

Too important to lose: telco appeals city's fiber-optic win - dhimes
http://arstechnica.com/news.ars/post/20081107-too-important-to-lose-telco-appeals-citys-fiber-optic-win.html

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dpatru
I didn't see the problem with the city's action until I read Amity Shlaes's
"The Forgotten Man" (<http://www.amityshlaes.com/books.php>) in which she
describes the federal government's fight to displace private utilities with
the Tennessee Valley Authority. The government used all the means it had to
win: deception, force, subsidization, taxation, regulation, and targeted
prosecutions. As a result, the valuable time of good businessmen was wasted,
their investors lost money, and the public got less value.

If some politicians or bureaucrats want to compete with a private business, if
they think they can do better, they should be free to try, but they should
leave their government jobs and start their own company. It is unreasonable to
expect a private business, which must persuade investors to give it money and
which must persuade customers to buy their services, to be able to compete
with government which raises its funds by force through taxation, limits
competition by force through regulation, and then can give away its product
for free because it does not have to give its financers a return. Other
businesses are not the only entities harmed by government competition:
taxpayers are harmed as well. Taxpayers are forced to make bad investments and
forced to subsidize inefficient enterprises.

Put yourself in the place of each of the participants in this situation.
First, imagine you're the government official who's going to run the new
Internet service. You probably were not your high school's valedictorian. You
probably were not voted "Most Likely to Succeed." You probably had average-to-
below-average grades, went to average-to-below-average schools, and got a
average-to-below-average job with your local government. You are definitely
not CEO material. Suddenly you have the opportunity to oversee a multi-million
dollar construction project and manage the ensuing multi-million dollar
business. Suddenly you're a big-shot. Truly America is the land of
opportunity!

Now put yourself in the place of the competing business manager in charge of
providing the city with internet service. At the very least you have some
business experience and you probably had to compete with other candidates to
get your job. Furthermore, you are subject to periodic performance reviews and
are compared with other managers with similar responsibilities within the
company. You would like to expand service and revenue in the city, but you
haven't been able to convince upper management or investors that further
investment is worthwhile. Now you hear that your city regulator, the person
with the power to fine you or even to shut you down, is planning to compete
with you using a huge cash fund obtained by selling city bonds.

Now imagine you're a city homeowner, concerned about being able to make ends
meet, concerned as well about retirement, feeling the need to increase
investment in order to secure a comfortable pension. You're approached by a
eager young man who wants you to buy stock in his new Internet provider
company. The man has little or no management experience, no business
experience, what little work experience he does have is in government-- a
monopoly not known as a beehive of industry. You say, "No thanks, I'm not Paul
Graham. I'm not comfortable risking my money on what seems to me to be a risky
scheme. I'd rather invest my money in established businesses run by
experienced professionals with a proven track-record, even if that means I
might be missing out on some great returns." Then you realize that the young
man is not _asking_ for your investment, he's from the government and he's
_demanding_ your investment. Would you feel like you're getting a good deal?

~~~
dhimes
Interesting argument, but now let's assume that Comcast builds it, promising
unlimited internet and that they won't throttle users. Then they change their
mind. What can you do? As a town, you might be able to revoke Comcast's
charter, and then build your own anyway, but you've certainly wasted some time
(and probably money in the legal battle with Comcast). Not to mention torquing
off the residents who don't know enough to care.

A town, on the other hand, can hold the leaders directly responsible.

On a broader point, perhaps the town should be able to decide whom they trust
more--the local business person (who you've painted to be competent, but that
isn't always the case), or their own manager (who may be excellent, in any
isolated instance).

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MaysonL
The really sick part of the telco's case is that the city _first_ asked the
telco to build a fiber network. The telco refused. _Only then_ did the city
decide to build its own network. Plus the telco has zero law on its side.

------
lutorm
One would think that it would be the right of the citizens to decide to join
together to do whatever they thought would improve their lives. If the
citizens vote to approve it, isn't it _by definition_ a public good? I mean,
sure the company will disapprove, but it's not the duty of the citizens to
help that company, is it? I'm sure there are people that disapprove of cities
building public roads or having public police departments, too, because they
want to start their own... After all, corporations exist to improve the lives
of the people, not the other way around.

------
Herring
Just out of curiosity, how would a judgement against the city be enforced?

