August 6, 2002

James Robinson argues: So, who’s good at infrastructure? Well, what’s the best example of infrastructure around? The US highway system. Who built it? The US government. The public is in the right mood to accept this, but the Administration is not. But it’s something to think about as the networking and telecommunications and airline industries collapse around us. Isn’t it?


 


            Well, I certainly disagree. While the US highway system is a good example, I bet it is difficult to think of more examples. Imagine politicians and Government buerocrats trying to decide what infrastructure needs to be built, how, using which standard or when. A case in point is the mess that the cell phone market is in the US. While the whole world is on a calling party pays standard, the US charges the owner of the number. This severely limits the traffic and has definitely hampered the development of the US wireless industry. Why is that? The Government decided a priori, before the market even existed how it should behave. If I were a US taxpayer I would prefer WorldCom to fail, than subsidize data traffic for corporations via the US Government. The same with airlines, let some of them collapse, others will survive. After all, you can get around better with current private airlines than with Amtrak, which is a Government infrastructure company. WorldCom, Global Crossing and others are collapsing financially, but their network infrastructure remains. If they cant survive, somebody will buy it on the cheap and let users pay for it, not taxpayers. If you let the Government be in charge of providing broadband to the home, it might just never happen.


 


This is even worse in other countries. Up to 1991, when the Venezuelan phone company was privatized, it took three, four tries to complete a phone call. Now dialing many times is a thing of the past and DSL services were first launched no more than a year behind the US. Cant imagine any Government matching that!

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