June 18, 2005

This could be problematic at best...

Local Government offering low cost wireless broadband may see like a pretty good idea. I admit, the ability to plug a card into my laptop and fly by the seat of my pants wherever and whenever I want is a pretty cool idea, as I've said before in this blog. Thing is, the commercial providers make a pretty good point. In the days of tycoons really messing things up by monopolizing industries while government looked the other way (mostly because it paid to do so) the consumer suffered. In the examples local governments provide as their basis for comparison its pretty easy to think "Sure, it's a great idea". Problem is the SBCs and Verizons of the world make a good point when they plea "Conflict of Interest". Local governments levy a fee for all services sold to consumers by service providers. DSL and cable based broadband are not left out of this wide reaching tax; they just pass the cost on to the consumer as a recovery fee or some other such nonsense. Well the cities don't have to tax themselves, do they? Most would say now, and the city would too, I'm afraid. When the government wants to provide services the private sector already covers; services which are taxed by the same government who wants to get their feet wet in the industry its hard to ignore the potential for corruption from the get go.

Thing is, these governments are responding to constituents who are fed up with having taxes levied against service providers being passed on to the consumer without a second thought by the corporation. I mean, think about it... If you have children, and you're taxed on the clothes they wear are you going to take that tax out of their allowance just because you bought them some shoes? I didn't think so. That analogy doesn't really work in real life because as a parent you're not raising your children to make money. The service industry, however, will pass every cost they can on to you because their whole existence is to make money.

Which brings me to another point. The linked story mentioned above talked about Whatcom, WA and their woes venturing into the ISP business... They bought $2.3M worth of fiber network real-estate. They couldn't make it work because their target audience was either happy with their current service or couldn't afford the discounted rates the government was providing for the service they didn't have in the first place. The idea of a government trying to provide something the private sector already does a pretty good job of providing is socialism, plain and simple. The target consumer of the government in providing low cost broadband access in most cases can't afford the appliances needed to take advantage of the service. $2.3M sold to the myriad of start ups and other bandwidth hungry ISPs for $126k. Sounds like maybe government should keep it's nose out of where it doesn't belong. There are other ways to get what your constituency wants without resorting to socialism. If the service industry won't give the consumer what it wants then the consumer needs to go where they can get it. They are not forced to live in a service sparse community.

Now, if the service industry hasn't provided to a community at all, there's no problem with government making the effort. The case mentioned in the story above talks about Lafayette, LA, and the point is well taken. This community doesn't have the service the industry has been asked for in the past by it's consumers. If they won't provide it because it's not profitable I don't think the government should either because of the loss of tax payer dollars in a no win venture. However, if the industry won't provide it not because of the lack of profit, but the lack of ENOUGH profit to justify the expenditure... Well I think if people vote to have government provide something the industry won't and the measure passes then the industry misjudged the market, and thus deserves to lose it to their competition.

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