Provo’s Lock In – Failed Muni Broadband purchased by Google for $1

It may be a heartless monopoly, but at least it’s OUR heartless monopoly!

The logic goes something like this: In order to stay competitive in today’s technologically racing world, you must have high speed broadband. Well, cheap public transportation and broadband. Better make it Cheap Public Transportation, High Speed Broadband, and Free Health Care… and how about Free College -well, I digress. Laws favor incumbent providers of these services. These ‘incumbents’ are the providers that first built networks in communities for profit, usually being guaranteed a virtual monopoly to help lure them to the area. You remember the Bell Telephone system? How about the New York Subway? It was one of these favored incumbents in the early years. Consumers have since benefitted from deregulation in the telephone market, and in wireless telephony as well. They haven’t benefitted quite as clearly from a municipal conglomerate takeover by the New York MTA.

Anyway, the story goes these incumbents are shielded against competition by laws that favor them over new entrants to the market, so the consumer suffers from few choices in selection of service, and must pay a noncompetitive rate for that service poor service.
Fans of municipal broadband projects feel that the people can provide for themselves through their city councils and coops what the big and monopolistic companies won’t since they deem it unprofitable, as they propose to ‘compete‘ with the incumbents. Giving due consideration to this argument, it seems to start out complaining about lack of competitive energy in the market and finishes by eradicating any hope of competition in that market. It is kind of like when Anakin Skywalker starts off as a Jedi Knight and ends up as Darth Vader. “Noooooooo!”

my motivations are pure

my motivations are pure

This kind of liberator turned dictator story happens all the time in government history, and such an example can be seen happening right now in Provo. Think Che Guevara, the cute guy on the hipster T-shirt whose real life biography features committing murder on behalf of South American communism, and you will not be surprised that people who once chafed under the harsh yoke of the capitalists are now blissfully crushed under the heel of government collectivism and crony capitalism. I can’t think of any Andrew Carnegie T-shirts being worn at coffee shops, even though many urban dilettante coffee drinkers benefit from the libraries and concert halls across the country left by that capitalist. And just so, modern technologically literate buyers are surprisingly ignorant to the reality of markets. This season you will probably see a lot of Google T-shirts in Provo.

Provo Utah, impatient with the kind of service afforded by commercial internet providers in their market, began to ‘compete’ with them by committing to build a municipal network. Donning their white hats, the project managers and city council assumed a large debt by issuing bonds and committed the city to what looked like a future free of internet access constraints. The problem occurred when the project turned out to be, oh irony of ironies, unprofitable. The project had been leaking money for years, and as time went by, even the purchased technology itself was depreciating and becoming technologically decrepit.

Enter a savior in the guise of Google – who themselves have had a bit more of Darth Vader about them than Obi Wan lately, as revealed in NSA security scandals. Google has purchased the less than worthless infrastructure in Provo for one dollar. In addition, Google says that it will need to invest an additional thirty million in the network to bring it up to date and complete it. There has been some rejoicing, as Google offers the citizen of Provo free internet (5 mbps) for seven years following a three hundred dollar installation fee. Just think of it; free internet, or as the Provonians say, internet like tap-water.

But hold on. Google did not assume the thirty nine million dollar debt already hanging over the project. The city is still on the hook for that. In effect, Google has received an artificial place in the local market by virtue of the City’s distressed and dysfunctional legacy network. Google will be subsidized in Provo by the citizens, some of whom in delusion think that they are getting ‘free’ internet. Coming full circle, the baseball metaphorically named ‘triple play‘ package (TV, phone, internet) costs 120 dollars per month under the Google regime, and the burst limited 1 Gig service costs 70 dollars per month. A citizen who opts for a competitor will be paying the fee for the service, and also the elevated taxes and fees the failed municipal broadband project has left behind. This amounts to a witless ‘Lock In’ phenomena, self inflicted by the consumers of Provo, like when a telephone provider charges a fine for switching providers. It is hard to tell if the ball has been moved at all. Like Che Guevara, some dictatorships are just more photogenic, and so get a pass from those who demand ‘competition’.