by Mike Masnick

Broadband Providers Are Happy About Monopolies When They're The Monopoly

from the funny-how-that-works... dept

In all of the arguments the various broadband providers have been making against muni-broadband, one of the more popular ones is that it's unfair competition, and the muni-provider would basically have a "monopoly" on the town or city. They usually go on to talk about the importance of competition. Well, apparently, that doesn't apply to themselves. You don't see them complaining at all when they can strike deals with new home developments that requires homeowners to use only the approved services (found via Broadband Reports). In fact, many of these developments simply include the fees to the broadband providers directly in the Home Owners Association fees -- meaning you're paying for it whether or not you use it. Apparently, those types of monopolies are just fine.

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  • identicon
    Hersh, 3 Mar 2005 @ 1:24pm


    I think the issue is that if public funds are used in a sector, then returns for private investment in the same sector will be depressed. It’s a legitimate concern, since something like that could reduce private investment in the sector, ultimately leading to a state monopoly of sorts.

    From a shareholders point of view this is quite unfair. You invest in a company under certain rules, and then the government decides to enter the market and compete using public funds--basically changing the rules. Public companies are not under the same constraints as private ones; without a need to make a profit they can cause the floor to fall out on prices, and kill existing private providers.

    Sure in the short term consumers will rejoice at the lower rates but in the long-term you have to wonder what that does to the infrastructure.

    I'm always skeptical of public utilities. All the concerns we have about slothful monopolistic private corporations are equally aptly applied to public monopolies. Only its worse: public companies are not subject to anti-trust law, and they are not subject to litigation for anti-competitive actions. Because, well hey, its ok if the government is a monopoly.

    Have you been to a government office recently? They move at the glacial pace of people that have no need to optimize time or resources—the bucket of public funds fills and empties independently of their performance.

    Sure, public utilities are not trying to make a profit, but they are as susceptible to cancerous bureaucracy and inefficiency as any private company. And where private companies at least have a fire under their asses, because of competition and shareholders, public utilities are only prodded from above by the administration--which may or may not care, depending on what other headaches they have that year.

    In the end we are going to be paying for another lazy monopoly, not in the same way we pay for lazy Microsoft’s overpriced XP, but in higher taxes. But money is money. Whether my “monopoly tax” goes to 10 Microsoft millionaires or 1000 middle-income government bureaucrats it’s the same to me.

    Ideally we’d like several hungry corporations fighting it out brutally for the broadband market. With profits in constant danger, organizations in a frantic churn, the weak falling by the side and new ideas constantly being tested. That’s the ideal, and that would be in the consumer’s best interest. Now how to achieve that? I’m not sure—but a public utility entering the market doesn’t seem like a step in the right direction.

    reply to this | link to this | view in chronology ]

    • icon
      Mike (profile), 3 Mar 2005 @ 1:40pm

      Re: competition

      Ah. Perhaps you haven't been following this debate closely.

      For the most part we agree completely. Governments tend to be notoriously inefficient. However, there are certain cases where it absolutely makes sense for them to step in -- when private competition isn't getting the job done. The problem, often, is that it IS a monopoly situation already, and private companies WITH THE HELP OF MASSIVE GOV'T SUBSIDIES are basically holding broadband hostage.

      That's a problem

      Besides, there are plenty of examples where muni broadband has helped build new business opportunities for towns that go well beyond just giving people access. Note Google's recent office opening in Oregon -- driven mainly by the muni fiber there.

      Our stance on this has always been the same: if the gov't wants to get in the game, it should just be for the right of way issues. They should work with private companies to build a network that is then offered to any private company to offer service on. Then you get REAL competition in the market -- which is exactly what you're asking for.

      reply to this | link to this | view in chronology ]

    • identicon
      mhh5, 3 Mar 2005 @ 1:46pm

      Re: competition

      I think you missed the point. Taking snail mail as an example, FedEx,UPS,etc shouldn't protest the existence of the US post office. They should (and do) provide better services that are in more profitable areas of shipping. I dislike the sloth in the USPS as much as anyone, but they provide a service that would likely be unprofitable for private companies. For broadband, some cities are trying to develop networks where private companies won't go -- like rural towns or suburbs. Private networks aren't building there because there's no (or little) profit in it. So why should private companies protest the development? Private providers should let the government develop the less profitable areas and then build on the market that develops when more users see the value of broadband. Private providers should see muni developments as an opportunity to have the government foot the bill for developing in areas they don't want to.
      The knee-jerk reaction against anything governmental is ridiculous. Not all government operations are evil, not all of them are great.

      reply to this | link to this | view in chronology ]

  • identicon
    Tim, 3 Mar 2005 @ 1:48pm

    No Subject Given

    The worst part about this is the horrible service and support you get since you have not choice to go elsewhere.
    I know this all too well. Although I wasn't locked into a single provider there is only one provider for this new development. Worse is that another really lousy provider received the contract (somehow) for providing the infrastructure for this development. So my current cable internet provider has no choice but to put their service over the really lousy providers equipment.
    It took over two years before the service started working somewhat reliably. I would have gladly paid ten times the amount for a reliable alternative but there isn't any.
    See http://tim.blog.kosmo.com/blog/CustomerService/RogersCableInternet for some history on it.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 4 Mar 2005 @ 10:40am

      kill me now ...


      A blogger's story about bad customer service with a cable company ...

      Now THIS is going to get interesting ...

      reply to this | link to this | view in chronology ]

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