Bought and Paid For

A North Carolina town wants to install broadband fiber and provide Internet access that’s ten times faster than cable, but a state senator is trying to end it:

In the last legislative session Sen. Hoyle tried to put a moratorium on any more local governments expanding into municipal broadband.

When the I-Team asked him if the cable industry drew up the bill, Senator Hoyle responded, “Yes, along with my help.”

When asked about criticism that he was “carrying water” for the cable companies, Hoyle replied, “I’ve carried more water than Gunga Din for the business community – the people who pay the taxes.”

Of course, no stupidity like this is complete without the obligatory bow to the free market of Internet services:

“It’s not fair for any government unit to compete with private enterprise,” he says.

(via)

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51 replies
  1. 1
    Eric U. says:

    Ed Rendell did the same thing in Pennsylvania, so we are pretty much doomed to live under people with this kind of attitude.

  2. 2
    Bob says:

    “In the last legislative session Sen. Hoyle tried to put a moratorium on any more local governments expanding into municipal broadband.”

    This also happened in Michigan.

  3. 3
    dmsilev says:

    But, but, I thought private enterprise was so much more efficient than government that it made sense to outsource as many government functions as possible. What happened?

    dms

  4. 4
    JasonF says:

    When asked about criticism that he was “carrying water” for the cable companies, Hoyle replied, “I’ve carried more water than Gunga Din for the business community – the people who pay the taxes.”

    But my friends on the right always insist that businesses don’t pay taxes — they just pass them on to consumers. Get with the program, Senator Hoyle!

  5. 5
    Egypt Steve says:

    What is fair is for tax payers to get charged more for less so they can subsidize Hoyle’s political donors. Corrupt bastard.

  6. 6
    Gin & Tonic says:

    Annoying, maybe egregious, but when municipalities are cutting basic services, like fire departments, maybe municipal broadband isn’t the best possible use of funds.

  7. 7
    Tonybrown74 says:

    @Gin & Tonic:

    Oh, please! Is THIS community cutting its fire department? You don’t know that and they plan to improve internet service for their inhabitants at no cost to them, which in turn allows them to have more purchasing power.

    People shop, Businesses flourish, everyone pays taxes and the cycle of improvement continues to the benefit of all.

  8. 8
    Gin & Tonic says:

    @Tonybrown74: I don’t know and can’t easily find the municipal budget for Salisbury, NC. My comment, nevertheless, was more against the “municipal broadband is always good” tone.

    At any rate, if Salisbury thinks it’s a good idea, it can go ahead and build it, because the Hoyle bill which mistermix refers to actually *failed*. So he may be bought and paid for, but he wasn’t such a good investment.

  9. 9
    Gin & Tonic says:

    @Tonybrown74: Incidentally,

    improve internet service for their inhabitants at no cost to them

    how do they perform this feat? By using volunteer fiber installers and donated or surplus equipment? Fiber costs money. Pulling and splicing it costs money. Routers cost money.

  10. 10
    Dan says:

    Nice Rudyard Kipling reference at least

  11. 11
    Tonybrown74 says:

    @Gin & Tonic:

    Of course it costs money. Short term investment can equal long term gain.

  12. 12
    Judas Escargot says:

    “It’s not fair for any government unit to compete with private enterprise,” he says.

    This canard got a lot of mileage during the public option debate last year, too, and infuriates me. Just once I’d like the interviewer to ask: “Since when is life supposed to be fair to businesses?”

    If the world doesn’t owe me a job, then it most certainly doesn’t owe you a business, either.

  13. 13
    Gin & Tonic says:

    @Tonybrown74:

    Short term investment can equal long term gain.

    I’m not arguing that.

    But a) you said they could improve service to residents at no cost to them, which is as absurd as saying they could re-pave the roads at no cost to the residents or cart away the trash at no cost to the residents; and b) I’m not convinced of the long-term benefit of municipal investment in equipment with such a relatively short life cycle. Network gear goes obsolete quickly.

  14. 14
    morzer says:

    @Gin & Tonic:

    So you think that better broadband might not help people run their own business, or even just make their lives a little better? But after all, why should the US have good broadband, or fix the sewers and highways? Much better to let business create ghettos and deadzones, while charging the earth for their monopoly products. Dollars to donuts Hoyle is getting more than just campaign donations for his services. Which raises another point – isn’t he part of government? Shouldn’t he eliminate himself and thereby create greater opportunities for business?

  15. 15
    Gin & Tonic says:

    @morzer:

    So you think that better broadband might not help people run their own business, or even just make their lives a little better?

    Please show me where I said that.

    What I *am* trying to say is that with municipal budgets being under the pressure they are (admittedly not being familiar with Salisbury, NC) having the town or county pulling fiber and installing routers should be lower on their priority list than paving the roads or putting out fires.

    But again, mistermix’s original post leaves the misleading impression that the municipal broadband provision failed due to Hoyle’s actions. In fact the opposite happened.

  16. 16
    gwangung says:

    t I am trying to say is that with municipal budgets being under the pressure they are (admittedly not being familiar with Salisbury, NC)

    Then it’s a pretty useless statement, isn’t it? About as useless as any wing nut statement—oversimplified and ill fitting to specific circumstances.

  17. 17
    debbie says:

    Of course, no stupidity like this is complete without the obligatory bow to the free market of Internet services:

    “It’s not fair for any government unit to compete with private enterprise,” he says.

    It’s the free market of everything Republican. This is the argument they used against the public option.

  18. 18
    elm says:

    @Gin & Tonic:

    Presumably the people of Salisbury, NC are best-equipped to decide what the government of Salisbury, NC should or should not be doing with its funds.

    Hoyle’s bill was an attempt to prevent the government of Salisbury, NC from providing internet access to the people of Salisbury, NC (using government funds from Salisbury, NC).

    Your postings don’t seem to have any point at all.

  19. 19
    debbie says:

    Oops on the blockquote:

    Of course, no stupidity like this is complete without the obligatory bow to the free market of Internet services:

    “It’s not fair for any government unit to compete with private enterprise,” he says.

    It’s the free market of everything Republican. This is the argument they used against the public option.

  20. 20
    Mary says:

    @Judas Escargot:

    It’s also infuriating because it runs directly counter to the original argument in FAVOR of privatization, which is that private corporations can supposedly do things better and cheaper. And yet now we’re supposed to believe that they won’t be able to compete with supposedly lumbering and inefficient government?

  21. 21
    ErikaF says:

    As long as people think of broadband as a luxury item and not essential to today’s business climate, we’re going to get stupidity like this. Let’s rephrase the problem a bit (my changes in italics:

    A North Carolina town wants to install better electrical cables and meters and provide a smart grid system, but a state senator is trying to end it.
    In the last legislative session Sen. Hoyle tried to put a moratorium on any more local governments expanding into municipal electrical systems.
    When the I-Team asked him if the power industry drew up the bill, Senator Hoyle responded, “Yes, along with my help.”
    When asked about criticism that he was “carrying water” for the power companies, Hoyle replied, “I’ve carried more water than Gunga Din for the business community – the people who pay the taxes.” “It’s not fair for any government unit to compete with private enterprise,” he says.

    If we don’t emphasize that broadband access is vital to business growth, we’re going to get crap like this. Broadband is now as essential to business as consistent electricity.

  22. 22
    Gin & Tonic says:

    @gwangung:

    Then it’s a pretty useless statement, isn’t it?

    Probably about as useful as anything else in this thread.

    Since Pennsylvania and Michigan were dragged into this thread very early on, though, others are generalizing as well. I’m pushing back against the “municipal broadband is always better” meme.

  23. 23
    Gin & Tonic says:

    @ErikaF:

    Broadband is now as essential to business as consistent electricity.

    Does Salisbury, NC have a municipal electric company?

  24. 24
    Judas Escargot says:

    It’s also infuriating because it runs directly counter to the original argument in FAVOR of privatization, which is that private corporations can supposedly do things better and cheaper.

    Also true… but I’ve never bought that framing, personally. A business exists for one and only one purpose: to make a profit for its owner(s). The government, however, should be able to provide a needed service at cost. No functional business could beat that and survive, so the theory fails.

    Of course, in real life, you’ll always have grift, lack of transparency and corruption causing upward pressures on the public cost– but that’s a different issue. And one not unique to government, either.

  25. 25
    Gin & Tonic says:

    @ErikaF:

    Broadband is now as essential to business as consistent electricity.

    Does Salisbury have a municipal electric company? Essential services and taxpayer-funded services are not congruent.

  26. 26
    Davis X. Machina says:

    @Gin & Tonic: Because they’re not congruent, they’re not automatically disjunct, either. There are municipally owned and operated electric companies, but you don’t see — in CA there was just a referendum on this issue IIRC, that lost — blanked prohibitions on them. Perhaps the only thing that saves them is that they already exist….

  27. 27
    elm says:

    @Gin & Tonic:

    the “municipal broadband is always good” tone.

    the “municipal broadband is always better” meme.

    I don’t know where you think you’re seeing this.

    The municipal broadband offered in one locale may or may not be better than the commercial offerings available in that locale. It’s pretty fucking obvious that the specifics are important and that quality of implementation matters.

    If the government of Salisbury, NC provides poor internet service or if it’s too expensive or if it consumes too much local government money, or if the commercial offerings available locally are spectacular then the people of Salisbury, NC can sort that out for themselves.

    Unless, of course, Hoyle had succeeded at preventing the people of Salisbury, NC from doing so, which is the issue here.

  28. 28
    Gin & Tonic says:

    @elm:

    I don’t know where you think you’re seeing this.

    On a lot of leftish blogs. Tell me that it doesn’t underlie about a quarter of the posts on this thread.

    Of course specifics matter. But in many cases I think decisions are made by local governments without a full understanding of the capital and operating expenses associated with being a broadband ISP. Equipment is expensive and becomes obsolete quickly. France thought it had a great idea with Minitel, which was also popular with many leftish analysts, and which was a colossal waste of money.

    Unless, of course, Hoyle had succeeded at preventing the people of Salisbury, NC from doing so, which is the issue here.

    But he didn’t succeed. So the NC legislature is smarter than Hoyle. So what *is* the issue?

  29. 29
    Stillwater says:

    @Judas Escargot: “It’s not fair for any government unit to compete with private enterprise,” he says…. “Since when is life supposed to be fair to businesses?”

    Re: the word ‘fair’ in the above: hasn’t the rightwing meme for howeversolong now been that private enterprise performs services more efficiently (hence more cheaply) than the public ever in your wildest dreams so don’t even think about it…could? What happened to that argument? Hmmmmm

  30. 30
    tkogrumpy says:

    @elm: Nicely done!

  31. 31
    tkogrumpy says:

    @Gin & Tonic: Apperently you don’t use broadband much while traveling outside the United States.

  32. 32
    cmorenc says:

    @ Gin & Tonic:

    Does Salisbury, NC have a municipal electric company?

    The above was written as a challenge to the proposition that it is essential for municipalities to assure high-speed broadband to support and attract businesses.

    As a matter of fact, historically across a great many parts of the south, electric service was first established in PRECISELY this manner during the New Deal era, by government-sponsored electric coops created to serve more rural counties that were not financially attractive enough to be served very well, or often at all by private power companies. The private power companies and their legislative toadies of course fought this sort of effort, using precisely the same objections as are currently being made to establishment of municipal-sponsored broadband service: unwarranted intrusion of government into services that ought to be provided by the private free enterprise sector, government is inefficient, private enterprise is efficient, or more simply: IT’S SOCIALISM!

    Without these cooperatives, it may have been another one to two or more decades before private power companies got around to pervasively serving many rural counties across the south. A neighbor of mine down at the beach recalls that her family in a rural pocket in southeastern NC was in an area where there was no cooperative, only a private power utility, and they had no electric service until almost 1950s!! Because they were in a pocket surrounded mostly by poor black tenant farmers, and the power company didn’t regard that four to five mile square area as being profitably worthwhile to serve at all, let alone even poorly.

  33. 33
    cmorenc says:

    er, that should be my neighbor’s family didn’t have electric service until almost 1960! (because their general region was served by a private power company, not a co-op).

  34. 34
    elm says:

    @Gin & Tonic:

    It doesn’t underlie about a quarter of the posts on this thread. Point out 7 posts out of the first 28 based on the concept that municipal broadband is always better.

  35. 35
    Gin & Tonic says:

    @tkogrumpy:

    Apperently you don’t use broadband much while traveling outside the United States.

    Actually, I do.

    In most Western European countries the PTT or equivalent was one of the major impediments, if not *the* major impediment to the growth of decent non-voice services. In almost all Eastern European countries the governmental telephone service was *the* major impediment. Same for Africa and most of Asia.

    I’m not arguing that broadband in the US is good. I am arguing that private enterprise coupled with an intelligent regulatory and legislative scheme (which are sorely missing) could provide the necessary capex and opex better than town or county governments which do not, typically, have the technical expertise to do so.

    How is Salisbury to decide, for instance, whether they should install fiber to the home or WiMax, or decide between WiMax and LTE? I don’t think this is something municipal government is good at. And once they do, who maintains it, and for how long, and when do you reach for more capex once the stuff is obsolete? A 10-year-old bridge, assuming it’s been maintained, is perfectly good. A 10-year-old fiber switch is a useless piece of crap. Verizon builds that into their cost models. Does Salisbury? I don’t know, but I doubt it.

  36. 36
    Gin & Tonic says:

    @elm:

    Point out 7 posts out of the first 28 based on the concept that municipal broadband is always better.

    I would suggest that the authors of posts 1,3,4,7,14,20,21, if asked, would have an underlying position that municipal broadband is good in terms more general than Salisbury, NC, although maybe not *always*. Yes, I am reading a lot into things, but I also have read a lot on this subject.

  37. 37
    Gin & Tonic says:

    Trying to restate, the economic model which I find instructive is mobile telephone service. I am in Eastern Europe often. Mobile phones are cheap and ubiquitous. Literally everyone has at least one, including many people who do not now and have never had a landline. The mobile carriers are “connected”, in the corruption sense, most of the time, and despite this are able to provide a service that everyone can afford. There are no government-run mobile carriers.

    Look at Yota, in Russia, building a “4G” network from scratch. I think only a private business has the agility to do something like what they have done.

    I don’t think I’ll be able to continue this today, but thanks for the challenges.

  38. 38
    elm says:

    @Gin & Tonic: Post 7 overreaches, but nothing in the other posts comes close to a claim that municipal broadband is always good or always better. I won’t pretend to read the posters’ minds. You have significantly walked-back your original claim.

    I am confident that at municipal broadband would be good for at least 2 communities in the United States. I suppose if that’s your criteria then you can add my posts to your mind-reading list.

    It is always good for the people in a community to have the option of municipal service for internet access, even if the municipality never acts on that freedom. A ban on municipal broadband lets incumbent providers neglect infrastructure and charge higher rates in the very common situation when

  39. 39
    Stillwater says:

    @Gin & Tonic: I am arguing that private enterprise coupled with an intelligent regulatory and legislative scheme (which are sorely missing) could provide the necessary capex and opex better than town or county governments which do not, typically, have the technical expertise to do so.

    Do you work for a broadband provider?

  40. 40
    Gin & Tonic says:

    @Stillwater:

    Do you work for a broadband provider?

    I do not.

  41. 41
    Adam Lang says:

    @Gin & Tonic:

    I’m not arguing that broadband in the US is good. I am arguing that private enterprise coupled with an intelligent regulatory and legislative scheme (which are sorely missing) could provide the necessary capex and opex better than town or county governments which do not, typically, have the technical expertise to do so.

    Then you’re absolutely, completely wrong. Right now, AT&T (which controls the vast majority of telephone service in the US, we won’t discuss cable modem for the purposes of this) is highly incentivized by the market to maintain things exactly as they are. They get a decent amount of money for DSL connections, essentially for free aside from initial setup. (The bandwidth costs them pennies per month, or at most a few dollars for heavy users, and as (in almost every location) you are required to have a phone line in order to have DSL, there are literally no other continuing charges. It’s between $30 and $60 per month of essentially pure profit.) And if someone wants a more reliable line, or one with higher upstream speed, they pay $375 for a 1.5mbps T1, which is no more expensive for the phone company to maintain. So it’s $375 of pure profit. And if they want more than that? You get a DS3, for $3000/month, which costs the phone company a couple hundred a month at most. $2700 in pure profit.

    And you’re saying, gee, if we just regulated these guys, somehow magically we’d get (say) 50 mbps connections straight to the home, for what we’re paying now for 5. But these would require infrastructure investment, and they’d be less profitable for the phone company than what they have now.

    So, I’m not aware of what kind of regulation you think would be able to force AT&T to somehow magically abandon this pure-profit business model, in any kind of a timely fashion, for a less profitable one, when in order to get to that less profitable one they have to spend millions of dollars in infrastructure investments for every community that they ‘want’ to improve. If you want AT&T to do that, the government would essentially have to tell them, ‘okay, if community A doesn’t all have fibre to the door by the end of 2011, then we’re charging you a fine of the entire amount you collect from community A on a daily basis, until they all do.’ And so on with all the other communities. And every state (or the federal government — good luck!) would have to do that, or at least several big ones, or even then it would be more cost effective for AT&T to simply cease to provide service in that state entirely.

    Basically, if you’re AT&T, then anything you can do, anything you can spend, any penalty you can be charged, up into the hundreds of millions or even billions of dollars, is worth it in order to maintain the current broadband system in the United States.

    On the other hand, if your municipal government does not look at internet service as this enormous cash cow which has to pay out ten thousand times as much as they put into it, then they can make all sorts of enormously expensive mistakes and still be cheaper than AT&T. Hell, it could cost them a hundred times as much as it costs AT&T to run, and it would still be cheaper.

  42. 42
    Gin & Tonic says:

    @elm:

    A ban on municipal broadband

    Which *we do not have* in North Carolina.

    Your post was cut off shortly after that.

    Now I really do have to go. Sorry.

  43. 43
    Mnemosyne says:

    @Gin & Tonic:

    The mobile carriers are “connected”, in the corruption sense, most of the time, and despite this are able to provide a service that everyone can afford. There are no government-run mobile carriers.

    No, but the government dictated what the cell phone network standard was going to be, unlike here in the US, where we have four or five different and competing standards depending on which company you’re with. In Europe and most of Asia, everything is GSM 900/1800.

    Those mobile carriers save a lot of money not having to develop their own network, so they can concentrate on pricing and equipment.

  44. 44
    elm says:

    @Gin & Tonic:

    Which we do not have in North Carolina.

    I’m well aware that this particular attempt failed.

    Hoyle and his sponsors (and legislative ghost writers) in the ISP industry attempted to legislate such a ban. Although that ban failed, four states have banned municipal broadband outright, three more have de-facto bans, and a further eleven states impose “various barriers”.

    Those bans and barriers favor incumbent ISPs. The ISP industry has demonstrated that it loathes competition and prefers to legislate and litigate competition out of existence instead of providing superior service at a superior price.

    I’m not arguing that broadband in the US is good. I am arguing that private enterprise coupled with an intelligent regulatory and legislative scheme (which are sorely missing) could provide the necessary capex and opex better than town or county governments which do not, typically, have the technical expertise to do so.

    Could private enterprise do a better job? Sure, it’s not impossible.

    Is it reasonable to expect that they would? No. They’ve demonstrated that they would rather sue, lobby, and bribe than compete.

  45. 45
    Gin & Tonic says:

    @Adam Lang:

    Jeez, so many errors, so little time. You clearly know nearly nothing about telco infrastructure.

    First, you can’t just ignore cable because it’s inconvenient, when in the US it has *more* subscribers than DSL. AT&T does not control the vast majority of telephone service in the US. It may be the leader in market share (although even that’s unclear), but it is not a *vast majority*. A T-1 line does not cost the same to build and maintain as a DSL line. It costs more to build (you know what a DSLAM is, and how port density affects the buildout costs?) and it costs more to maintain, because it’s “business class” and there are more and different caliber staff at the NOC who handle them. The costs of T-1 and T-3 lines have been dropping steadily in real terms over the last 15 years nevertheless.

    What kind of regulation? How about requiring ILECs to offer naked DSL? Competitive access to the fiber plant? How about requiring companies putting up cell towers to put up WiMax on those towers? Imposing single standards, like GSM, so we don’t spend years in TDMA/CDMA/GSM pissing contests that benefit nobody while Slovakia, say, has better 3G cell coverage than lots of areas in the US, or spend the last three years battling WiMax vs LTE?

    Look, I’ve said multiple times that the US situation is not good. The ILECs here are like the developing-country PTTs of 10 years ago, and need to be pushed out of the way. But they need to be pushed out of the way, IMO, by nimble private companies who know how this shit works. My town/county can do any number of things quite well, but being a 21st century ISP is just not in its skill set. Some locations, maybe. Could the city of San Francisco do a good job in this? Probably. Could, I don’t know, Gilmer County, West Virginia, with 20 people per *square mile* do it?

  46. 46
    Gin & Tonic says:

    @Mnemosyne:

    No, but the government dictated what the cell phone network standard was going to be

    Precisely. Which is part of what I mean by intelligent regulation. Set the standard so competitors can compete, then let them.

  47. 47
    Gin & Tonic says:

    @elm:

    Could private enterprise do a better job? Sure, it’s not impossible.

    Not only not impossible, it actually *has* done a better job in most countries.

  48. 48
    Mnemosyne says:

    @Gin & Tonic:

    Precisely. Which is part of what I mean by intelligent regulation. Set the standard so competitors can compete, then let them.

    Why do you think we have multiple standards in the first place? Because it is politically impossible to do anything that looks even vaguely like a regulation that might hamper business in any way whatsoever. They have lovely apples in Europe, but they have nothing to do with the lemons we’re stuck with here in the US.

    If we’re going on pure speculation here (as you are) my speculation is that the town got sick of having to deal with private companies who kept getting together to jack up their rates and decided it would be better for everyone if they offered it as a public utility. By your standards, the town should have done nothing and let the private companies continue to exploit their customers because private enterprise is always best even when private enterprise is demonstrably screwing people over.

  49. 49
    Mnemosyne says:

    @Gin & Tonic:

    Not only not impossible, it actually has done a better job in most countries.

    But those companies, as you admitted, are much more heavily regulated by their governments than the private companies in the US are. So what you’re actually saying is that private enterprise can do a better job if they have the government constantly looking over their shoulder to make sure they’re playing fair.

    That’s not exactly the system we have here in the US.

  50. 50
    Gin & Tonic says:

    @Mnemosyne:

    as you admitted, are much more heavily regulated by their governments

    I did not admit or state that. They are regulated differently, perhaps, and in some areas more lightly. The GSM standard, as you noted, is very helpful, for mobile. But there is no way Safariphone (Vodafone) is regulated “more heavily” in Kenya than Verizon is in the US. Private enterprise has done a better job in providing telephone service in Africa than any government ever did, and that’s not because they “have the government constantly looking over their shoulder.”

    Maybe Salisbury can do a better job, maybe they can’t. Wilson, NC, on whom Salisbury is modeling, floated a $28 million bond to build out FTTH (about $1500 per person), and now provides, for instance, 20 Mbps symmetrical for $60/mo, which is pretty damn comparable to Verizon’s FiOS service. Ten years from now, when they’ve got to float another $15-20m to replace/upgrade the infrastructure they have now, let’s see how they feel.

    Look, the duopoly that exists in most places in the US sucks. We need more competition, and the system is not structured to provide that. Maybe municipal competition is the only available answer in some places, but my ideal is competition among private companies because I think they can move more rapidly and are more likely to be able to afford the technical expertise. I think state PUC’s should push harder when granting franchises to build in competitive possibilities, as I outlined earlier.

  51. 51
    Alex says:

    This issue has nothing to do with whether the government broadband service would be better in the sense of faster data flow. It certainly has the potential to be better in this measure. However, the legitimate economic measure is whether consumers will voluntarily pay for it when compared to other options. How the hell does one know that with government? It could run the service profitably, or tax dollars could be used to subsidize a horribly inefficient service. Why should I as a taxpayer be forced to pay for the experiment? Government needs to protect us from criminals, not keep “helping us” with more and more “social benefits” at all levels and forcing us to be involuntary investors in its schemes. Whoever thinks the profits and benefits are so obvious, should invest their own money and make that sure fortune. The government should not impede you from competing freely.

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