Charter sent this email to it’s customers today. Well all their customers except the CDE employees who use Charter, and me! Someone was nice enough to forward it to me. I promptly sent CDE a copy.
Subject: The facts regarding Clarksville Department of Electricity entering the cable business.
It is bad public policy for government to compete against any private industry.
When government competes with the private sector, economic development is not promoted. In Clarksville, this competition will not give residents more affordable competition “The Clarksville Electricity Department has publicly stated that their rates will not be lower than Charter’s rates.”
I have said that I do not expect our rates for video service will not be lower than Charters. In other cities where the municipal utility has offered video services, Charter has immediately lowered their price to a point lower than the municipals. I expect that to happen in Clarksville. A good point is that that action will save money for those customers that remain with Charter. Those customers are also our electric customers and if we can save them money even if they are not doing business with us, thats a good thing. – Kenneth W. Spradlin, Clarksville Department of Electricity
Charter’s statement sure doesn’t sound like what he actually said does it? Charter intentionally misquoted his clear statement to mislead you, the voters.
As for why the government must step in when private industry won’t lets ask Layfette, LA…..
They couldn’t afford to wait 10-20 years for progress on their Cable and Phone companies terms, neither can Clarksville.
Public entities that have entered this highly competitive marketplace, such as Columbia, TN, Jackson, TN, Fayetteville, TN, and Covington, TN, have ALL had to raise or borrow more money to operate their cable and Internet business after entry.
Even if the Clarksville Department of Electricity is able to attract 25% of the market “a projection, which the industry believes is very ambitious” 100% of the ratepayers/taxpayers will be liable for any shortfall.
Of course to build a municipal telecommunications network you have to borrow money to build their network and purchase equipment. That is what bonds are for. As for the 25% quote lets look at that one in detail.
25% of the market is specified in CDE’s business plan as the percentage of their current electrical customers using their additional services for this telecommunications venture to break even. Ambitious says the Cable industry….
Fayetteville, TN and Jackson, TN both have 45% of their local markets, Columbia, TN has 35% of theirs. Bristol and Morristown have 13-15% of their markets and they have both been offering service in less than a year. Doesn’t sound very ambitious to me.
Lets talk about Fayetteville, TN for a second.
In Fayetteville, the local municipal provider offers their channels 2-96 for $34.52, Charter offers channels 2-78 which is known as their expanded basic package of channels for $28.30. In Clarksville, TN they offer the same exact package of channels for $49.50. That means due to competition in the market place with a municipal provider, Charter has reduced their prices by $21.65 a month, saving the residents of Fayetteville $259.80 over the course of a year. Betcha you could figure out a use for that money, I know that I can!
Competitive private telecommunications service providers are already competing in Clarksville. These providers include Bellsouth, Dish Network, DirecTV, and EarthLink.
Competition by private enterprise is the way our economy was designed to operate. For example, Bellsouth is preparing to build a wired cable system in Tennessee to offer cable, Internet, and phone. If the Government competes against private enterprise, there is no incentive to invest more money and provide advanced products.
Competition only works when you compare apples to apples. That leaves exactly two companies capable of offering the same services. Bellsouth does not yet offer TV and video services so it’s not a 100% comparison but it’s close enough.
Lets look at a section of recent report by the consumer group Free Press….
The U.S. broadband market is dominated by regional duopolies of cable and telephone companies that face little competition.
- Despite claims of “fierce competition,” Cable modem and DSL platforms account for 98 percent of the residential broadband market.
- The top 10 broadband providers, each a regional monopoly in cable or DSL, made up over 83 percent of the entire U.S. broadband market.
- A recent Government Accountability Office (GAO) report on broadband shows that the median U.S. household has only two terrestrial broadband services providers available.
- According to the GAO, nearly 1 in 10 consumers don’t have access to any broadband providers.
- FCC data show that over 40 percent of U.S. ZIP codes have one or zero DSL and/or cable modem provider reporting service. ‘Third platform’ alternatives like wireless and broadband over powerline don’t offer viable competition.
- Satellite accounts for approximately one-half of 1 percent (0.5%) of all advanced service residential broadband connections.
- Mobile wireless accounts for roughly one-hundredth of 1 percent (.01%) of all advanced service residential broadband connections. Fixed wireless comprises less than one-half of 1 percent (0.5%).
- 99.8% of mobile wireless broadband connections are used by businesses, not consumers. And nearly all of these exceed 200 kilobits per second in only one direction.
- Broadband over powerline (BPL) accounts for about one-hundredth of 1 percent (.01%) of all advanced service residential broadband connections.
- The combined market share for all of these alternative technologies has decreased over the past five years.
Sure paints a different picture of the competition claimed by Charter, doesn’t it?
As for their investment statement, it’s put to rest by another choice quote from the same report…..
- The threat of competition — not government regulation — is the most important factor behind broadband infrastructure investment decisions.
So when they have the threat of competition they are more likely to roll out new services. That has already happened here in Clarksville. Before CDE’s plan was announced, Charter had no stated intentions of rolling out faster services in our area. Once they were informed that CDE’s starting tier of service would offer 10MBPS of bandwidth both ways, Charter started upgrading our local network to provide faster speeds. First 5MBPS then, and they promise the hope of 10MBPS later, coincidence? I think not.
Last but not least their closing pitch….
The Clarksville Department of Electricity will be obligating taxpayers/ratepayers for $88,000,000.00 and competing against private enterprise.
The last part is all they have right. CDE will fiercely compete against both Charter and Bellsouth, and they will have to compete with CDE. That my friends is the heart and soul of Capitalism. It’s just sad that we had to wait for CDE to come into the marketplace for them to act like the capitalistic companies they like to claim to be…