Commentary: An Opposing View on Government-Owned Broadband

This piece originally appeared in The Canton Repository on October 19, 2016

The Canton Repository Editorial Board reacted to the release of the Stark County Broadband Task Team’s broadband feasibility study by stating that they were “encouraged” to see the Task Team taking steps forward, but also cautioning that “big questions” related to the project remain unanswered.

For readers who might not yet be familiar with that study, it is designed to determine if a municipal broadband network is feasible in Stark County. The new study projects an approximate cost of $22.5 million dollars to build the new broadband network. The Editorial Board makes one very good point about the cost when noting that, “how the county would be able to afford it is another question.” Taxpayers need to know the financial risks associated with the project and the feasibility test certainly shows that taxpayer money is going to be at risk if the project moves forward.

An earlier editorial noted that other U.S. cities have conducted similar studies. That’s true. One of those studies was done in Seattle, Wash., the city that exemplifies technology. Seattle looked at the feasibility of a citywide, taxpayer-funded broadband network a handful of times and each time public officials dismissed the notion. After the latest effort carried out last year, city officials acknowledged it would be nearly impossible for the city network to break even on an annual basis and that persistent yearly deficits would put funding for other government programs at risk.

While access to high-speed broadband is essential in today’s economy, Seattle’s decision not to move forward was a smart one. According to one expert at the University of Denver, about four out of every five taxpayer-funded internet networks fail to make enough each year to sustain operations. Taxpayers are saddled with significant debt when that happens, taxes and fees increase or other government priorities are threatened, and municipal credit ratings fall through the floor.

The Taxpayers Protection Alliance recently released a report that examined the failures of 12 of America’s most infamous taxpayer-financed broadband networks. Together, these projects cost the public more than $2 billion, but did nothing to improve the lives of the people they served. And in each of these twelve cases, private Internet services were already available before these government broadband schemes were built.

One of the country’s oldest municipal broadband networks is Click Network in Tacoma, Wash. Click was created in the late 1990s by the city’s electric utility, Tacoma Power. It utilized Tacoma Power’s $100 million publicly funded fiber-optic network to create a government-managed cable television service. The project also offered Internet through a third-party provider. In 2009, Click boasted 24,400 cable subscribers. That number had fallen to barely 18,000 by 2015.

Click Network now loses about $9 million a year and is projected to run a deficit of $37.4 million over the next five. Tacoma Power customers have been forced to pay higher electric bills in order to bail out the insolvent government cable business each year.

According to the Repository, the municipal network Stark County is thinking about would provide gigabit broadband service to households and speeds 100 times that to businesses. Those speeds are impressive — as this newspaper said they’re about 35 times the Ohio average.

A gigabit sounds cool and intriguing, but is it really necessary? According to Skype, consumers just need two to four megabits per second download speeds, depending on how many people are joining the call. To download a movie on Netflix, consumers need even less capacity. If all you’re doing on your laptop is emailing, don’t waste your money on gigabit service.

A recent news report out of Opelika, Ala. shows that the much-vaunted gig service down there only has one customer. That’s right, one customer who is paying $500 per month for the service.

To remain an attractive venue for new companies, Stark County should endeavor to be on the cutting edge. However, to remain fiscally secure (another consideration businesses take into account when they’re deciding where to invest), the county shouldn’t spend taxpayer money on useless endeavors. Asking local taxpayers to use their hard-earned money to build a 100-gigabit network is like asking them to help finance a rocket to Mars. Yeah, it’s cool, and no other county would have it, but that doesn’t make it worth the expenditure. The priority for government spending should be infrastructure like schools, roads, and bridges need to be upgraded.

Another reason it’s unnecessary: The private sector is fully capable of providing high-speed broadband. In Canton, 99.8 percent of residents already have access to high-speed broadband. The city has 25 carriers.

Stark County officials should consider this fact, and the devastating consequences of government broadband, before putting tax dollars on the line.