Hello!\u00a0 My name is Mat Binkley.\u00a0 I am a life-long citizen of Cheatham County (you may know my dad Roland or my mom Janice who worked at Bank of America in Ashland City for 35 years).<\/p>\n
I run a blog (www.mathewbinkley.org) where I like to examine political and economic issues.\u00a0 I would like to ask you a few questions (over time, just one today) and post your responses on the blog.\u00a0 I don\u2019t pretend to be The Tennessean, but my posts are usually read by 20-30 people in the area, and they are on average more politically active than the average person (and thus are more responsive to substance than to soundbites).\u00a0\u00a0 Any responses will also be made available to other local media.<\/p>\n
It is difficult to believe that 20th century businesses like State Industries and Flexible Whips could have been founded in Cheatham County without the widespread availability of 20th century infrastructure such as electricity and water.<\/p>\n
It is equally difficult to believe that 21st century businesses such as IT and healthcare (not to mention all the fields yet to be invented) will set up shop in Cheatham without the widespread availability of 21st century infrastructure such as broadband internet (both for themselves, as well as for the workforce they need to attract).<\/p>\n
In the middle 2000\u2032s several under-served TN cities which were tired of being overlooked by private ISP’s like AT&T and Comcast (who were cherry-picking lucrative neighborhoods and ignoring the rest) began evaluating municipal internet as a way to provide broadband access to unserved constituents. In addition, several electric utilities (including CEMC, our local electric utility) were also looking at providing service.\u00a0 Electric utilities have particular advantages, as they can provision both electricity and fiber internet over a single cable, reducing costs and speeding up roll-out.<\/p>\n
Allow me to quote a passage from my college economics textbook (McConnell & Brue):<\/p>\n
A natural monopoly exists when economies of scale are so extensive that a single firm can supply the entire market at a lower unit cost than could a number of competing firms.\u00a0\u00a0 Clear-cut examples of natural monopoly are relatively rare, but such conditions exist for many public utilities, such as local electricity, water, natural gas, and telephone providers.\u00a0\u00a0 Where there is natural monopoly, competition is uneconomical.\u00a0\u00a0 If the market were divided among many producers, economies of scale would not be achieved and unit costs and prices would be higher than necessary.<\/p>\n
There are two possible alternatives for promoting better economic outcomes where natural monopoly exists.\u00a0\u00a0 One is public ownership, and the other is public regulation.<\/p>\n
Tennessee’s legislature passed the \u201cCompetitive Cable and Video Services Act\u201d in 2008 after furious lobbying by private ISP’s, based on their promise to accelerate their own broadband roll-out.\u00a0\u00a0 The legislation shielded private ISP’s from competition and effectively blocked municipalities and electric utilities from rolling out internet service to their constituents by forbidding them to issue debt to pay for the infrastructure.\u00a0\u00a0 However, it did not actually compel ISP\u2019s to provide service.\u00a0\u00a0It is actually a worst-of-both-worlds solution.<\/p>\n
You can imagine the lasting economic damage that would have been incurred if similar legislation had prevented CEMC from borrowing to roll out electricity in the 1940’s.\u00a0\u00a0 This is a textbook case of rent-seeking behavior on the part of private ISP\u2019s and regulatory capture on the part of the legislature, and was no doubt passed based both on some mixture of ideology unrestrained by real-world results, and private ISP\u2019s increasing their political donations that year by a factor of 100 (as Upton Sinclair bitterly mused, \u201cIt is difficult to get a man to understand something when his salary depends on his not understanding it.\u201d)<\/p>\n
In the 4 years since then, private ISP’s have failed to deliver on their promise. Charter and AT&T have curtailed any further roll-out of broadband. Today 15% of the households in Cheatham County cannot get *any* broadband access, and the remainder pay prices for service that people in more advanced countries would consider a bad joke (and as a US citizen I bristle at the term \u201cmore advanced countries\u201d, but in this case it is sadly warranted.\u00a0 Our internet is currently rated 35th in the world, behind several former Soviet bloc countries.)<\/p>\n
I ask you, what do you intend to do to promulgate widespread broadband internet to your constituents?\u00a0\u00a0 There is the public ownership route (taking the financial handcuffs off municipalities and electric utilities and allowing them to compete) and the public regulation route (regulating private ISP rates and behavior, and compelling them to use the monopoly the legislature has effectively granted them).\u00a0 Or there could be a valid alternative solution.\u00a0 Can you tell us what yours are?<\/p>\n
Other posts I have made on this issue:<\/p>\n
https:\/\/www.mathewbinkley.org\/?p=96<\/a> Hello!\u00a0 My name is Mat Binkley.\u00a0 I am a life-long citizen of Cheatham County (you may know my dad Roland or my mom Janice who worked at Bank of America in Ashland City for 35 years). I run a blog … Continue reading
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