Dr. Donald L. Alexander

Not starting a dubious government program is as important as privatizing poorly performing, already-existing ones. State officials who want to take charge of wiring Michigan with high-speed Internet access should stay home, and MPR explains why.

In November, Gov. Engler announced the state would work to wire all of Michigan, including sparsely populated rural areas, with high-speed Internet cable. But rapidly changing technology and differing demands from consumers make the state's plan redundant at best and harmful to the telecommunications market at worst.

Over the past several years, the Internet has helped to unleash a revolution in commerce. Most of the new economic activity generated by online "e-business" has happened with little or no government involvement. But the Michigan Economic Development Corporation (MEDC) is looking to change that.

Government "forced access" proposals would stifle innovation, limit competition, and raise prices in the growing market for Internet access.

The Internet has transformed our way of life; and new "broadband" technologies promise even greater benefits through high-speed Internet access and communications. Unfortunately, because major cable companies currently have the capacity to provide this technology to their clients, other Internet service providers (ISPs) are crying foul. They are calling the cable companies' "head start" unfair and forming alliances to get the government to force cable companies to make their high-speed broadband lines available for use by all ISPs on equal terms. This study explains why this government intervention would be a terrible idea. It analyzes market trends and technological possibilities to show that "forced access" would significantly increase costs for consumers with no benefit to show for the added expense. The study concludes that "forced access" would stifle the innovation that naturally emerges from the free play of market forces. It shows why government should not only refrain from interfering with broadband technology, but should allow competition between local cable providers in order to maximize the potential of this exciting new technology.

Only 3% of America’s 67 million cable TV subscribers can select from competing cable companies. But consumers in Wayne and Berkley, Michigan, are showing how competition can bring in more channels for lower prices.

Government interventionists argue that antitrust laws are needed to protect the public from Microsoft, but a lesson from Michigan history shows that brainpower and some old-fashioned free-market competition can break even the most powerful cartels.