By Michael Rau
May 5, 2009
I've been following this story involving our neighbors to the south in Wilson, N.C.. In some ways, it's the perfect parable to illustrate why the American economy tanked.
It seems that the residents of Wilson got sick and tired of the quality and cost of their cable and Internet services, provided by the megalithic Time Warner Cable, and a smaller company called Embarq. So they decided to authorize their municipal government to secure financing for and install their own fiber-optic infrastructure, thus establishing a citizen-owned cable system called “Greenlight”.
The net result was a 40% drop in the cost for these services, with a corresponding increase in quality of signal and customer care.
I've written numerous times over the years about the utterly outrageous costs for such services in the United States. The cost for such services in the United States is so grossly out of proportion with those in the rest of the industrialized world that they border on the obscene.
Why? Because the one critical element of a healthy market has been missing for many years: Competition.
It amazes me that in a country that considers itself to be the bastion of capitalism, our elected representatives have so profoundly colluded with big industry to crush competition through the abuse of law. That collusion has been bipartisan.
Back in North Carolina, Time Warner Cable (whose CEO made $14.4 Million last year, by the way) threw an absolute hissy fit, and got a couple of “conservative” legislators to pitch a new bill that would forbid municipalities from creating such citizen-owned and managed entities as that created in little Wilson.
One report says that when the two legislators were questioned about their proposed bill in a committee hearing, they had to turn to representatives from the cable company to provide the answers. So how is it that the industry reps knew more about the bill than the two guys pitching it?
Telecommunications companies have become among the most egregious abusers of this practice, and Time Warner tops the list. Just a week or so ago, they were forced to back off of their plan to apply a tiered pricing system to their services, which would have led to the cost for Internet and cable services going up considerably for everyone on their system except the lightest users.
Their reaction? It was the equivalent of “I'm taking my ball and going home!”. Time Warner has now threatened (in carefully parsed language) to delay or cancel improvements to their network which would contribute to bringing American broadband speeds and quality in line with the rest of the industrialized world.
These same companies have been lobbying for years to be allowed to control the Information Superhighway in America. They say that if they're not given that control, they won't bother to upgrade the infrastructure to keep the U.S. competitive with everyone else.
To me, their behavior illustrates that they already have too much control. I don't know about you, but I resent being held hostage.
I also believe that the Internet, like the U.S. Interstate system, is too critical to our economic and national security to allow any non-public entity to have any control of it whatsoever.
Corporate imperialism has taken our economy to the brink. Companies being allowed to acquire and flex this kind of power resulted in entities emerging like AIG, which have been deemed “too large to fail”. I heard a prominent conservative economist recently say that a company that's too big to fail should be considered too big to exist in the first place.
It's the role of government to protect the citizenry from such grotesque piracy – a role that the Federal Government has utterly failed to fill for the last 25 years. Now, because their failure has come back to bite us all, taxpayers are having to fork up trillions of dollars to avert an absolute collapse.
And the same people whose greed got us into this mess are getting bailed out, while still running these unhealthy companies with no apparent change in the morals or ethics which are at the root of our economy's failure.
Which takes us back to Wilson. Citizens there decided enough was enough and asked their local government to help. Their solution was simple and elegant. It took an investment of around $28 million, which will be paid off in a few years, leaving the citizens of Wilson with a wholly-owned fiber-optic system with no outside obligations. I'd guess their rates will even go down some more once the debt is paid off.
If the legislation proposed (and apparently written) by Time Warner actually passes, even localities that have no cable system and have virtually no chance of a company like Time Warner bringing one to them, would be forbidden by law from creating their own.
So, hats off to the citizens and elected officials of Wilson, N.C. for providing a shining example of how good government should work.
Got room for one more resident?
Michael Rau is a mass-communications consultant in Virginia Beach. To send feedback or view past columns, go to http://dailypress.asoundidea.com.
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