Wednesday, June 17, 2009

Perhaps they could open a coffee shop next to Starbucks

Oregon community's 5-year muni-fiber plan struggling
Sherwood, Ore., a small city southwest of Portland with about 16,000 residents, is knee-deep in cost overruns and service shortfalls after five years of trying to launch its own fiber-optic network. The city promised residents the service would give every home and business high-speed Internet access, and that the service would pay for itself and even create a revenue stream for the city.

In Sherwood, to date, taxpayers have laid out more than $1.55 million for a service that is anything but complete. One official called the 60-mile network a "significant money loser."

I have Verizon FIOS (excellent service by the way) and not a week goes by that Comcast and Qwest don't contact me in some way to see if I would like to switch to their fiber-optic service.

But for some reason government thought it should do what the private market was already doing so well and these idiots will insist until the day the stupid thing gets shut down that it will "soon" be viable.

But the fact that it can't make money is not the issue, if they were hauling in cash hand over fist I would still oppose this because IT'S NOT THE CITIES JOB TO PROVIDE INTERNET ACCESS.


Anonymous said...

give the goverment an idea and watch them run it into the ground .( and cost the tax payers millions of dollars ! )

Scottiebill said...

To add to what Anon 8:06 wrote:
If you think the problems created by government are bad, just wait until you see their solutions.

Robin said...

it's all part of the bigger picture.

with high speed internet at every home, utilities can save money by connecting internet enabled devices to read your meters, and because THEY would own the service, you have no choice what is connected to it.

is short, the government never gives anything away without some type of a catch.

Stevie said...

Let’s examine this issue more thoroughly, and see why Daniel's argument is once again severely flawed:

Sherwood has spent $1.55 million on a fiber-optic Internet network that doesn’t appear 100% reliable.

On the one hand, city officials could simply buy privately-provided 3G Internet service to it’s 16,000 residents for $640,000/year, based upon Cricket’s and Clear Wireless’ going rate of $40. (And we could reasonably assume that if the city did actually contract for 16,000 accounts, they’d get a quantity discount to at least $35/month/user.) This means Internet access could be bought for $560,000/year. In other words, Sherwood could buy fast, reliable Internet access for all its citizens for three years for the amount they’ve already spent.

On the other hand, as a piece of infrastructure, it would be more intellectually honest to amortize the cost over a longer period of time…say, ten or twenty years. If you do this, and if you assume Sherwood will need to spend another $1-$2M to get the service up and running reliably, this would ultimately translate into a long-term cost of around $10-$15/month/user…and possibly less. In other words, publicly funded Internet could be financially viable when viewed as the long-term asset it is.

"But wait!", you right-wingers say. “It’s not the government’s job to do this anyway!” Well, let’s analyze that thought:

Some of us who work or have worked in the tech field, and who have been on the Internet long before it was known as the Internet (I was on QuantumLink back in the 1980’s, before it became known as a little company called “AOL”) see the Internet as a critical piece of economic infrastructure, no different from a road or a bridge or an airport. The Internet currently accounts for $300+ billion in economic activity in the U.S. alone, and that number will measure in the trillions of dollars in a decade. If we can agree that a legit function of government is to provide critical infrastructure, and if we can agree that any vehicle (such as the Internet) which accounts for hundreds of billions, and eventually trillions, of dollars worth of economic activity is itself critical infrastructure to this country, then it becomes very hard to reasonably advance Daniel’s argument that the government has no business providing Internet service.

Now, back to Sherwood: We would need an economist to crunch some numbers, and see if a long-term spend of $10-$15/month/user had a positive ROI (return on investment) for the city and people of Sherwood. Given that many of Sherwood’s residents are educated and, I would assume, heavy users of the Internet, and given that 3.1 million+ jobs have been created in the U.S. from the Internet, and given that the Internet is and will increasingly become a locus of economic activity in every household in one form or the other, I would presume that yes…the $10-$15/month/user long-term cost would probably be a wise investment for Sherwood, as it would deliver positive long-term ROI.

Daniel, your take on this issue – which is the standard “conservative” take on the matter – completely ignores the economics of the issue. Or rather, your view focuses on the short-term economic impact as opposed to the long-term. In other words, classic right-wing thinking these days: forget the long-term consequences of things, and continue to be completely out of touch with 1.) What people want; 2.) Technology; and 3.) Sustainable economic development.

And you guys wonder how come you’re unelectable?!?

innominatus said...

Stevie's credibility kinda got chewed up in the "QuantumLink->AOL" boast. Dickering around on a C64 BBS does not make one an internet pioneer. In fact, I'd go so far as to say AOL ruined the real internet that was accessed on unix terminals through a command line. (ooh! scary!) Once it got easy enough for idiots to access, it all went to crap.

When it comes to fiber, liberals should stick to weaving baskets.

Anonymous said...


With your logic we should have government-run health care, right?

Oh, wait...

Bobkatt said...

Stevie-good argument, however the numbers seem a bit askew. If Sherwood has 16,000 residents do they all live in single person households? If not, then how many individual accts. would you actually be providing? Maybe 4000? If that were the case the $35 cost would be about $140,000. This would translate to about 11 years of 3G service with no added government employees, bureaucracy or waste.
Your cheap comment about "conservatives" also rings hollow.
Ask a conservative about the economic viability of $160,000 public toilets, selling houses to people that have no possibility of paying for them, light rail, Amtrak, etc.

Stevie said...

Actually innominatus, the modern Internet far more resembles QuantumLink than it does a unix terminal with a command line. So yeah, anyone who was using the earliest versions of the modern Internet (prior to 1993), are kinda Internet pioneers. But I know, I know…AOL came along, and all the “idiots” came along with it, and all of a sudden those gosh-darn capitalist idiots turned it into a $300+ billion (and rapidly growing) force. Man, if we had ONLY stuck with the command lines!!!

Regardless, your elitist attitude is noted. (Very liberal of you, I must say.) As is the fact that you failed to address a single substantive point I made.


Stevie said...

Anon 6:02, go back and take a refresher course in analogies. The "Internet as infrastructure" argument is an entirely different argument, as you can't fully quantify intangibles stemming from healthcare (such as increased quality of life) like you can fully quantify ROI on Internet development.

There are a host of other differences, as well.

And if you're really interested in my views on health care, I think we need to look more at the French system. (Which, btw, is not a socialist medical system. In fact, if you tell a Frenchman he has "socialized medicine", he'll tell you no..."socialized medicine" is what they have in England and Canada.)

But here I go, getting off point! Just like you Anon. In fact, like your buddy before you, I noticed you couldn't be bothered to stay on topic. Go figure.

Stevie said...

Bobkatt, your point about Internet costs is well-taken. Yes, there are a host of variables I didn’t account for. On the minus side, you’re right…there would likely not be 16,000 individual accounts. I did not account for that. But on the plus side, there would also be many business accounts, rapid population growth in Sherwood, and a possible expansion of service to neighboring communities once all was going well. I did not account for those numbers, either.

So yeah, the number of actual accounts could ultimately be less, or more, than the numbers I used.

But I’m not sure it matters, because the point is the same. Amoritized out over a long period of time, I suspect you’re going to see positive ROIC. Again, this assumes that the Internet continues to grow rapidly, and that the Internet becomes more and more of a necessity in our everyday lives. I think both of those are reasonable assumptions, and support the idea that Internet access is critical infrastructure for which government involvement may be appropriate.

As for my “cheap comment” about conservatives, I understand you don’t agree with it, but that doesn’t mean it “rings hollow”. I can think of example after example after example of where modern “conservatives” (I hate using the term “conservative”, as much of what they’ve stood for in recent years could hardly be described as “conservative”) have indeed showed a propensity for being out-of-touch with the needs and wants of common Americans. I believe that’s precisely why they had such difficulty in the recent election, and why they don’t seem able to re-group now into anything that resembles a viable political front.

And when conservatives DO try to recapture their historical principles these days, it often comes off as a cheap stunt of convenience, given the way they’ve abandoned those principles in recent years. I can think of few better examples of this in recent memory than the comical “tea parties”. (Comical, because those same people didn’t exactly take to the streets when THEIR guy was spending hand-over-fist. Continuity breeds credibility.)

So yeah, we probably won’t see eye-to-eye on the issue of conservatives.

Anonymous said...

Stevie your just to smart for your own good . If you have paid any attention to what happens when the goverment runs something , it just ends up being less efficent and cost more . so let privite business run it , and let there be compatition for the product or service. then it will be ran efficientl and cost less. just get toe goverment out of it!!!!!!!!!!!!

Stevie said...

Anon 12:43 wrote, “Stevie your just to smart for your own good.”

You might be right, Anon 12:43. After all, I DO know the difference between “your” and “you’re”, and “to” and “too”. :)

Your blanket generalization about government and the private sector is an old right-wing standby. I hear it from Lars Larson all the time…“The private sector can always do anything better than government!”

And while it’s true that most economic activities are better handled by the private sector, it is not exclusively true as Larson often likes to claim. For example, the very Internet you and I are now conversing on would likely not be where it is today were it not for billions of dollars of government investment in the technology back before it was profitable for private business to invest. In fact, a lot of things you enjoy and take for granted today, were initially made possible by government-backed R&D or other public investment. “Conservatives” often forget this…if they ever realized it in the first place.

Robert Kuttner wrote a great book on this entire topic called “Everything for Sale: The Virtues and Limits of Markets.” In this book, he carefully dissects the last 200+ years of U.S. economic history, and using concrete examples, he pretty much pulverizes the right-wing myth that the private sector always gets it right, and the public sector always gets it wrong. But the book is not anti-private sector. Far from it. Kuttner recognizes that most economic activity should take place in the private sector. Just not exclusively so. The book is a worthwhile read for anyone prepared to accept that maybe the private sector doesn’t always get it right, and maybe the public sector doesn’t always get it wrong.

Bobkatt said...

Stevie-another good argument but you're right we just totally disagree. When you state Conservatives don't act like true conservatives you are right and therefore they aren't. Very few people would still label G.W.B. as a conservative. Hence the reason for the decline of the Republican party. The current republican leaders are still trying to pander to the liberal agenda to bolster their ranks instead of their true base leaving most conservatives without a party. Minority politics is a Democratic principle the Repubs will never succeed in that arena.
Back to government vs private. One thing that statists never mention is the chilling effect on private investment and development that the mere mention of bringing in the government has. What private capitalist is going to invest large amounts of money into any endeavor that might all of a sudden on a whim of a bureaucrat put him in competition with the unlimited power and near unlimited resources of the government?
Also, off hand I can not think of one area of the economy that the government runs more efficiently and economically than the private sector. Package delivery-not a chance. Education-nope private schools do it cheaper and more effective. People transport-nope. Name a public transportation system that turns a profit. Show a couple of examples of these public internet service providers that actually have succeeded in making money. It seems to me that the main agenda of the public push is simply more wealth redistribution. If your goal is to provide services to people without means then fine, but lets not try to cook the numbers to make it appear that there is an economic benefit to those actually footing the bill.
The primary thing that is often overlooked in the redistributing of wealth is that first you need to acquire the wealth.

Roadrunner said...


There are numerous areas where the Postal Service is the best deal for package deal.

Publicly owned utilities regularly provide service at lower rates. In California when the Enron-fueled huge rate increases and brownouts were happening, municipal electric companies did not have those problems.

Regarding people transport, most of the private companies have gone out of business. Amtrak was formed because the railroad companies were losing money on passenger service. Tri-Met was formed because Rose City Transport went out of business.

Countries who have public health systems, either single-payer plans or socialized medicine (we actually have both in the U.S.--Medicare is a single-payer system, the V.A. system is socialized medicine) as their main means of paying for medical care pay a much lower percentage of their GDP for health care, and usually with better results.

Also, though those of us who call ourselves liberal see government as part of the solution, that doesn't make us "statist". In fact, I would argue that those who seek government intrusion into private health decisions and are seemingly uninterested in accountability governmental spying on citizens are at least as statist as those who want government to rein in private businesses.

Roadrunner said...

Ah, once again, the sure way to get a "conservative" to shut up is to provide actual evidence. They have a hard time with that, because most of what they believe is based strictly on faith.

Anonymous said...

Hi !.
You re, I guess , perhaps curious to know how one can collect a huge starting capital .
There is no initial capital needed You may commense to receive yields with as small sum of money as 20-100 dollars.

AimTrust is what you need
The company represents an offshore structure with advanced asset management technologies in production and delivery of pipes for oil and gas.

It is based in Panama with affiliates around the world.
Do you want to become really rich in short time?
That`s your chance That`s what you desire!

I`m happy and lucky, I started to take up income with the help of this company,
and I invite you to do the same. If it gets down to choose a correct partner utilizes your savings in a right way - that`s AimTrust!.
I make 2G daily, and what I started with was a funny sum of 500 bucks!
It`s easy to get involved , just click this link
and go! Let`s take this option together to become rich