Tuesday, February 23, 2016

Legacy incumbents circle the wagons against WV telecom infrastucture initiative

Charleston Gazette-Mail | Senate OKs creating state-owned broadband network: The West Virginia Senate approved legislation Thursday that would create a state-owned broadband Internet network, but Frontier Communications and cable companies already are lobbying members of the House of Delegates to kill the bill. State senators voted 29-5 to build a fiber-optic network “zone by zone” across West Virginia, using money borrowed through the Water Development Authority, one of the few state agencies authorized to issue bonds.

The legislation (SB 315) aims to expand high-speed Internet in rural areas, drive down prices and bolster Internet speeds.“This bill is one that can really promote West Virginia and move our state forward,” said Sen. Chris Walters, R-Putnam. “Without this type of infrastructure, we aren't giving the people the opportunity to succeed.”

Senate Majority Leader Mitch Carmichael, a Frontier executive, sharply criticized the legislation on the Senate floor, saying the bill would discourage Internet providers from expanding existing broadband networks or building new ones. “The capital allocations are chilled when they know the government is going to be competing,” said Carmichael, R-Jackson. “The best way to deliver broadband is through the private sector. We don't have to always turn to government to solve technological issues.

If it were only a technological issue as Mr. Carmichael wrongly frames it, it would merely need a technological solution the private sector could provide. In fact, it's a market issue. The state is attempting to address private market failure to construct telecommunications infrastructure needed for the 21st century. In that regard, it's also not about market competition. By definition, competitive markets are not failed markets.

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