Debate Magazine

Digging and Natural Monopolies.

Posted on the 08 November 2013 by Markwadsworth @Mark_Wadsworth
1. Driving through town yesterday, I noticed that a local utility seems to be wrapping up their engineering for a new district heating network. It´s been over 8 months of open pits in almost every street, in some places it has more or less closed off normal business dealings, and caused severe revenue losses. Noone knows if district heating is actually any good, as they are subsidised beyond measure, in construction as well as in operation, and there are plenty of options, including better insulation, ground-based heat exchange etc.. But anyway, new utilities are going to get built. In a few years, it might be pneumatic refuse collection, more fiber and what not. Same thing over again.
2. Digging accounts for 80% of costs in laying down fiber. In addition, there are externalised costs for utilities construction, that are not paid for by utilities, but by businesses (theoretically, landlords as well, but you know they are not going to take that hit in practice). To reduce costs, some are going for the technique of micro-trenching to lay down fiber. This sounds excellent, until you consider the long term, where there will be another layer of complication at road-repairs or laying new utilities.
When the hell are local governments going to start building utility tunnels? You have an initial once-off cost, and minimal maintenance. From then on, the limitations are only in the physical space in the tunnels. Preformed concrete tunnels, about a meter in diameter, divided by separate chambers, accessible by manholes, can carry all utilities including wastewater for normal density residential areas. For high-density urban environments, you have larger tunnels, that are large enough to fit people, even small vehicles. When it comes to telecoms, you have now eliminated any natural monopoly. The tunnel-owner, i.e. local govt., can charge the operator nominal maintenance costs for laying down fibre, as long as there is room in the fibre-section of the tunnel, and switching operators will be simple. Still some intial cost, but nowhere near the costs of separate trenches.
There is a tax that can be applied to pay for the capital costs of these tunnels which happens to fit perfectly.
The thing is, local government has changed their focus from "public goods" to the business of providing every service known to mankind, and have no time or money for such follies. In fact, in my local government, doing this stuff; local roads, water/wastewater, refuse collection, fire services, is about 5-6% of the total budget.

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