approval from:
ahedge 
| Municipal vs private The situation we have with Broadband/High-Speed Internet access is very similar to a situation that developed during the turn of the century with electricity and coal. Quite simply, it is impossible for private companies to profit with broadband in certain parts of the country. A private company will not penetrate into certain rural or low-income areas. Some they incidentally hit, but most they do not.
Currently, US Broadband penetration is ranked 13th in the world. Meanwhile, in Hong Kong and Korea, 1 Gig/sec service is being readied.
Why is this?
Broadband is still very expensive for many Americans. Municipals generally provide cheaper broadband. I do not see how municipals kill competition. Frankly, they act like a company willing to work for the lowest bottom line, ZERO profit. I don't know if you guys knew, but its actually illegal for munis to use money collected via taxes and charges for other utility services to be used for broadband deployment. Munis do not have to charge anything more than they need to break even. They pay their employees and deploy the service system (though not the actual service, thats usually taken care of by a private party). TECHNICALLY, a giant corporation could do the same for a year or two, and probably beat the municipal from an honest, competitive stand point. Quite simply, IP service providers don't like municipal utilities because they ARE competition, very, very honest and tough competition at that. You can't gouge profits when the competiting interest is trying to offer the lowest price possible. Truth be told, private companies that haven't gone public/investor-owned can actually offer the cheapest service of all. They can be experts at deployment, only worry about paying their own salaries and beat the municipals when it comes to the development of new technologies.
I think another thing people forget is that it is individuals who often times have presented the IT revolutions of the past twenty years, and then sold their idea to privates for profits. It seems pretty clear that private companies aren't sparking the innovating or penetration in the US (just see the US international broadband ranking).
Of course, the US ALSO has the third largest population in the world, and far more rural areas than much of the East.
I guess the thing to remember is that without municipal utilities, there would still be many rural areas with no electricity or phone service, because its just not profitable to provide them it. When servicing four people in an obscure county, it is a municipal provider who will do the best job, or really, any job at all. |
