from customers could go a long way toward mitigating the risk. Ideally the company would be structured as a hybrid for-profit/customer co-operative (so maybe 20% of the shares would be 10X preferred stock owned by the for-profit arm, and the other 80% of shares would be owned by the customers).
- Zigurd 12y agoWhy are investor owned enterprises owed any explanation at all?
- nzealand 12y agoOr define any internet utility as a common carrier to open up competition.
- lutorm 12y agoThe argument that a publicly owned utility shouldn't be allowed to do it because it has a natural advantage is ridiculous -- that's precisely the point! Corporations exist to provide a good to society, and if a public utility would do that job better, then we should obviously be free to choose that model. It's not my job as a citizen to subsidize for-profit enterprise for the sole reason that they are for-profit enterprise!
- abraxasz 12y agoThat was exactly my thought when I read the comment. I would be very curious to know if I'm missing something here, but it seems obvious to me that if a publicly owned company can do something better and cheaper (cheaper not only just for these people but also for the taxpayer, I don't know if that's the case here) then how is that a bad thing?
- tiatia 12y ago"It's not my job as a citizen to subsidize for-profit enterprise for the sole reason that they are for-profit enterprise!" Unfortunately, it is. The numbers are so tremendously bend in favor of "socialized medicine" but it is basically communism and hence, the private model is better. https://en.wikipedia.org/wiki/List_of_countries_by_life_expectancy https://en.wikipedia.org/wiki/List_of_countries_by_life_expe... https://en.wikipedia.org/wiki/List_of_countries_by_total_health_expenditure_(PPP)_per_capita https://en.wikipedia.org/wiki/List_of_countries_by_total_hea...
- Alupis 12y ago> The numbers are so tremendously bend in favor of "socialized medicine" There are also a lot of numbers against "socialized medicine".
- SnacksOnAPlane 12y agoFor example?
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- SideburnsOfDoom 12y ago> a publicly owned utility has a natural advantage over for-profit companies So what if it does? I do not think that this should be of overriding concern to us. The for-profit companies are not the only stakeholders here.
- bencollier49 12y agoInteresting, this. I suspect that under the currently-being-dbated TTIP, this would count as State Aid, and foreign shareholders in Comcast could sue the local government for lost profits.
- davidw 12y agohttp://en.wikipedia.org/wiki/Eugene_Water_%26_Electric_Board http://en.wikipedia.org/wiki/Eugene_Water_%26_Electric_Board has worked pretty well to provide water and electricity in the town I grew up in.
- coldtea 12y ago>One way to address the private utility companies' argument -- that a publicly owned utility has a natural advantage over for-profit companies And why shouldn't it have "a natural advantage over for-profit companies"? Were "for-profit companies" granted a guarantee to have advantage over everything else somewhere?
- bencollier49 12y agoI wonder if the legal issues could be sidestepped by the local utility subletting the data usage of their cabling to, say, Google?