A Unique Economic Development Opportunity?

The city of Martinsville enjoys a unique economic development opportunity presented by the bankruptcy of cable provider Adelphia, suggests consultant Robert F. Sepe, proprietor of Cary, N.C.-based Action Audits LLC. Sayeth the Martinsville Bulletin:

The city could use Adelphia’s existing infrastructure to greatly enhance the Martinsville Information Network (MINet), which now links mostly schools and government offices. The city then could provide companies with “super-high-speed” Internet, voice and video transmissions, which would give Martinsville “a presence anywhere in the world,” said Sepe.

Apparently, the city is taking the idea very seriously. Says the Bulletin: “Action Audits … has determined the city franchise’s value. City officials have declined to release it, though, saying that doing so may hinder any negotiations with Adelphia that may occur.”

If Martinsville winds up taking over its local Adelphia operation, it could provide a model for other communities in Virginia served by the cable company.

Philosophically, I have major problems with local governments getting into the telecommunications business. They don’t possess the expertise to do a good job managing an on-going business enterprise like a cable company. On the other hand, Martinsville and Henry County have every reason to be frustrated by the unwillingness of private-sector businesses to invest in local telecommunications infrastructure — investments that offer enormous social benefits to the community.

Are there no alternatives for communities to incentivize cable and telecom companies to accelerate investment locally without incurring the responsibility of operating the business?

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  1. Anonymous Avatar

    Telecomm is a real problem for rural areas – and rural centers – all over the country. Dollars for new infrastructure go to growing communities like Loudoun, while dollars for infrastructure improvements go to denser areas with more thriving economies where there are more customers for higher quality services.

    Meanwhile, the Martinsvilles are left behind. Unfortunately, government action may be their only hope. That said, that action could take the form of some sort of program subcontracted to a private service provider. Either way, the government may be the only entity with sufficient resources and interest in solving the problem to take responsibility for doing so.

  2. James Atticus Bowden Avatar
    James Atticus Bowden

    Consider how rural areas got electricity. What is the difference?

    Was it an inappropriate New Deal expansion of government to create the Rural Electricity authorities? Was it an appropriate action like building roads,canals, railroads and airports?

    When did corporations and co-ops take over the power business from government sponsorship? How did it work for citizens?

    My greatest caution is to be careful about the technology choice IF the Commonwealth needs to get involved. In Educations, the Standards of Quality are saddling us with huge expenses for a tech jobs program in schools that is OBE. Don’t need to repeat that mistake.

  3. JamesRiverGOP Avatar

    This is a tough issue, philosophically, with good arguments on both sides. That said, a balance can be found with the City owning the infrastrucure, keeping it dark, and putting leases for its operation out to bid leases to the private-sector. Depending on infrastructure capacity, there is no reason that several leases can’t be extended to the private sector, which would bring in competition.

    The municipality should be very careful about “getting into the business.” It may be inviting at first blush, but could end up being an expensive headache. Witness the City of Bristol, which several years ago got into the telecom business and is now chomping to get out of it, as they got locked into old technology they can’t afford to upgrade and is also now saddled with quite a debt service.

  4. Very interesting post and comments. Currently Lynchburg finds itself in the same boat. The contract for adelphia has been over due for quite sometme. Comcast will be becoming our new provider. The main question, I see is the city has some good bargining chips right now, how will they use them to best benefit the city?

  5. Jeremy Hinton Avatar
    Jeremy Hinton

    I tend to agree with JamesRiverGOP’s comments. Although the method of getting there would be different, what you may end up with is something similar to the CPAU setup in Palo Alto (atleast the fiber piece):

    CPAU Commercial Fiber

    Of course, the city already maintained a larger public infrastructure through the municipal utility, but the idea of offering the dark fiber to promote competition between actual telecom service providers is intriguing.

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