Month: April 2008

communication about administrative problems

Good government must respond effectively to administrative problems. In China, claims of wrongful government action are addressed through petitions to complaint offices (the Xinfang system) and through court cases (administrative litigation). From 1996 to 2004, Xinfang petitions were perhaps forty times as numerous as court cases.[1] How these two processes shape communication with persons not formally parties to the dispute may help to explain this outcome.

In an interesting recent paper, Taisu Zhang argues that the relatively large number of petitions doesn’t indicate Chinese reluctance to pursue court cases. About the year 2000, the Xinfang system handled about five million petitions concerning civil matters. The number of civil cases in the court systems was about four million.[2] Thus the ratio of petitions to court cases is much lower for civil disputes than for administrative disputes. Persons are not relatively reluctant to bring court cases; they are relatively reluctant to bring administrative disputes to courts.

Zhang also argues that the relatively large number of petitions occurs even though petitioning is a much less propitious action. In administrative cases in China, plaintiffs’ claims prevail in about 30% of cases. In contrast, only 0.2% of Xinfang petitions lead to “successful resolution of the dispute.”[3] For a person seeking to prevail in a dispute, the Chinese court system offers better opportunities than the Xinfang system.

Zhang proposes that the adversarial nature of administrative litigation explains the relatively low number of administrative disputes brought to courts. Chinese administrative litigation law prohibits mediation in administrative cases. According to Zhang, the Chinese public prefers “more paternalistic and less confrontational methods”: “the judge should appear as a benevolent ‘Fu Mu Guan’ (‘father figure’) who is seeking to solve problems through the least intrusive way possible.”[4] Officials in the Xinfang system appear to be much closer to such a role.

Forms of communication about the dispute to non-disputants may also favor the Xinfang system. Chinese administrative litigation law requires that all cases receive a public trial. Zhang’s paper says little about this requirement. A public trial does not necessarily make for a more adversarial proceeding. It can, however, expose the interests of the plaintiff to competitors outside of the dispute. Public, authoritative accounts of disputes and decisions fosters the rule of law. In circumstances of intense socio-economic competition not well-structured by an effective legal system, serving as a public example through administrative litigation can have considerable private costs along with the public benefits. The Xinfang system, in contrast, requires no particular written statements and no public account.[5]

The Xinfang system also gives disputants better opportunities to frame the dispute in a way that appeals to others. Litigation involves highly structured forms and patterns of communication. Petitioning, in contrast, allows the petitioner much more freedom in communicating the dispute to others. While class-action litigation requires considerable conceptual and organizational support, mass petitions naturally occur and in fact tend to be associated with mass incidents. Transforming specific administrative problems into more general problems of social unrest makes those problems less informative.[6]

Requiring Xinfang petitions to be submitted according to a specific written form and requiring responses to Xinfang petitions to be described publicly might encourage the development of law-oriented procedures for resolving administrative disputes. More generally, how to get better formed communication about administrative problems is a key challenge for good government.

Notes:

[1] Zhang (2008) p. 4.
[2] Id. p. 24.
[3] Id. p. 13.
[4] Id. p. 5.
[5] Minzer (2006) pp. 161-2 notes that petitions made as in-person visits rose from 59% of petitions in 1990 to 78% of petitions in 2001. In an in-person visit, the petitioner need not commit any information to writing.
[6] Minzer (2006) argues that Xinfang regulations encourage the politicization of grievances.

References:

Minzner, Carl F. (2006), “Xinfang: An Alternative to Formal Chinese Legal Institutions,” 42 Stanford Journal of International Law, v. 42, pp. 103-79.

Zhang, Taisu, “The Xinfang Phenomenon: Why the Chinese Prefer Administrative Petitioning Over Litigation” (February 27, 2008). Available at SSRN: http://ssrn.com/abstract=1098417

on the way

On an uncertain quest,
caught in the back eddies of
time and place, like a
Christmas poinsettia dropping
a brown leaf in June, like
black mould sketching a
fresco on the bathroom ceiling,
there’s a soreness in the
soul of my foot.

“A half million people have gone
by this booth,” the Mississippian said.
People in Washington think we’re
ignorant. And half of them come up
and ask, “What’s that?”
“A turkey call,” I say.
“What’s it do?”
“Call turkeys.”

Circling high, where
ends of hot dogs and
kernels of popcorn
look like pebbles,
an incomprehensible
message bound to
its leg, a homing
pigeon flaps off
to a knurled wooden roost.

successful municipal fiber network

The city of Burlington, Vermont is providing communication services for its residents over a new, advanced municipal fiber optic network. Burlington is a city of about 40,000 persons. The city department that builds the network, operates it, and sells communications services is called Burlington Telecom (BT). BT had been designed and operated to be self-sufficient. BT receives no city budget or special tax revenue.

BT has been much more successful than other new communications services providers. Construction of BT’s fiber network began in 2005. BT provides wholesale services on an open access basis to other communications service providers, and it provides telephone, cable television, and broadband Internet services to retail customers. BT signed up its first customer in 2006, went cash-flow positive for operations in 2007, and is projected to cover its debt and be profitable about 2009.[1] The network is intended to offer long-term, advanced communications services to every resident, business, and institution in the city. By the end of 2008, the network will be sufficiently extensive to do that.

One important factor in BT’s success has been the expertise and leadership of Tim Nulty. After an impressive career working for the United Auto Workers, the U.S. government, the World Bank, and a private capital fund addressing telecom start-ups in Central and Eastern Europe, Nulty came out of retirement to provide key direction for the Burlington project. Unfortunately there’s only one Tim Nulty. But other cities have good leaders, and they can learn from what Nulty has done.

Nulty emphasized a “build the barn you can afford” approach to building BT’s network. BT first built a network for Burlington city government organizations, which served as anchor tenants. The network was then extended to selected large businesses. Subsequently it was expanded to serve residential customers.

BT benefited from relatively low cost of capital. Koch Financial Corp., an organization of private investors, provided $20 million dollars for the project at 5.17% interest.[2] The physical network itself, rather than municipal guarantees, provides the backing for the loan. However, as municipal finance, the interest is tax-exempt. Tax-exempt municipal bond financing provides capital much more cheaply than private equity finance.

A factor less widely understood is that providing retail services has been critical to making BT financially sustainable. BT’s retail services include differently priced bundles of telephone, Internet, and cable services similar to what commercial service providers offer. Since BT offers wholesale services on an open access basis, commercial services providers could out-compete BT at the retail level and confine it to wholesale service provision. Given that city departments typically do not excel in complex, competitive retail services, that probably would be a desirable long-term outcome.

However, beginning a municipal network with retail services makes good financial sense. Establishing a municipal network necessarily requires mobilizing the population to support it. Commercial service providers, in contrast, need to make huge expenditures on advertising and marketing to gain popular recognition and to attract customers. Moreover, pre-established popular support for a municipal network makes customer uptake relatively predictable and scalable. BT has had a take rate of about 30% of houses passed.[3] At the recent Freedom to Connect conference, Nulty emphasized that not allowing a municipal network to provide retail services is a sure way to kill it.

Update: See also the East Central Vermont Community Fiber Network.

Update 2: Burlington Free Press article on Burlington Telecom. Tim Nulty’s response. More on the Vermont E-State and the East Central Vermont Community Fiber Network clash with the Vermont Telecom Authority. Summary: technology is easy compared to the interaction of human egos.

Notes:

[1] From Tim Nulty’s presentation at Freedom to Connect, 2008.

[2] This was for Phase 3 and 4 of the project. A $2.6 million loan for the initial phases was at 5.63%. See p. 3. of Christopher Mitchell, Burlington Telecom Case Study.

[3] Ibid.