In a terrific piece, Glen Pearson asks:
...[W]hy aren’t the true business entrepreneurs speaking out against fiefdoms like Caterpillar and working to make governments more sensitive to where the real growth is?
I thought I'd answer his question with a story.
We have an office in the west end of London Ontario. Specifically just southwest of Hyde Park and Fanshawe Park roads. There's a few dozen businesses back here, most of which you have never heard of. Some of us own our own buildings, others rent from a handful of different landlords.
It is impossible to get decent internet service here. DSL is not an option - the phone lines in the area are 40-50 years old and cannot handle the load. (Why have our phone lines never been replaced? I have no idea). Rogers has not wired the area for cable. The only option is to get satellite internet, which is very expensive. We pay nearly $500 a month for 100 GB worth of bandwidth and many months we go over our cap and pay penalties for doing so.
I have tried on four separate occasions to get a quote to get a cable run to our office (cable is available on the east side of Hyde Park road, but not the west). I received the following four answers:
- $50,000
- $65,000
- $100,000
- You don't want it.
I'm not sure why we get a different answer each time, but we do.
This is a pretty classic microeconomic problem. If we have the cable run to our office, it will pass many other offices who will then be able to run cables to their office for next-to-nothing. Our installing cable will provide a pretty massive positive externality to them. I have tried to band 25 different businesses together to each pay $2500 or so, but we've run into the classic co-ordination and free-rider problems. This is exactly the type of externality problem that government should be involved in. They could co-ordinate us all together, put in the cable, and charge us for it. Heck, they could probably do so at a substantial profit.
I tried discussing this with municipal politicians from councilors to the mayor and gotten nowhere. It was a complete and utter waste of time. So much so that it's more profitable to simply pay the $500+ a month for satellite service than it is lobbying politicians who have zero interest in the problems of small business.
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