|reply to iansltx |
Re: It doesn't have to be FREE
said by iansltx:
I think he's saying that a muni doesn't have to pay off greedy shareholders (and they're greedy all right) every quarter.
But a community does have to worry about answering to angry bondholders and taxpayers. Not much different IMO.
Oh, it's a lot different. Taxpayers can't withdraw their money, and bondholders get a guaranteed, somewhat low interest rate on their bond, which can't be pulled prematurely. Stockholders are whiny babies in comparison.
I think the differences are much more subtle than you believe.
- Community officials answer to the taxpayers sufficiently enough to gain reelection. CEOs answer to their boards and shareholders sufficiently enough to keep their jobs.
- Muni bondholders get their return as long as the community remains solvent, which will most likely happen at the expense of the taxpayers. Corporate bondholders get their return as long as the company can pay its debt, which can happen at expense of the equity holders if the company fails.
Equity investors tend to be more vocal than taxpayers. Call it whining if you want, but it's not necessarily the bad thing that a lot of people make it out to be.
·Time Warner Cable
·Verizon Online DSL
Again, bondholders are guaranteed a rate of return and have to stick around for the long haul. They also know in what they're investing, so they have a vested interest in a project succeeding. Investors in a publicly owned company can pull out whenever they feel like, with no long-term commitments, because "it's a tech company, it's supposed to make gobs of money overnight."
Also, a muni has to out-innovate its competitors to get customers. Price competition works only when the competitors are overpriced. Out-innovation is good for broadband speeds...