Free Market Broadband

I’m a rabid free marketer, and by rabid I mean:”Annoys all his friends because he never shuts up about how the free market has brought more benefit to humanity than any other invention ever.”
And as far as this article about the free market and broadband is concerned, there are a number of factors involved.

  • Governments competing with private enterprise is ok, so long as the government does not use its law-making power to create an unfair advantage
  • which, unfortunately, is very likely to happen
  • The DSL and Cable companies already have government-granted monopolies, so the claim that they represent the free market is a weak one.
    • It is in their best interest to avoid/supress competition if at all possible, and they seem to be content to share the market with each other, but with no other entrants.
  • Other wireless systems also derive their spectrum from government rule, so their claim to “free market” status is weak as well.
  • Google’s wifi project, for example, is about as cleanly free market as they come – it has no monopolies, it just offers services where it can.
  • Where does this leave us?

    Ideally, two additional entrants with broiadband offerings (for a total of four) would create enough of a chaotic system where free market competitive effects would apply, and benefit consumers.  Ideally, none of these would be governments-sponsored because the temptation to limit competition is very strong.

    However, given that the other two players are government-sponsored, I think that three competitors would be better than two, and if governments are offering broadband, it is because the DSL and Cable companies have done a crappy job of making the service affordable and attractive.

    My guess as to how things will play out – Governments will start to offer broadband, over the objections of the cable companies and telcos.   Some DSL and Cable cos will “bribe” state governments to prevent cities from offering broadband; unfortunate, but given that the government has the power, corruption is inevitable.

    Some states won’t outlaw municipal broadband, and some cities will offer services.  Some of these will be run very well, and will be very successful. Many will not – they will be as ineptly run as every other government service,  wasting a bunch of taxpayers money for a very small benefit.  That’s pretty typical of government initiatives.   But they won’t be shut down – once the government service exists, it will exist for a long time.  Eventually, it might be “spun out” or licensed to a private agency, which will, of course, be granted monopoly power over wireless broadband.

    And then we’ll end up with three monopoly-licensed broadband providers in play, which, all told, is probably better than two.


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