But Wait, Wasn't Muni-Fiber Supposed To Take Away Incentive For Private Fiber?

from the caught-in-a-lie dept

Over the past few years, there have been numerous lawsuits by telcos against various municipalities that have decided to launch municipal fiber broadband projects. Most of these lawsuits have failed -- but the main argument from the telcos is that it's unfair to have to compete against the government, and it would take away incentives for the telcos to actually invest in infrastructure to provide for those towns. Of course, that doesn't make much sense. That would mean that any competition would decrease incentives to invest. One of the nastier legal battles took place in Monticello, Minnesota, where the local telco TDS fought hard (and lost) its battle to stop muni-fiber from showing up. But, now, suddenly TDS is announcing its own fiber broadband, giving people 50 Mbps service for $50/month. What's the likelihood that TDS would have done this if it didn't have competition from muni-fiber? The reason municipalities look to muni-fiber is because there isn't enough competition and the telcos aren't investing in infrastructure (or really serving customer needs). So the end result here is that by introducing more competition, consumers and citizens are better served. So what's the problem with it again?

Filed Under: broadband, competition, muni-fiber
Companies: tds

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  1. identicon
    Phil, 30 Oct 2009 @ 6:59pm

    Re: Government is Part of the Competative Landscape

    Steve R. has hit the nail on the head with the term "Competative Landscape". In discussing the strength and ability of capitalism to deliver goods and services, much is made of the essential motivating factor: the right to private ownership and profit. Capitalism however, has 2 great pillars, not one.
    Capitalism will only truly thrive with the other essential factor-- Competition.
    Lacking competition there will be minimal incentive to produce, no incentive for efficiency, and no incentive for improvement. Competition is the driver that makes all of us better, even though we would often like to be able to take the easy path.
    If allowing a government agency to provide a service increases competition in a marketplace, then that service may indeed become available at a less expensive price. However, government agencies need competition from private enterprise as well. This is why communism didn't work and socialist systems are usually inefficient. The government employees in such systems do not feel the pressure of competition. Neither unrestrained government nor unregulated business can be allowed to enjoy the lazy path of monopoly.
    I am small business owner and I know that competition motivates me to provide better service, (even though I am pleased when a competitor leaves town). So when I hear a business or corporation complaining about government performing a service that private enterprise "should" be doing, I view that as simply the whining of someone who doesn't want to make the effort to compete and excel.
    I believe the underlying reason the US economy has been so dynamic over the past 150 years has been that our system has tended (at least until recently) to maintain a very healthy competitive environment in most markets.

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