Keep government out of the internet business

Ian MadsenManitoba’s Opposition New Democratic Party proposes the creation of a new Crown corporation to provide high-speed internet service to rural and remote communities, particularly First Nations communities, in that province.

This is a bad idea for several reasons.

A host of private-sector and government organizations are launching enormous flotillas of low-Earth orbit (LEO) satellites to provide this very service. They are set to go online in a few years. While they may vary in cost to the user, there will be competition. And since coverage will be global, the providers will have a huge potential market, making it quite likely per-user prices will be relatively low.

Projects include one from Telesat, a Canadian company; Starlink, from Elon Musk’s SpaceX; Kuiper, from Amazon; and efforts from Facebook, OneWeb and others. They involve at minimum hundreds of individual satellites; in some cases, thousands. Their low orbit means they can be lower power and smaller. And dozens can be launched at one time at lower altitude. These factors lower the cost per satellite.

Creating a Crown corporation rarely results in the quality and cost of service originally conceived or promised.

The sad debacle of Manitoba Hydro’s Keeyask and Bipole III projects also came with optimistic pronouncements by believers in government solutions. These projects supposedly would provide cheap power for domestic and export sale. They would benefit First Nations through service contracts and jobs, and the development of remote communities, plus spinoffs.

Instead, these Crown projects are multibillion-dollar disasters, particularly for the taxpayers.

The promoters of the internet proposal are the same sort of people – indeed, some of are the same people.

Crown corporations are most often far inferior to the private sector when it comes to addressing unmet demands. They invite political meddling and often employ at senior levels people with political, social or other links to favoured or in-power elected or unelected government officials.

Moreover, they lack the discipline conferred by free markets onto products or services provided, and by capital markets.

They are also non-taxable.

Nor do they attract the most innovative or creative thinkers, builders or leaders. Rather, they attract those with a bureaucratic risk aversion – except when it comes to Keeyask-style grandiose empire-building with taxpayers’ money.

So they put taxpayer capital at risk, too.

Crown corporations are a way for those with a bias in favour of government ‘solutions’ for things that may not even be issues, let alone problems, to find a home for themselves and those of a similar central-planning, social engineering, statist and technocratic mentality, rather than an entrepreneurial mindset. They could also be yet another locus for anti-market individuals, and their votes and election campaign donations.

This is yet another proposed venture with little or no profitability as its goal. Perhaps hundreds of millions of dollars that Manitoba can ill afford would be invested. Taxpayers have suffered enough.

If the imminent LEO systems turn out to provide exorbitantly-priced services, the Manitoba government could look into assisting the consumers or communities that receive transmission links. That would undoubtedly be cheaper than what this suspect and unattractive proposal for a Crown corporation would entail.

Let the private sector take on the costs and risks; that’s its role. It’s not the role of government.

Ian Madsen is a senior policy analyst with the Frontier Centre for Public Policy.

Ian is one of our Thought Leaders. For interview requests, click here.


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