Time Warner vs. Wilson, NC

It seems that Time Warner and Embarq never really paid much attention to the town of Wilson, NC. So when residents got fed up with paying too much for subpar service, they decided to do something about it.

They created Greenlight, an ISP that provides awesome packages for very good rates. How good are Greenlight’s deals? Well, for $99/month, you can get for 81 cable channels, unlimited phone service, and 10Mbps of synchronous bandwidth Internet; compare that to a similar “basic” plan from Time Warner, which offers fewer channels and less bandwidth for an “introductory rate” of only $137. For only $33 more per month than Time Warner’s “introductory rate”, Greenlight has a plan that provides every single channel (including premiums, like HBO and Showtime), unlimited phone service and 20Mbps of (let me mention this again) synchronous Internet.

Of course, Time Warner doesn’t like this one bit, so they’re teaming up with DSL provider Embarq to try and convince the North Carolina legislature to ban this type of “community-owned” ISP. And frankly, I can kind of see their point. Why is it fair for a community to use tax dollars to create a company that competes with Time Warner? Why not use tax money to create a chain of “community-owned” fast food restaurants or “community-owned” tire stores?

On the other hand, many people (myself included) see Internet service as a utility, much like water or electrical service. No community would put up with the kind of shenanigans Time Warner is known for when it comes to water, gas, or electrical service – so why should Internet access be any different? I mean, imagine if your water company suddenly decided to implement caps on the amount of water you could use per month… and then made those caps so low that, to consume the same amount of water you normally consume, you had to pay two or three times as much as you did before? No one would put up with that from a water or electricity utility, and no one should have to put up with that from an Internet provider, either.

It’s long been my dream that some government agency – be it federal, state or local – would create a “semi-private” company that would run fiber optic cables to every home in America (or North Carolina or my hometown) and then ISPs could really compete against each other as “virtual operators”. The public would own the fiber, and ISPs could charge whatever they wanted for their content. Since the ISPs would only be providing hardware to the end user and software services like email and DNS, everyone would be free to chose whichever provider they wanted. Families with small children could sign up for Mayberry USA (a “family-frendly” ISP that rigorously filters “adult” content), while “traditional” ISPs like Time Warner could offer whatever crap they offer. But that’s just a dream, right?

In any case, I remember from my economics classes that black markets appear when consumer demand is not being met by the legitimate market. I’m not talking about stuff like illegal drugs or kiddie porn (although those are perfect examples). I’m talking about things like gaming consoles. When Sony, Microsoft or Nintendo release a new console, demand frequently outstrips supply… and hundreds of consoles suddenly appear on eBay. Concert tickets are another example. Demand for these frequently outstrips supply, and thus sites like stubhub.com and other reseller sites thrive. If the people of Wilson, NC are dissatisfied with their Internet providers, it’s a perfectly rational economic decision to provide it for themselves. The bottom line is that if Time Warner were meeting that demand, Greenlight wouldn’t exist. But it does… so what does that tell you, Time Warner?

Read more about it here.

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