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Kaltes
Premium
join:2002-12-04
Los Angeles, CA
| reply to mocycler
Re: Yes, too bad indeed.
mocycler:
That is about as strong an argument as can be made against the proposal. The libertarian perspective. Your argument is that a minority of beneficiaries want the taxpayers to subsidize them. First of all, "who is going to pick up the tab" is not at issue here. Subscriber fees are what pays the bond debt. The users of the service pay, NOT the taxpayer.
The taxpayer is, however, exposed to paying the bonds if the venture collapses into bankruptcy and utterly fails. If you research other ventures of this type, it will be obvious to you that the risk of catastrophic failure is negligible. So, there is only a slim chance that the 'tab' would be picked up in any way by the taxpayers at large.
You say that, if success is so certain, why not make a private venture? The answer is simple: a municipal venture and a private one are not the same thing.
Comcast/SBC know they can attack and destroy a private venture. All that would take would be some promotions and marketing funding to coincide with the launch of the private venture. The giants are good at frustrating market entry. I doubt that a private venture could get off the ground in the tri-cities area, but the tri-city proposal is a different matter entirely.
The municipality has several advantages:
#1. (cheaper financing) Financing is less worrysome because the bonds are guaranteed and therefore pay lower interest. Private loans would be far more costly and make the break-even point significantly more difficult to obtain, especially when would-be lenders know that Comcast and SBC can use their market power to crush the upstart.
#2. (harder to kill) Even if Comcast/SBC temporarily drop their prices, introduce giveaway promotions, and step up their advertising revenue, the municipal venture will not die. Since the vast bulk of the cost is paid upfront in setting up the infrastructure, and the cities have guaranteed the bonds in the long-term, tricities would not have to worry about being driven into bankruptcy. Knowing that tricities cannot be killed in this fashion, it would be futile for Comcast/SBC to throw away large sums of money in a pointless battle. The end result is that SBC/Comcast will either lose market share or profit margins. Now you can see why they were so afraid of the proposal.
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If you stick to some variety of ideological "The government is too deep into our business as it is." argument, I think you are making an irrational choice. Appealing to ideological form over factual substance is no way to make decisions.
To sum up: Assuming that a private venture could somehow equate to the municipal proposal is improper on several grounds. The municipality is likely to succeed where a private venture is likely to fail. | |
mocycler
Premium
join:2001-01-22
Naperville, IL
 ·AT&T U-Verse
 ·AT&T Midwest
| Kaltes,
First off, thanks for acknowledging and respecting my obviously libertarian views. I suspect you've read my other posts on this topic.
It is true that subscriber fees pay bonds, and there is no real risk to taxpayers. However, bonds are traditionally used for things like schools, sewers, and libraries...things that in and of themselves do not make money, but need to exsist regardless of profit considerations. Furthermore, everyone can identify with the need for new police cars and street lights.
But broadband??? Why not float a bond to give every resident a hot tub??? In a state with a huge deficit, brave cops and firefighters going for years without contracts, and dozens of school districts in the red, the mere idea of government-backed broadband, no matter how financially secure, sounds petty and trite to say the least.
As for your comment that a SBC/Comcast could destroy a private venture, I don't know. If someone walked into the Tri-cities with 63 mil and said, "I'll do it", they would be welcomed with open arms. And if they failed, oh well...better them than Joe Citizen.
I see where you're coming from but I can't go along with government involvement in something like this.
peace,
mocycler
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