UTOPIA and competition

Proponents of the UTOPIA network, which would socialize high-speed fiber-optic Internet service in several Utah cities, like to say they are providing an appropriate government service — important infrastructure similar to roads and highways.

That argument falls apart, however, when you consider the private sector isn't working the angles, trying desperately to build highways that undercut the public system. Most roads, for obvious reasons, must be publicly owned and available for universal access. When it comes to Internet access, however, the private market is, in most cases, quite nicely working to supply consumer needs.

This was evident last week when UTOPIA officials said they did not want to disclose where the first test network will be located for fear that private providers, such as Comcast and Qwest, would then lower their prices in those areas to compete. It would be silly to think that kind of competitive marketing won't take place everywhere UTOPIA tries to go. Quite simply, competition doesn't concern only the Internet services that would some day use a fiber-optic infrastructure in Utah; it concerns the infrastructure itself.

Hardly a day goes by when technology news wires don't carry a story about some budding breakthrough in technology. DSL, for example, now is being engineered to run several times as fast as many local providers currently offer. Wireless technology is being engineered to cover much broader distances, perhaps eliminating the need for fiber-optic hookups to the home. Cable providers are increasing their speeds, as well.

None of these currently can compete with the type of speeds UTOPIA plans to provide through its network. But in each instance, they are able to provide speeds that are sure to please current consumer demands, and they hold real promise for the future. And in each instance, private investors, not local governments, are taking the risks. UTOPIA would build a $340 million fiber network with bonds backed by sales tax dollars in the 11 cities that have joined. Backers are adamant that the interlocal agreement creating the network protects the cities from legal liability in the event the network fails, but even a small pledge of sales tax revenue has an impact on local budgets.

While the current arguments center on whether UTOPIA could attract enough paying customers to cover its costs, the real issue ought to concern plain, old-fashioned market principles.

Private enterprises have built-in incentives for innovation. Public monopolies don't. In fact, they stifle innovation. All one need do is look at the Postal Service, another "essential" piece of infrastructure, and its struggles to keep up with private overnight delivery services and e-mail. In an arena as fast-moving as Internet technology, the claim that anything is "future proof" for the next 20 years is foolish, at best.