Argument: State intervention would crowd out private firms

The imposition of a powerful state firm dominating the broadband market would serve to reduce the ability of private providers to compete. The greater resources of the state would be able to give it the power to dictate the market, making it less attractive to private investment. Creating a monopolistic provider would be very dangerous considering that this is a sector upon which much of future national development relies. [1] Crowding out private firms will make them less inclined to invest in new technologies, while the state provider is unlikely to fill the gap, as traditionally state utilities rely upon their power of incumbency and size rather than seeking novel services. An example of this is Eircom which, when it was the state utility, provided broadband of a lower quality and at higher price than most private providers. The end result of state dominance and reduction of private competitors is a loss of innovation, a loss of price competition, and an erosion of customer service.

[1] Atkinson, R. “The Role of Competition in a National Broadband Policy”. Journal on Telecommunications and High Technology Law 7. 2009, http://heinonline.org/HOL/Page?handle=hein.journals/jtelhtel7&amp;div=4&amp;g_sent=1&amp;collection=journals

Candidate 1: "The private sector will never be able to meet the demands governments would make in order to build a working broadband network and the subsequent smart grid because their profit motives cannot internalize the social benefits of the new grids and technology. Unfortunately the private sector will only build the infrastructure in profitable densely populated areas neglecting rural areas. The state must therefore fill the gap, either by subsidizing private firms to provide service to unprofitable areas, or to service them itself. Furthermore, it can provide the service more freely and more fairly in order to guarantee that citizens get the services they deserve and need to succeed in the 21st century."
Candidate 2: "Internet access is not a fundamental right. It is a useful enabler of rights. But that is not reason to guarantee it to all, any more than states owed every citizen access to a printing press a few centuries ago. Even were it a right, internet access could be provided far more efficiently and effectively through the private, rather than the public, sector."
Candidate 3: "States can develop new power-grids without needing to furnish all citizens with broadband in order to avail of the smart grid. The cost of developing these technologies and implementing them across the board are woefully high, and the inefficient nature of government services means they would only be more costly to the taxpayer. A better solution would be to liberalize the energy markets in order to encourage private firms to invest in the development of the smart grid."
Candidate 4: "State firms do not necessarily crowd out private firms. Rather, they can furnish services in areas that private firms consider unprofitable, and can coordinate infrastructural process on a wider area, allowing for gains in economies of scale. Eircom provides an example of this too as its reduction in investment in broadband post privatisation meant that the government had to begin reinvesting in broadband itself. [1] Private firms will still have incentives to develop new technologies because there will still be profits to be made. But absent private firms, innovation will still exist. State investment in innovation and new technology can be very effective, as was the case with the Space Race.

[1] Palcic, D., and Reeves, E., “Privatisation and productivity performance in Ireland”, http://www.forfas.ie/media/productivity_chapter11.pdf P.200"
Candidate 5: "The state is rarely an efficient service provider. Conventionally, it provides a shoddy service when it faces no competition, and when it charges low prices it is usually at the expense of the infrastructure and quality of service. When free of market forces, the state is even more likely to rest on its position of monopoly and provide insufficient service. But even with a state service, prices cannot be guaranteed to be kept low, but rather states can well overcharge and exploit their privileged position."
Candidate 6: "Broadband is a necessary evolution of internet technology that firms would be wise to avail of if they wish to remain competitive. But it is this very desirability that makes the provision of broadband a lucrative business in which many firms participate. Business on a large scale is rarely organised in diffuse patterns, but clustered in major population centres. Economic development can be furnished by the private sector investing in broadband where there is a market. Growth will not be slowed just because some farmers in Nebraska have slower internet. Singapore is an aberrant example, as it is so small and its population so dense that it would be impossible to compare its provision of broadband access to most other countries."
Candidate 7: "If the state overstepped in its regulation, no doubt private competitors would be able to fill the void. But such an eventuality is rather unlikely given the robustness of civil institutions in free societies and the willingness of people to come out in arms against attacks on their freedoms. The state is not a bogey-man. Rather, it is the best outlet by which to deliver inexpensive, efficient broadband service."

State firms do not necessarily crowd out private firms. Rather, they can furnish services in areas that private firms consider unprofitable, and can coordinate infrastructural process on a wider area, allowing for gains in economies of scale. Eircom provides an example of this too as its reduction in investment in broadband post privatisation meant that the government had to begin reinvesting in broadband itself. [1] Private firms will still have incentives to develop new technologies because there will still be profits to be made. But absent private firms, innovation will still exist. State investment in innovation and new technology can be very effective, as was the case with the Space Race.

[1] Palcic, D., and Reeves, E., “Privatisation and productivity performance in Ireland”, http://www.forfas.ie/media/productivity_chapter11.pdf P.200
