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NFL Stadiums, Broadband, and the Dangers of Taxpayer-Funded Shiny Objects

Michi Iljazi on 2015-09-30 18:56:02


Politicians and bureaucrats know that the easiest money to spend money is somebody else’s. There are countless examples of this, but taxpayer-funded NFL stadiums and municipal broadband system show that spending other people’s money is even easier when it is spent on these shiny objects. Recently, the Taxpayers Protection Alliance (TPA) released a report detailing the reality of taxpayer-backed NFL stadiums in cities across America. TPA has also been exposing taxpayer funded broadband networks across the country that are costing taxpayers billions of dollars and failing at an alarming rate.

TPA’s NFL stadium report documented the use of hundreds of billions of dollars in taxpayer money to build stadiums that were aimed at boosting local economies. In 60 percent of the cases examined the poverty rate increased and the median household income decreased.  These were hardly the results that those securing the financing predicted.  And, most certainly, not the results taxpayers envisioned with their money being used as the basis for building these venues.

Government broadband is another troubling example of this ‘shiny object’ syndrome that state and local legislators have been taking part in for years. The scam is pretty simple, and horrendously expensive to taxpayers. State governments, prodded on by the Obama administration and the Federal Communications Commission (FCC), propose plans for a government-owned broadband network (GON) and use taxpayer dollars to build the infrastructure and maintain the network. Those backing the plan promise it will bring a faster, better, and cheaper internet.  Once the “shiny object” is dangled in front of the press and lawmakers, the network is built and then the frenzy to show its success begins.. Unfortunately, the story takes an awful (and expensive) turn when the network is unsustainable and taxpayers have to provide more money. The GONs are usually failures for reasons that range from unworkable to unmarketable, because despite what some proponents say there is already competition and GONs usually offer service at lesser quality at a similar or higher cost.

TPA has highlighted these before, but here are some of the worst cases where government broadband has been a debacle for the taxpayers:

  • In Tennessee, after hundreds of millions of dollars, the taxpayer-backed Chattanooga EPB program is a failure. TPA has exposed EPB for its broken promises of cheaper service or being able to provide a gig of service.
  • In Utah, the Utah Telecommunication Open Infrastructure Agency (UTOPIA). As of now the initiative is still working out outstanding issues on cost and feasibility. ]It remains to be seen if UTOPIA will be any different than other GONs.
  • In Louisiana, after several years of taxpayer investment, LUS Fiber is in debt over $160 million. The GON is running 30% short of its revenue projections and struggling to compete with established private sector services in the area.

TPA recently traveled to Kentucky to investigate a new government broadband project that is likely to initially cost state and federal taxpayers more than $50 million.  There are still questions concerning the details of the contract between the Kentucky government and the private company that is  providing a portion of the funding for the network.

As more states continue to get into the government broadband game, TPA is making sure to highlight the dangers and risk to taxpayers. As Seattle, Washington was contemplating plans for a GON, TPA called attention to the feasibility report that showed the project was a risky one for taxpayers:

  • Initial investment of $480 million to $665 million to build.
  • A required “take rate” – the percentage of single-family homes within the service area that would need to subscribe for success – of 43 percent. The study notes that the Chattanooga, Tenn., network that is often hailed as a success among advocates has a take-rate of just 33 percent.
  • A required cost of at least $75 per month for subscribers, and the report notes that even a “slight decrease” in this monthly fee would cause a “very significant” hit to Seattle’s General Fund.

Taxpayers and businesses aren’t the only ones feeling the negative impact from these failed projects. Will Reinhart with the American Action Forum outlined a study conducted earlier this year by AAF looking into how GONs impacted consumers. The results were yet another reason to be wary of the ‘shiny object’ promised with government broadband:

Recently, as part of a larger initiative, the administration announced its plan calling for the Federal Communication Commission (FCC) to overturn state laws that determine how cities deploy their own Internet services. AAF examined all of the residential fiber broadband offerings by municipalities and found that municipal plans were 20 to 50 percent more costly to consumers than private broadband providers.

Taxpayer money should not be used by government officials to fund shiny objects like stadiums or GONs. The promise of better economic growth or faster or more affordable broadband is Fool’s Gold that loses its luster after the projects are built.

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