Think Tank Slams iProvo, Municipal Broadband

This is cross-posted from FreeUtopia.

The Reason Foundation, a libertarian think tank from California, has released two studies recent slamming iProvo specifically and municipal broadband in general. They make a solid case that city-run WiFi networks (as with all WiFi networks) face rapid obsolescence that a city probably can't keep up with. However, they go well off the mark by including fiber projects in their slams, paying little heed to the long-term viability of these networks and the obvious benefits to the city to have such networks available for their use.

The slams on iProvo are particularly ill-founded. Yes, iProvo was hamstrung by a bad initial choice in a broadband provider. Yes, they've had three years of losses as a result. What we have to ask, however, is if a private company that built the network would have closed up shop after only three years. In the pursuit of their obvious agenda, they have placed the bar for success much higher for iProvo than any reasonable person would for a private enterprise. Once iProvo meets their target for subscribers within the next two years, it should start breaking even.

When we take a closer look at the figures, we see that residents of Provo are paying about $12.40 per resident per year for the losses. For a family of five, you're at $62 a year, or around $5 a month. If they switch either their Internet or TV service to iProvo, they are saving more than that every single month. As more subscribers come on, that difference drops even more. While it sounds impressive to quote big numbers, these "Reason" Foundation nitwits have also been horrendously dishonest.

In short, iProvo is a winning proposition for residents of Provo, it's a winning proposition for true telecommunications competition, and it's a hearty stab into the heart of the over-charging and under-delivering incumbent providers that we've all been saddled with. Having a $1.24M loss in a year is a drop in the bucket compared to what the telcos have been overcharging us for over a decade. It's a small price to lay the groundwork of a truly competitive space for communications services.

Let's hope these obvious industry shills will learn to keep their dishonesty to themselves and stop defending the industry that ripped us off for over $200B since 1996.

(See articles here, here, here, here, and here.)

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2 Responses to Think Tank Slams iProvo, Municipal Broadband

  1. Jeremy says:

    You said:

    “What we have to ask, however, is if a private company that built the network would have closed up shop after only three years. In the pursuit of their obvious agenda, they have placed the bar for success much higher for iProvo than any reasonable person would for a private enterprise.”

    The difference is that a private entrepreneur wouldn’t have started this enterprise because the risk involved doesn’t justify the profit potential. The only people willing to take the risk were your elected leaders who didn’t mind extorting money from tax payers as security against the risk of failure. The Reason document makes some great points about how government leaders in the iProvo fiasco have taken risks private entities refused to take and now tax payers/utility users are paying the price.

    I live in Layton, a UTOPIA city. I’m excited for the possible benefits of a fiber connection to my house but I am not so excited about the benefits that I’m blind to the fact that my city government is possibly making a mistake in gambling tax dollars on the success of an enterprise that no private entity was willing to invest in.

    I think the Reason author may have a point.

    You said:

    “While it sounds impressive to quote big numbers, these “Reason” Foundation nitwits have also been horrendously dishonest.”

    Are you arguing that the author is being dishonest because the numbers quoted in the piece don’t reflect a truly serious problem or are you saying there is dishonesty in the content of the report?

  2. Jesse says:

    Oh, they’ve taken risks, but this is the very high price to be paid for allowing the incumbent telco and cableco to rip us off for decades. Are you aware that the telecom industry ripped us off for over $200B since the 1996 Telecommunications Act? That price is only the cost of direct regulatory and tax breaks and doesn’t include the meteoric price increases we’ve seen since that time. We made a contract with the telcos to give them a ton of money for the promise of fiber-to-the-home, increased competition, and lower prices. Instead, we have inferior DSL and cable modems, a huge industry-wide consolidation, and significantly higher costs for Internet, television, and telephone services.

    We tried to level the playing field by forcing companies to open their networks, but they stifled competitors at every turn until the FCC gave up on forcing them to play fair. The only way to make things right is to divorce the service provider from the infrastructure provider to remove the incentive and ability to use these dirty tricks. Municipal ownership is about the only way to ensure a neutral party controls the infrastructure, an infrastructure that, while promised, has never been built by the telecommunications industry.

    The “Reason” Foundation seems to be blind to the rampant anit-competitive and monopolistic tendencies of the indsutry they are essentially defending. Monopolies are NOT the free market in action, so I find it dishonest to try labeling our current situation as such. I find it dishonest to quote aggregate numbers without pointing out that, public cost and subscribers fees combined, iProvo users are still saving money while getting superior service and a real choice of providers. (This says nothing of the universal access component: you can’t get cable or DSL in some parts of the city!) Even if we distribute the public cost of the network only amongst subscribers, they end up paying about the same amount of money but getting a better service. To hear Mr. Titch tell it, it’s nothing but a money pit, hardly the case when you actually crunch some numbers.

    Is the Reason Foundation dishonest? Yes. They paint an imcomplete picture of the telecommunications industry and iProvo in order to push their agenda.

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