U.S. study on government-run telecom draws lukewarm response in Canada

A new American report says government-run telecoms distort the marketplace and should be discouraged. But Canadian commentators say the study itself is a distortion of reality. The 17-page paper, entitled Does Government Belong In The Telecom Business?, was written by Jeffrey Eisenach, the president of the Progress & Freedom Foundation. The PFF is a Washington DC-based group that studies the impact of the digital revolution and its implications for public policy. The study came to the attention of Bill St. Arnaud, senior director of network projects for CANARIE Inc, who distributed it through his extensive e-mail list. Reaction was immediate. Ian Angus, president of the Angus TeleManagement Group, sent a letter to CANARIE saying the report proves nothing. "It isn’t by any stretch of the imagination even an objective study of the issue."Part of the blame he lays at the feet of the PFF. "Virtually everybody associated with this thing was a former Reagan government advisor," Angus explained to Network Letter, "They have all their papers published there and they uniformly argue against regulation, against taxes and against governments being involved in telecom." Eisenach’s report is a doctrinaire document from the very first page. The first sentence asserts that "widespread recognition of the inefficiencies of government-operated businesses has led to a worldwide movement towards privatization." The author presents his thesis early on. In tortured prose, he writes, "This paper examines this surprising trend towards expanded government participation in the U.S. telecommunications business. It concludes that such entry is not likely to produce desirable results. Indeed, there is strong evidence that government operated telecommunications enterprises have performed poorly in the past, that they rely on extensive subsidies that burden taxpayers and distort the marketplace, and that they discourage private-sector provision of very services they seek to provide." But Canadian observers say Eisenach doesn’t let the facts get in the way of a good story. The paper alleges that Chicago’s CivicNet is on its way to becoming a phone company. "The city of Chicago, for example, makes no apologies for its plan give its proposed ‘CivicNet’ telecommunications company substantial advantages that would not be available to other, privately-owned companies," Eisenach claims. Enticing the private sectors to build condo fibre networks But that’s not their intent, according to St. Arnaud. "Their model is the same as we’ve been advocating, that the city provide incentives for the private sector to build an open condominium network to all the public sector buildings in the city." "This particular paper includes some useful data, but its argument against public telecom utilities consists of quotes from individuals who share the organization’s political views, and a few facts from a very small number of cases," Angus wrote to St. Arnaud. "It gets the facts about Chicago CivicNet wrong, so I’m not inclined to accept its other ‘facts’ uncritically." The telecom expert is not so anxious to dismiss public involvement in the sector. "Sometimes the government can help and sometimes the government just ought to stay out and you really have to make a case-by-case analysis," Angus opined to Network Letter. St. Arnaud doesn’t regret distributing the study, flawed as it is. "I put that out just to show there is another viewpoint out there. It always helps to define the debate, define the issues to see different perspectives. But I think it’s more useful if these reports are based on facts or have some factual data to support their arguments." To an extent, it’s working. Murray Matiowsky of Manitoba Hydro chairs the western Canadian region of the United Telecom Council. He told Network Letter the group, which helps utilities enter the telecom market, is studying the PFF paper and will discuss it at an upcoming session.

U.S. study on government-run telecom draws lukewarm response in Canada

News | January 29, 2001

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