Tag: "competition"

Frequently Asked Questions

Posted May 18, 2009 by Christopher Mitchell

F.A.Q.

  1. What exactly is a Community Fiber Network?
  2. Who offers services?
  3. What does public ownership mean?
  4. Why publicly owned? Aren't private companies more efficient?
  5. I heard there is tons of dark fiber available - why do we need more fiber?
  6. What if a better technology comes along in a few years?
  7. Doesn't fiber break easily?
  8. Don't existing companies already have fiber networks?
  9. DOCSIS 3, isn't that as good as fiber?
  10. Should government compete with the private sector?
  11. Do we really need faster connections?
  12. Symmetric? Asymmetric? Huh?
  13. Why not wireless?
  14. What happened to the whole muni-wireless thing?
  15. What about WiMAX?
  16. What about broadband over powerlines?

Answers

  1. What exactly is a Community Fiber Network?

    A Community Fiber Network is a community-owned broadband network that uses fiber-optic cables to connect all subscribers. It can offer phone, television, and Internet access. The capacity on the network is so great that it could offer tens of thousands of television channels while allowing thousands of people to talk on the phone while still offering Internet access at faster speeds than a cable modem system or DSL currently offer.

    2. Return to top

  2. Who offers services?

    In some communities, the local government (Monticello) or public power utility (Chattanooga) has a department that provides video, phone, and Internet services. In others, the network is only open to private service providers who compete for customers on equal terms (this would be an open network, Report: Open...

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Bureaucrats as Entrepreneurs: Do Municipal Telecommunications Providers Hinder Private Entrepreneurs?

Posted May 18, 2009 by Christopher Mitchell

We consider how government-owned enterprises affect privately owned rivals. Specifically, we compare the types of markets that municipally owned telecommunications providers in the United States serve to the types of markets that competitive local exchange carriers (CLECs) serve. We find that CLECs focus on potential profitability while municipalities appear to respond to other factors, such as political considerations or the desire to provide competition to incumbents. As a result, municipal providers tend to serve markets that CLECs do not. We also find that the presence of a municipal provider in a market does not affect the probability that a CLEC also serves that market. Our results suggest municipalities may not pose a significant competitive threat to CLECs and do not preclude CLEC participation.

Empirical Study: Does Municipal Supply of Communications Crowd-Out Private Communications Investment?

Posted May 18, 2009 by Christopher Mitchell

There are 2,007 municipalities across the United States that provide electricity service to their constituents. Of these, over 600 provide some sort of communications services to the community. An important policy question is whether or not public investment in communications crowds out private investment, or whether such investment encourages additional entry by creating wholesale markets and economic growth. We test these two hypotheses – the crowding out and stimulation hypothesis – using a recent dataset for the state of Florida. We find strong evidence favoring the stimulation hypothesis, since public investment in communications network increases competitive communications firm entry by a sizeable amount.

Florida Refutes "Crowding Out" Hypothesis

Posted May 13, 2009 by Christopher Mitchell

While critics charge that municipalities "crowd out" private investment, the reality in Florida shows that where municipalities invest in broadband, there are more private providers of broadband services. Municipalities frequently sell broadband services to private communications firms, and the result is a more competitive and symbiotic environment that benefits both consumers and the private sector.

Public Networks are not Subsidized by the Government

Posted May 7, 2009 by Christopher Mitchell

I’m very familiar with many government owned telecom operations throughout the world, over many years, and across many different forms of government, and I can tell you that governments generally do not subsidize publicly owned telecommunications. They milk telecommunications - these systems generate a lot of revenue.

Who Will Own Minnesota's Information Highways?

Posted April 30, 2009 by Christopher Mitchell

Competitive broadband service and pricing is within reach of most Minnesotans if anti-competitive polices and practices are removed and municipal governments build broadband infrastructure, according to a new report released today by the Institute for Local Self-Reliance (ILSR). The findings are contained in "Who Will Own Minnesota's Information Highways?", a report issued by the New Rules Project of the Institute for Local Self-Reliance.

"Minneapolis and Saint Paul have a once-in-a-lifetime opportunity to develop an affordable, high quality broadband infrastructure that would benefit city offices, consumers and businesses," said co-author Becca Vargo Daggett, a former information systems administrator for a private company.

"But to make that a reality, Minneapolis city leaders must revisit their decision to depend on a private company for future information needs," Daggett warned. "Given that Minneapolis has spent the last 10 years trying to get its cable company to live up to the provisions of its original franchise contract, it is remarkable that it wants to travel that same privately owned information highway in the future."

When cities offer broadband services, the competition with private companies drives prices down and improves service. The experiences with community-owned systems in Buffalo, Chaska, and Windom, Minnesota support that conclusion. The city need not act as a service provider, however. Publicly owned networks in Philadelphia and Western Utah will sell network access to private service providers, who will in turn sell services to consumers.

Level Playing Field

Posted April 30, 2009 by Christopher Mitchell

Many private, often incumbent and monopolistic, providers use the term "level playing field" as code for ensuring communities are unable to build their own networks. They do not actually want a "level playing field," they want more advantages for their businesses.

Consider the fight in 2009 over this issue in North Carolina:

HB 1252 would create extraordinary financial accounting and administrative burdens on municipal broadband providers that would render their existence fiscally difficult, if not impossible. The bill also subjects municipalities to the new jurisdiction of the North Carolina Utilities Commission, while not requiring the same of private providers. Also troubling is the injunctive relief provision, which could encourage litigation for purposes of gaining competitive advantage. Furthermore, the legislation appears to prevent municipalities from pursuing alternative funding sources, such as broadband grant programs included in the Federal stimulus bill, the American Recovery and Reinvestment Act of 2009. Source: Save NC Broadband Blog

Additionally, the process in North Carolina reveals the extent to which private providers like Time Warner buy legislation in some states.

While big companies like Time Warner Cable pretend to be the underdog compared to community networks, the reality is that big national corporations have far more advantages than any local government. We created this video to illustrate the point:

 

Cross-Subsidizing

Cable and telephone companies are able to cross-subsidize their networks - they can charge more in the areas they serve where there are no competitors in order to charge less in a competitive community. Numerous state and federal laws prohibit public entities from cross subsidizing across services. Further, when private companies are forced to have open meetings and disclose their business plans like their public sector counterparts, we will be closer to a "level playing field."

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No one Resists Incompetent Competitors

Posted April 29, 2009 by Christopher Mitchell

Incumbent providers, grown lazy on a steady diet of public subsidies and monopoly rents, have done their best to cast this as a debate between efficient private competitors and inefficient government monopolies. But it is the incumbents that would rather regulate than compete. They resist municipal entry not because it is incompetent – no one resists incompetent competitors – or because it is unnecessary. Rather incumbents resist municipal entry because they recognize the ability of local government to offer a genuine competitive alternative to a high priced monopoly or duopoly services.

Leveling the Playing Field

Posted April 29, 2009 by Christopher Mitchell

Local governments do not favor themselves on taxes or right of ways or otherwise compete unfairly with incumbent telecommunications and incumbent cable companies. To the contrary, private incumbents enjoy a wealth of state and federal subsidies, guaranteed rates of return, regulated rates for pole attachments, etc. In addition, local telephone companies enjoyed years of regulated monopoly status to build positions of dominance they continue to enjoy. To pretend that these local incumbents, with their subsidies and regulated access, need to “level the playing field” to protect a “free market” against local government systems flies in the face of reality.

Public Investments do not "Crowd" Out Private Sector

Posted April 29, 2009 by Christopher Mitchell

Municipal systems do not “crowd out” private providers any more than the New York City Subway “crowds out” private taxi cabs and car services. To the contrary, studies and anecdotal evidence repeatedly show that where municipal systems take on the expensive task of building network infrastructure, the number of private providers increases.

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