Brian Gongol
Every few decades, a technology emerges that is considered such a useful good that people come to consider it a public utility. Roads, water and sewerage, electricity, telephones, and now broadband Internet access have all emerged as public utilities in high demand.
Some questions are worth considering about these utilities, especially when questions arise about whether the government should get into the business of providing them:
- Is there a true market failure? That is: Is this a good or service which the private sector, for whatever reason, will fail to supply in the volume or quantity that people truly need?
- Is it really a natural monopoly? Since roads are needed for more than just leisure travel -- we need them, for instance, in order to deliver police and fire service -- it wouldn't make sense to expect the private sector to build, maintain, and charge tolls on the entire residential network of streets in a community. Similarly, people would probably resent having four different sets of sewer lines running beneath their sidewalks, since that would likely result in four times as many broken lines and four times as much disruption to the community.
- Does implementation require a large capital expenditure? It takes a lot of concrete to build roads and sewers, and a lot of capital investment to install traditional telephone service or an electrical grid. For some communities, the amount of capital investment required may be too great for a private firm to justify the investment, even if it would be valuable to the community.
- Is there a reason to expect a disruptive technology to displace it soon? In the case of broadband Internet access, most people originally got their service through cable television wires. As the technology has changed, alternative broadband services are rapidly being deployed -- from DSL to wireless networks covering entire communities. When a disruptive technology can be seen on the horizon, it may be sensible for municipal authorities to hold back from making large capital expenditures.