Governments Privatizing Public Utilities Even As Some Want to Convert Internet Into One

by on August 23, 2010 · 4 comments

Two articles of interest in today’s Wall Street Journal with indirect impact on the debate over the future of Internet policy. First, there’s a front-page story (“Facing Budget Gaps, Cities Sell Parking, Airports, Zoo“) documenting how many cities are privatizing various services — including some considered “public utilities” — in order to help balance budgets.  The article worries about “fire-sale” prices and the loss of long-term revenue because of the privatizations.  But the author correctly notes that the more important rationale for privatization is that, “In many cases, the private takeover of government-controlled industry or services can result in more efficient and profitable operations.”  Moreover, any concern about “fire-sale” prices and long-term revenue losses have to be stacked again the massive inefficiencies / costs associated with ongoing government management of resources /networks.

Of course, what’s so ironic about this latest privatization wave is that it comes at a time when some regulatory activists are clamoring for more regulation of the Internet and calling for broadband to be converted into a plain-vanilla public utility. For example, Free Press founder Robert McChesney has argued that “What we want to have in the U.S. and in every society is an Internet that is not private property, but a public utility.”  That certainly doesn’t seem wise in light of the track record of past experiments with government-owned or regulated utilities.  And the fact that we are talking about something as complex and fast-moving as the Internet and digital networks makes the task even more daunting.

Government mismanagement of complex technology projects was on display in a second article in today’s Journal (“U.S. Reviews Tech Spending.”)  Amy Schatz notes that “Obama administration officials are considering overhauling 26 troubled federal technology projects valued at as much as $30 billion as part of a broader effort by White House budget officials to cut spending. Projects on the list are either over budget, haven’t worked as expected or both, say Office of Management and Budget officials.”  I’m pleased to hear that the Administration is taking steps to rectify such waste and mismanagement, but let’s not lose sight of the fact that this is the same government that the Free Press folks want to run the Internet.  Not smart.

  • Guest

    Right, because the privatization of electrical market in Southern California worked so well…

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  • http://aheram.com Jayel Aheram

    It is hard for me to swallow the idea that anything involving a construct of the state is “privatization.”

    Could we please use a term that is not as grossly inaccurate as “privatization?”

  • http://www.my-dogshop.com/root.php?beds-bedding_dog-beds.html Susan

    Well, that certainly doesn’t seem wise in light of the track record of past experiments with government-owned or regulated utilities.

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