Minnesota county sells its government broadband network for pennies on the dollar

Johnny Kampis

January 8, 2019

This article originally appeared on Watchdog.org on January 7, 2018.

The long, sordid tale of the taxpayer sinkhole (aka Lake Connections) ended recently when the Lake County Board of Commissioners in Minnesota agreed to sell the municipal broadband network to a private provider.

The commission accepted the bid of $8.4 million, the highest submission for the network, from Pinpoint Holdings Inc. of Cambridge, Nebraska.

Lake Connections is one of the biggest taxpayer-supported, government-owned broadband boondoggles, with taxpayers left holding the note on tens of millions of dollars in debts.

After seven years of operations, Lake Connections has 2,500 customers, with 750 more interested parties waiting for service, and ironically the Board of Commissioners sought to sell its government network because it felt a private provider could do a better job of hooking up eager customers sooner.

The commission had hoped to sell the network for $20 million, but found that estimate grossly overvalued. Instead, according to a July 27, 2018, Lake County News Chronicle article, Pinpoint Holdings offered an initial bid of $3.5 million before a higher price was agreed upon. Taxpayers get to eat about $40 million that’s still owed on the debts. RUS agreed with the county that the sale price will fulfill the balance of the loan.

Freedom Foundation of Minnesota founder Annette Meeks previously told Taxpayers Protection Alliance (TPA) that Lake Connections is one of the worst examples of the detriment effects of municipal broadband projects. Local taxpayers were forced to sink $17 million into the project, money that would have been better spent on other projects improving the quality of life of the area.

“It’s just tragic, especially with small counties like this,” Meeks said.

Brent Skorup, senior research fellow in the Technology Policy Program at Mercatus Center in Alexandria, Virginia, told TPA this project was an “outrageous case of waste of taxpayer money.”

“This case just shows how little cost-benefit analysis RUS is putting into these projects,” he said.

The sad part is that RUS rejected Lake County’s first application because of concern about its business plan. RUS inexplicably approved a second application that outlined heavier costs and a larger service radius.