DISTOPIA: The Proper Role of Government In The Telecom Industry

The Utah Taxpayers Association asked me to speak briefly at their pre-session conference on the proper role of government as it relates to competing in the private sector and specifically in the telecom business.

Due to horrible road conditions at the time I started my commute from Ogden to the the Capitol, I was unable to make it to the meeting as planned. But, I still have my written statement which I will share here with you:

We all know that government is clumsy and inefficient. Especially our form of government, a democracy, by its very nature, is slow to change and often solves problems by small degrees and measures. So given such awkward but consistent results, we have to wonder why it would ever be a good idea for government to enter business competition against the private sector.

We have seen how poor results materialize when government ventures into arenas where it should not be. An example was illustrated recently by an audit report presented to the Legislature regarding municipal telecom systems. In that report we discovered that there were glaring deficiencies in how Utah municipalities had run their program and left the project high centered without sufficient funds to complete their task.

Meanwhile, taxpayers are left with an unfinished project and still paying on the bonds issued at the outset. The Legislature would be ill advised to risk moral hazard by bailing out these municipalities. Doing so would only encourage others entities to take their chances at the cost of Utah taxpayers. We also do not want to be throwing good money after bad. Therefore, we must make sure that responsibility for the debts incurred are limited to those who incurred them.

It is also important to note that Utah code prevents municipalities from subsidizing government telecom systems with taxpayer dollars. There has been some talk of softening these laws in order to help the municipality telecom systems become more competitive in the marketplace. Such efforts run contrary to free market principles and hurt taxpayers more than it helps them. Given such, the Legislature should oppose any efforts to weaken these provisions.