The New Democratic Party, the Opposition in the Manitoba legislature, has proposed 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 idea is not advisable, for several reasons.
In the first place, a host of private sector and government organizations are launching enormous flotillas of low-Earth orbit (LEO) satellites to provide this very service, 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 could be relatively low.
Projects include one from Telesat, the 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 of them. Their low orbit means they can be not only lower power and smaller, but dozens of them can be launched at one time at a lower altitude, both factors which lower the cost per satellite as well.
Second, creating a Crown corporation rarely results in the quality and cost of service originally conceived or promised when first proposed. 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 via contracts and their labour and the development of remote communities and spin-offs. Instead, they are a multi-billion dollar disaster; most importantly, for the taxpayers. This proposal’s promoters are the same sorts of people; indeed, some of them are the same people.
Third, Crown corporations generally and most often are a far inferior way to address unmet demands than the private sector. 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 in products or services provided and by capital markets.
They also evade taxes by being non-taxable. They do not 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. They put taxpayer capital at risk, too.
Fourth, Crown corporations are a way for those with a bias toward government “solutions” for things which 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. Thus, they could be yet another locus for anti-market individuals and their votes and election campaign donations.
Finally, this is yet another potentially expensive venture that would have little or no profitability as its goal, in which perhaps hundreds of millions of dollars could be sunk, which Manitoba can ill afford now, if it ever could have or should have. Taxpayers have suffered enough. If the imminent LEO systems turn out to provide exorbitantly priced services, Winnipeg could look into assisting the financing of either the consumers or the communities that receive the transmission links. Either would undoubtedly be cheaper than what this suspect and unattractive Crown proposal would entail. Let the private sector take on the costs and risks. That is its role; it is not the role of the government.
Ian Madsen is a senior policy analyst with the Frontier Centre for Public Policy.
Photo by Umberto on Unsplash.