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by wildmusings 3149 days ago
Municipal services usually don’t have to turn a profit, since they can make up the shortfall with tax revenue. You’re missing that crucial point. You can’t effectively compete against someone who can operate at a loss in perpetuity.

I don’t know what the specifics are in this case, but if they allow the municipal service to be funded by tax revenue, then it’s incredibly unfair.
2 comments
com2kid 3149 days ago
> Municipal services usually don’t have to turn a profit, since they can make up the shortfall with tax revenue. You’re missing that crucial point. You can’t effectively compete against someone who can operate at a loss in perpetuity.

This is more of a problem of how things look like they are funded.

Customers still pay the same price, but instead of $60 for Internet service, it may be $50 for Internet and $10 somewhere else. Or of course the city can tax the heck out of one subgroup of people and redistribute the funds.

I'd actually be OK-ish with a law saying that municipal broadband has to be self funded after initial rollout, I imagine that would maintain sufficient competition.

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wildmusings 3149 days ago
>Customers still pay the same price, but instead of $60 for Internet service, it may be $50 for Internet and $10 somewhere else. Or of course the city can tax the heck out of one subgroup of people and redistribute the funds.

No, in your scenario, customers pay $50, and EVERYONE pays $10, including those who use a private competitor.

The customers of a private competitor that also gets $60 of revenue per customer, would actually be paying $70. $60 for their own service, and $10 to subsidize the municipal service.

And even if you have some magic source of tax revenue that is not the citizens (or heavily tax some subgroup as you suggest), the municipal service is still charging $10 less to get the same revenue as the private service.

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com2kid 3149 days ago
> No, in your scenario, customers pay $50, and EVERYONE pays $10, including those who use a private competitor.

That is why I proposed the municipal broadband system be self funding, preventing any market distortion.

I admit I wasn't clear about it, and you are correct that in a scenario of anything other than 100% of the population switching over to the municipal provider, a subsidy effect does occur.

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collinmanderson 3149 days ago
Yeah, I'm curious what the actual price per customer will be. Comcast may still offer lower prices.
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