New Study Exposes Flaws in Louisiana Municipal Broadband Service

When government decides to crash the private sector there are always major concerns regardless of the project or the reasoning behind the move. Two major concerns that seem to play out over and over again are that the government can’t do a better job than those businesses that are already providing the service; and that inefficiency will lead to wasted taxpayer money. In a recent study from the Reason Foundation, a six -year government-run broadband project in Louisiana (LUS Fiber) proved once again that taxpayers are getting nowhere near their money’s worth when it comes to public-sector attempts to best the free-market.  This comes as no surprise to the Taxpayers Protection Alliance (TPA) because we have written about LUS Fiber in the past (click here to read previous posts).

Last week, Steven Titch with the Reason Foundation discussed the study, Lessons in Municipal Broadband from Lafayette, Louisiana, and some of the key findings of the Lafayette Utilities Service that began in 2005. The LUS has been around for several years and has been held up as the shining example of how municipal broadband services can succeed if given enough taxpayer dollars. LUS has received attention from not only prominent media types, but also a former Obama administration official. The high-profile associated with the program was something not lost on Mr. Titch:

Reason chose to profile LUS Fiber because it is often held up as a policy success. Groups such as the Institute for Local Self-Reliance, which profiled the operation last year in a report titled Broadband at the Speed of Light: How Three Communities Built Next-Generation Networks, say it is a model to be followed. It has drawn national coverage from prominent journalists Bill Moyers and Tom Friedman. Susan Crawford, former telecom advisor to President Obama, devotes several pages of her new book, Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age, to LUS Fiber’s story.

The major red flags brought to light in the Reason Foundation study are nothing short of a sad surprise to TPA. Taxpayers have a great deal to be concerned about considering exactly which problems were highlighted in the report. And, according to the report, LUS:

• is 30% short of its revenue projection as set out in its business plan
• is more than $160 million in debt
• was as of last year was losing $45,000 a day, according to the Lafayette’s independent auditor
• is struggling to compete with cable, telephone, wireless and satellite service providers in terms of price, performance and service options.

This isn’t the first time that TPA has shed some light on municipal broadband projects gone awry with taxpayer money. Just northeast of Louisiana is Chattanooga Tennessee that has the  Chattanooga EPB service which promised a, “constant stream of mind-bogglingly fast Internet that delivers a billion bits of Internet excitement per second is available — for a price — to every home and business in a 600 square mile area.” Looking more carefully into the taxpayer-funded program, TPA was less than impressed. Finding someone who used EPB was as much of a challenge as signing up on the Obamacare website. It was apparent that EPB only sold the service to individuals who can never use anything remotely close to what was advertised. Last week TPA highlighted the failed program and discussed the lack of proof that EPB can actually deliver a constant gig of service. EPB used hundreds of millions of dollars to set-up a non-existent 1G of service for Chattanooga.

Taxpayers are getting duped everyday by state and federal officials with empty promises and failed programs that don’t come anywhere near living up to the investment put forth from their hard earned dollars. The report released from the Reason Foundation last week on LUS just provides further evidence that when it comes to services the business sector is capable and successful at providing, the public sector should think about taxpayers and consumers and let the free-market reign to ensure real completion.

Innovation and competition should be left to the dynamic private sector rather than a taxpayer-funded slow and inept government.