The rosy picture painted by proponents of government-owned broadband, like President Obama’s Federal Communications Commission Chairman Tom Wheeler, couldn’t be more misleading.
Mr. Wheeler and other backers of big government are now considering whether to block state-passed laws that seek largely to keep government out of the Internet business. The FCC chairman and others seem to hold a misguided belief that there is a shortage of competition in broadband services, and that government is the only solution. The truth, however, is that fierce private-sector competition has made the Internet an epicenter of innovation and technological development.
When proponents of this kind of government overreach make their case, they almost always fail to mention that the list of government-owned broadband failures is significantly longer than the successes. Instead, they claim that municipal broadband brings competition and proceed to roll out the tired example of the Chattanooga, Tenn., broadband network as proof that government-owned broadband works. On the off-chance they mention the project received federal stimulus dollars, they often neglect the economic significance of such funding.
Almost 30 percent of Chattanooga’s infrastructure build-out came from the federal government — the largest per-capita in the country. Such a luxury is unavailable to city and local governments who, instead, must place the burden of infrastructure build-outs on hardworking citizens via tax increases. Moreover, Chattanooga was lucky enough to have an already-existing electrical smart grid that was utilized as part of its network infrastructure — another advantage that other cities won’t have.
Despite being awash in federal funding, however, the Chattanooga network has managed to accrue a staggering $200 million in debt, of which proponents curiously make no mention. Other municipal broadband networks across the country have generated even more debt, have failed or are on the verge of failing.
One of the more prominent government broadband failures is Utah’s Utopia. The network, originally consisting of 11 cities, has struggled to stay alive for more than a decade. Despite draining citizens of $13 million in sales taxes each year, Utopia has managed to generate more than $500 million in debt.
In a last-ditch effort to save the failing Utopia network, six of the 11 cities opted for a deal with an Australian capital firm that claims it can complete the network build-out. Unfortunately, the citizens of these six cities will be slapped with an $18 to $20 monthly tax, labeled as a “utility fee,” regardless of whether they subscribe to Utopia or not. If citizens refuse to pay the tax or are unable to pay their Utopia bill on time, their other utilities, like water, can be shut off. Even worse, citizens are still on the hook for Utopia debt, and the government will retain ownership of the network.
Sadly, Utopia is one of many examples of government networks burdening hardworking taxpayers. A government network launched in Lafayette, La., in 2007 has left the city with more than $160 million in debt. There’s also the unfortunate story of Provo, Utah. After its network failed, Provo was forced to sell the network to Google for $1 while leaving taxpayers with a $39 million bill.
Widespread failure of municipal broadband networks across the country should serve as a lesson to big-government proponents. Governments shouldn’t be in the Internet business, let alone any business outside of governing. Hardworking Americans’ tax dollars shouldn’t be used to gamble on expensive broadband network infrastructures.
Kuper Jones is a policy analyst with Americans for Prosperity.