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A Divine Comedy: Paradox, Competition, and Cooperation

A paradox is an apparently true statement or group of statements that leads to a contradiction or a situation which defies intuition. Typically, either the statements in question do not really imply the contradiction, the puzzling result is not really a contradiction, or the premises themselves are not all really true or cannot all be true together. The word paradox is often used interchangeably and wrongly with contradiction; but whereas a contradiction asserts its own opposite, many paradoxes do allow for resolution of some kind.

The recognition of ambiguities, equivocations, and unstated assumptions underlying known paradoxes has led to significant advances in science, philosophy and mathematics. But many paradoxes, such as Curry's paradox, do not yet have resolutions which are accepted by everybody. Wikipedia on "Paradox"

I visited another Texas city that is considering metropolitan broadband and the paradox of cooperation and competition was an underlying theme of our stimulating 2 and 1/2 hour conversation. What a rich topic this is! I sincerely hope that most cities are having or are going to have soon a conversation like we had last Friday.

Resolution of paradox is no easy thing. Just try to make it simple - it won't work. To get past a paradox requires some deep thinking and wrestling with conflicting ideas. The good thing is that the exercise, while necessary, provides ancilliary benefits, like muscles that show up after your workout. A community that wrestles with paradoxes by talking and working things out to their mutual advantage is demonstrating healthy behavior that is a great indicator of future success - and this is success that begets a pattern of success, because working together is an essential component of a healthy society.

This reasoning underlies my argument that the best metropolitan broadband project is begun immediately - no sense waiting if you know it's a long journey - but then proceeds slowly, with steady attention to inclusiveness and diversity of opinion and steady mutual learning of lessons on how to work together better. Lots of listening ensures that the entire situation gets fair consideration and the odds of maneuvering past all the obstacles dealing with a paradox throws your way go up considerably.

When considering cooperation and competition, you see that on the one hand, they lie on either end of a scale that defines how we interact in society - seeming polar opposites. On the other hand, in our daily lives we regularly switch back and forth on our attitude about the two - the answer to how one feels about cooperation and competition is most often "it depends." These lessons start immediately in life, from the Terrible Twos onward, because its the Ego that tells us we are separate and have to compete, but the rational brain recognizes the benefits of cooperation in society. It's situational. It's a nuanced answer, no way around it. Ambiguity on this subject is unavoidable.

You may think you have a rock-solid hold on the situation. "I'm in favor of private sector competition - it's the bedrock of our market economy. It's a matter or principles." But let the market fail you on competition - it can go stale, be abused, or simply be unattainable or impractical - and watch your strong convictions fade. At least I hope they do. There are few things more frustrating than one who holds on to a conviction in the face of overwhelming evidence of the need to let go. When conviction yields to reason is the point at which a market or a society really begins to function in a healthy way and progress is attainable.

When it comes to infrastructure, the underlying support for our daily lives, we tend to benefit from cooperation more than competition, so we turn to the government at its different levels to help manage the situation. In the US, we have a tendency to turn to competition and the private sector whenever we can, sometimes almost to a fault, to our detriment. Other societies and economies have less of a bias to the private sector, and whether or not you favor that approach is a matter of political persuasion.

We mostly build our roads in cooperative fashion, primarily with different public sector entitites coordinating so that the road system, as the physical connection mechanism for our communities, develops to serve all of society. Toll roads, the exception to the rule when it comes to streets and roads, are making a comeback in more congested areas, in the face of difficult financing decisions, but they remain a hotly debated topic in Texas today, especially with the Legislature in session this spring.

But with our electric and telecommunication infrastructure, two other vast connecting networks that we depend upon, the situation is more varied and regional. It's an incremental, mostly blended solution, where prime markets received the first attention from very large private corporations, which built out infrastructure in exchange for agreeing to be regulated to ensure societal benefits. Smaller markets are served in regulated competitive fashion by larger private companies, smaller private companies, or in cooperative fashion by either public sector entities or non-profit cooperatives. It behooves us to re-examine this situation in light of today's market realities, as the need for affordable and ubiquitous broadband connectivity grows inexorably and challenges old paradigms.

In our particular case on Friday, we talked about these subjects in two contexts. First, we talked about market failure: the current availability of affordable broadband in the community and the fact that residential cable broadband is priced at nearly $100/month. Ouch! One could make an argument that competition in this case no longer works for society, but primarily for the benefit of the cable company. The question is how longer society deems this situation to be tolerable, and when they decide to act, just what they intend to do about it. This is the engine that is driving this new industry.

Second, we talked about the issue of regional cooperation - when does it make sense for a community to cooperate with other communities on a metropolitan broadband project? In an ideal world, I would argue for a larger region to cooperate, and I have on this website. But practically speaking, those in a region often consider themselves as competing against each other and do not share my views, and I've gotten the message. There is a middle way though.

It appears the rational choice for city leaders is to a) limit the size of the initial project to the immediate region; b) invite other smaller satellite cities or neighbors in the immediate vicinity to participate in the initial project, while ceding control to the majority partner; and c) hold the larger or more far-flung neighbors at arm's length, at least until after the project has been completed. In a rural county, this probably means the major city drives the project and invites county neighbors to join in. In an urban county, it looks like this is translating into every man/woman for him/herself.

Viewed through the lens of regional competition, this approach makes some sense. "Let other cities model or join in with us AFTER our project is completed, which provides the benefits of cooperation to the region, yet by deferring interaction, preserves the benefits of competition to our first mover community - after all, we pioneers deserve some benefit from going first and taking that extra risk, but we still have the long-term vitality of the region to think about."

As for the first case - where free market competition has failed, at least temporarily, the introduction of a metropolitan broadband project by the city government is corrective, because it changes the fundamental market dynamic, which can lead to two principal outcomes, both beneficial to the society.

First, it can cause the monopolistic service provider to recognize that its hold has slipped, so it drops its high rates back down to a competitive level voluntarily, to prevent mass defection of customers. There will still be many subscribers who will leave if given the chance, for reasons other than price, but the incumbent can preserve revenue by proactively dropping prices. I'm still not so sure how common such magnanimous and far-sighted executive management is. They have to accept the shift to a competitive market, and denial is a powerful force.

A second, more likely scenario is that after the project is underway, the incumbent lowers its rates, but not dramatically. The result is that they let more competition into the market and while you have redundant infrastructures, consumers get more choices and this leads to longer-term competitive behaviors in a more fair market.

Either way, the community wins across the board when it accepts the paradox and works together to embrace and launch a metropolitan broadband project:

- they are hastening the advent of local access to THE infrastructure of the 21st Century - MOBILE BROADBAND;
- they are acting in healthy cooperative fashion as a community, which is contagious and a lot funner than the alternative of incessant bickering of competing interests;
- they are stimulating greater market competition in a commodity service and/or lower prices, with either outcome beneficial;
- they ensure greater social equity by including more citizens in the Have category and addressing the Digital Divide, especially among school kids; and
- they jump-start their economy with a newer, more vital market scenario and greater access to new digital applications and content.

To resolve the inherent paradox of metropolitan broadband, communities need to acknowledge the validity of BOTH competition and cooperation, accept BOTH private sector and public sector roles, decide to move immediately but slowly in order to be more successful, and embrace the fact that WIN/WIN is the only pathway out of the forest and into the sunny meadow, for long-term, sustainable, healthy community interaction. That is what makes a city a desirable place to live and work, and achieving that nirvana is a worthy goal and the sign of strong leadership.

Posted on March 26, 2007 at 05:57 AM

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