CHICAGO – The Heartland Institute, which was founded in Chicago in 1984 and bills itself a “genuinely independent source of research and commentary,” is flip-flopping along and trying to defend its report against the Tri-Cities, writes adjunct Northwestern professor James Carlini.

Though the Tri-Cities referendum was defeated in November, the questioning of the credibility of the Heartland Institute must have hit a nerve. I received this over the weekend:

I got this from the Heartland Institute’s director on our message board. I thought you’d like to see it.

Annie Collins
Fiber For Our Future
http://www.tricitybroadband.com
630-938-7630

In defense of The Heartland Institute
Posted here on Dec 11., 2004 at 3:56 p.m.
Editor’s note: On Dec. 20 at 2:50 p.m., this post was reposted verbatim at the poster’s request without typical edits for flow, formatting and grammar

My name is Joseph Bast, I'm the president of The Heartland Institute and author of two reports critical of the Tri-Cities' municipal broadband proposal. Until now I’ve avoided responding to all the ad hominem attacks and silly speculation about me, Steve Titch, and The Heartland Institute contained in various emails and bulletin board postings, typically by people unwilling to provide their names. But I suppose Annie Collins’ December 2 post and John St. Julien’s November 23 essay, which Nicholas Tyszka just brought to my attention, merit a reply.

The Heartland Institute is a 20-year-old nonprofit organization that addresses a wide range of topics, from telecom to environment, health care, school reform, and tax and budget issues. Our principal audience is the country’s 8,300 state and national elected officials, to whom we send publications on a weekly basis.

We do indeed have a “free-market” perspective, which means we take seriously Bill Clinton’s admonition that we have reached “the end of the era of big government.” We look for ways to empower people to solve their own problems and achieve their own goals by reducing the barriers erected, often unintentionally and at the behest of special interest groups, by governments. Those barriers include high taxes, command-and-control regulations, and government provisions of services that are better left to private (for-profit and nonprofit) organizations.

I personally do not shy away from the “libertarian” label, and have used it often to describe my views in Heartland’s monthly membership newsletter, The Heartlander. Heartland, though, does not fit so neatly into an ideological box, as we have nearly a dozen spokespersons and our publications feature the work of nearly 100 policy analysts and experts. Heartland also has a legislative advisory board composed of some 450 elected officials, all of whom are Democrats and Republicans (naturally) and who have views that span the ideological spectrum.

Heartland has a large and diverse funding base – 1,500 donors in all. No one donor gives more than 10% of our budget, and no corporation gives more than 5%. Corporations supply about a quarter of our budget. We have donors on all sides of most issues. They support us because they agree with our free-market positions on particular issues. We’ve lost many donors over the years because we took principled stands they disagreed with.

For many years we listed all of our foundation and corporate donors on our Web site and challenged other groups to do the same. Earlier this year we took that list off the site because lazy and biased reporters and advocates would simply go to the list, find a few unpopular corporations, and then use the claim we are “funded by X corporation” as an excuse not to respond to the actual arguments and facts we present. And of course, none of the other think tanks and advocacy groups followed our lead in fully disclosing their funding sources.

Heartland’s positions on most issues are only “extreme” to viewers who are well to the left of the center of the public policy debate. For example, we’ve been supporting charter schools, tuition tax credits, and school vouchers for 20 years, and today there are thousands of charter schools, a half-dozen states have tuition tax credits, and vouchers have been adopted in four states and will be adopted in many more in the coming years. Is it “extreme” to point out that public education is practically the only government-run monopoly left in the U.S., that it is responsible for an alarming achievement gap between black and white students, or that it is responsible for U.S. students scoring last or nearly last in international academic competitions? I don’t think so, and neither does the majority of parents and voters.

On telecom issues, from day one Heartland has called for competition and choice. Following the lead of free-market thinkers at the Cato Institute, Competitive Enterprise Institute, Heritage Foundation, Progress and Freedom Foundation, Institute for Policy Innovation, Pacific Research Institute, and other think tanks, we’ve been critical of the FCC’s interpretation of the 1996 Telecom Act. You have to be blind (or have a personal financial stake in the debate) to not connect UNE and TELRIC with the depression in the telecom industry. Cross-platform competition and private property rights, not forced access and socialization of the grid, are the progressive principles that ought to guide telecom policy in the future. And once again, there is nothing “extreme” about that view. It is in fact guiding public policy reform now and will be the dominant themes of state telecom reform in the coming years.

Concerning Steve Titch, we make no secret of the fact that he is a consultant for various private clients as well as a Heartland Senior Fellow and managing editor of IT&T News, our monthly newsletter on telecom and IT issues. See his bio at http://www.heartland.org/SpeakersBureauArticle.cfm?sbrId=64.

Titch’s expertise comes from his experience before launching his consulting business in 1999. He was director of editorial projects for Data Communications magazine, where he directed content development for supplemental publications and special projects. He also has held the positions of editorial director of Telephony, editor of Global Telephony magazine, Midwest bureau chief of CommunicationsWeek, associate editor-communications at Electronic News, and founding editor of Cellular Business (now Wireless Review).

And finally, concerning my own policy studies on municipal broadband (see http://www.heartland.org/Publications.cfm?pblId=3), my qualifications to write the study derive from 20 years of research and writing on public versus private delivery of goods and services, time spent actually looking at the availability and prices of broadband services in the Tri-Cities area, and examination of the consultant’s report on the proposed municipal broadband system. None of the criticism I’ve seen challenges my principal conclusions, that (a) access to broadband services in the Tri-Cities is now ubiquitous, (b) prices are plummeting, (c) band width and downstream speeds are rising rapidly, (d) municipal systems in many other cities have not been financially self-sufficient, and (e) the Tri-Cities proposals expose the cities’ taxpayers to considerable financial risks.

I do not claim to be a technologist, but I don’t need to be one to tell that the “business plan” put forward by the Tri-Cities is equal parts scam and wishful thinking. Enthusiasts for FTTH appear to believe bandwidth is the only element of broadband service that matters. They are wrong. Access to content, cost of infrastructure, and the behavior of competitors are all just as important, and in these areas, a municipal FTTH is bound to fail, not just in the Tri-Cities, but in virtually any city in the U.S. that attempts it.

I suggest that Annie Collins, John St. Julien, and other liberals who are enamored with municipal FTTH find some other cause to occupy their time in the future. It’s not a good idea, the voters don’t want it. Your knowledge of telecom technologies may be state-of-the-art, but your ideas about economics and politics are about 30 years out of date.

Joseph L. Bast
President
The Heartland Institute
jbast@heartland.org

My Observation

My criticism stands.

This is not a liberal or conservative thing. I am tired of these political labels used as some way to justify counter-criticism from either side. I do not know or care if you are a liberal or if he is a libertarian or conservative. The issue is that we need to make the network infrastructure competitive on a global basis and that means moving up to fiber (not hanging onto copper).

His letter to Collins is full of contradictions: “We look for ways to empower people to solve their own problems and achieve their own goals by reducing the barriers erected (often unintentionally and at the behest of special interest groups).”

This is true except for when people want to have their own telephone company and break away from the “special interest groups” of the phone companies, which themselves lobby very hard to keep everything tightly regulated in their favor.

They want competition to sell long-distance but they do not want competition in their own backyard of local service. This has been the case for years. Bast never directly answers whether or not any incumbent phone company (like SBC) has contributed to his “institute”. Is he afraid it would crush his purported “credibility”?

It’s very clear to anyone who really is in the industry that the incumbent phone companies are trying very hard to hold on to their eroding subscriber base and having a “town telephone and cable service” as a competitor is absolutely frightening.

Again, Bast does not show any hands-on “knowledge of the industry” for himself or his “senior fellow”. What have they designed or sold in terms of network infrastructure? On which mission-critical networks did they work? Did they put in any time at Bell Labs or one of the Bell operating companies?

Maybe he and his fellow editor should research some FCC reports (like “Trends in Telephone Service”) to see that the incumbents are bleeding to the tune of double-digit gains by the CLECs. If the Tri-Cities would have succeeded, this would have been another CLEC picking up long-dissatisfied subscribers.

Here’s another quote: “Heartland’s positions on most issues are only ‘extreme’ to viewers who are well to the left of the center of the public policy debate.”

I find their position extremely unfounded. When you (a subscriber) realize that you have substandard service, the only thing you can do is be at the mercy of the monopoly that has its own timeline for when you get better infrastructure.

The notion of people doing something on their own is fine so long as it doesn’t conflict with the business model of one of Heartland’s contributors. I thought Capitalism means that the strong survive and the weak go out of business.

If the incumbent phone companies can’t stay competitive, they should go the way of the buggy-whip manufacturer. Unfortunately, the phone companies have one of the strongest and oldest lobbying staffs out of any business. “Telewelfare” is alive and well as they reach out and touch their legislative friends for support.

Bast appears more liberal than conservative by calling for us to prop up and subsidize old technology. It’s funny how money buys off the truth.

Doesn’t Know Broadband From Waistband

If anyone is 30 years behind, it is Bast and his Heartland Institute. They are trying to protect and preserve a business model that’s based on copper. This is holding back our global competitiveness by fighting ideas and approaches that other countries are quickly adopting in order to compete on a global basis.

Carlinism: Pseudo experts sound real good until they get found out.

Carlini will be teaching a class on international applications of technology that includes Six Sigma and project team dynamics. It will be at Northwestern University Chicago campus in the spring on Tuesday nights. For more information, call 773-370-1888.

James Carlini is an adjunct professor at Northwestern University. He is also president of Carlini & Associates. Carlini can be reached at carlini@northwestern.edu or 773-370-1888.
Click here for Carlini’s full biography.