[com2kid]

> 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.

[wildmusings]

>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.

[com2kid]

> 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.