The municipal broadband issue presents two quandaries. First, what are we to do when there appears to be market failure (i.e., where a particular area still has no available broadband service)?
Second, how do we keep local governments from competing with the private economy by actually owning or managing businesses, and having incentive to shut private players out of the broadband business?
Be skeptical that the market has actually failed. Consider one area with which we are familiar, Copper Canyon, Texas, where neither cable nor DSL have been offered. Is that market failure? Some would say yes, but the entrepreneur who has supplied Copper Canyon with affordable and abundant broadband would say no.
Residents of Copper Canyon and surrounding towns have access to wireless broadband provided by an entrepreneur who saw the opportunity presented when the big guys hadn't yet gotten around to serving this market. He put wireless transmitters on water towers, cell phone towers, even barns, and Copper Canyon enjoys faster-than-DSL data rates at below-DSL prices.
What’s better: A private, taxpaying entrepreneur creating a new business and new jobs, providing broadband to neglected markets – or a town going into the broadband business, with taxpayer dollars, putting taxpayers at risk?
When someone thinks a market has failed, what is usually happening is that the market is still processing information. The solution to most perceived market failures is just a little time. The market solves most of its own problems. It’s part of why we believe in markets in this country, not in government solutions.
If a local wireless provider runs his business poorly, he goes out of business. But if the town runs its broadband business poorly, all taxpayers, even those who don’t use the service, end up paying higher taxes — and not getting their potholes filled. And the country is littered with failed or failing municipal broadband systems.