(06/10/05) During my tenure as a state representative, I watched well-meaning public servants advance ineffective and costly initiatives in the name of good government or economic development. It is one thing to operate a closed network to support municipal departments, it is quite another to compete in the open market for customers. City government, no matter how efficiently administered, does not have the governance, nor the financial structure necessary to assume the kind of risks that are present with rapid growth and technological change.

Government participation in otherwise private markets usually signals an inefficient market and can discourage competition. Government players can also give themselves tax breaks and can prop up their “businesses” by relying on other city resources as well as their paying customers to foot the bill. Existing and potential businesses are understandably put off by such preferences.

Finally, because Burlington is Vermont’s largest city, the city’s venture also has the potential to “cherry pick” a readily available and profitable market, leaving the more costly rural areas to the private competitors. This is hardly a recipe for enticing more providers to our underserved and less populated areas let alone true competition.

That’s why the Legislature conditioned the city’s foray into telecommunications and cable and charged the Pubic Service Board with enforcing specific conditions. I was one of several legislators who worked on this legislation in 2000.

In our negotiations with Burlington legislators who wanted to enable Burlington to design its telecommunications and cable system while sending the right message to would-be competitors and investors. We wanted to make sure that Burlington would not gain an unfair advantage by using its municipal status or any city funds. We certainly wanted to make sure that the investors, not taxpayers or ratepayers, would be left holding the bag if the venture fails. Burlington agreed to these terms and I trust that it will live up to those terms.

Nationally, of the several hundred municipal broadband systems in the U.S. few if any have delivered on its promise of payback, below-market pricing, and high penetration into a residential market. Many have dipped into general fund revenues or raised taxes to support these ill-conceived ventures. In retrospect, the legislature’s decision to protect the Burlington tax and rate payers was a good policy.

Burlington’s plan may have been seemed reasonable in 2000, when few citizens had high speed internet service and few businesses had competitive data and telephone offerings. Today nearly everyone in Burlington who wants broadband can have it through cable, phone, wireless and even satellite. Burlington area businesses can choose from dozens of commercial data and telephone service providers.

Burlington and Vermont’s economic competitiveness is also at stake. The speed at which technology is changing means Burlington is at risk of having obsolete equipment very quickly. California had a public phone system but is replacing it with a privately owned and operated one, saying such “infrastructures have proven costly and cannot keep pace with the rapid developments in telecommunications technology."

The free market, time and technology have worked itself out. The city of Burlington should be so lucky! If only technology and time could work out the problems of keeping neighborhoods safe, repairing streets, educating children, discharging treated waste and providing a good environment for job retention and creation.

It is difficult to get the wheels of government working, but often even more difficult to get those wheels to stop once they are already moving. Good government is the ability to realize when a problem has worked itself out, and move on to the next problem. Its time for Burlington to recognize that time and the market has changed.

Frank Mazur
South Burlington

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Frank Mazur is a small business owner and was a member of the Vermont House from 1995-2004. He’s also chair of the advisory board to FreedomWorks.com