Sun Prairie Should Rethink Government Broadband Project

A version of this op-ed was recently published in the Sun Prairie Star

Across the country, public officials are continuously duped into following the siren call of government-owned broadband systems. While it is certainly tempting to score political points with constituents who initially benefit from high-speed internet, these short-term gains are invariably canceled out by long-term costs that bedevil those same constituents.  That’s why city officials in Sun Prairie, Wisconsin now have an opportunity to be trendsetters. Instead of pressing ahead with its current broadband initiative, they ought to carefully consider the examples of recent history and reverse course. When a project is government-owned, this also means it is taxpayer-funded and that’s a problem when construction costs skyrocket and subscription numbers do not keep up with projections. Guess who foots the bill when that happens?  Taxpayers, or course.  And, with a recent vote to approve an additional $4.5 M for project expansion in Sun Prairie, it is important to look at what has happened across the country with these projects.

The Taxpayers Protection Alliance (TPA) released a report earlier this year, “The Dirty Dozen: Examining the Failure of America’s Biggest & Most Infamous Taxpayer-Funded Broadband Networks,” outlining 12 of the worst government-owned broadband failures in the country.  The report found that taken together these projects cost the public more than $2 billion. There’s an appetite for high-speed internet to be sure, but there’s also a better way and it’s called the private sector. The good news is that there is no paucity of options where Sun Prairie is concerned. In fact, there are multiple private sector companies doing the heavy lifting in this area without incurring any taxpayer costs.  What is missing is lack of imagination and the political will to pull back burdensome levels of taxation and regulation that stymie private investment.

Let’s take a look at just one example of what went down in neighboring Iowa. This one’s a doozy. In 2015, Cedar Falls’ municipal broadband, administered by Cedar Falls Utility, was touted a success to be emulated. As anyone who has to live with this boondoggle will tell you, don’t buy into the propaganda.  Construction of this network required the city’s electric, water and gas company to take on $14.7 million in debt. That’s not all. Officials in charge of the broadband service borrowed another $2.4 million from Cedar Falls electric and water utility customers without their consent. But at least the network is fast, right? Supporters claimed Cedar Falls had a network that is “100 times faster” than the average American Internet connection. Tech policy expert and former Federal Communications Commission Wireless Bureau Chief Fred Campbell tells us that the claims are very much off the mark. The hard reality is that the debt became so stifling in Cedar Falls that Moody’s downgraded the bond rating of the Cedar Falls Utility from A1 to A3. As an added insult, the project remains largely incomplete after about 20 years of development.

Public survey results do show that city residents are favorably disposed to the idea public investment in high-speed internet. After all, it does sound good on the surface. Although the city considered various public-private partnerships, it has settled upon a “standalone solution” that will cost about $35 million. The Sun Prairie Utility has already borrowed $624,000 to cover the cost of a pilot project and recently voted to approve a $4.5 million expansion of the project.

When these surveys are conducted, someone needs to ask the public how they feel about going into debt to service these projects. That’s what TPA did with a phone survey earlier this year that found two-thirds of respondents (64% opposed with 48% of those strongly opposed) would NOT support their local government going into debt so that it could sell high-speed internet access directly to consumers.  The lesson might be to ask the public about government-owned broadband in the right way. Everyone likes the idea of new technology, but they like less when they are left holding the bag for projects that financially unsustainable.

While government officials should certainly work to make their communities competitive with neighboring municipalities, they must also recognize that the public sector public sector lacks the incentive to build the networks in an effective and cost-efficient manner.  Where government officials can be effective is in removing barriers to business opportunities that can lure entrepreneurs. The recent history of municipal broadband efforts show that government officials are not particularly skilled at considering true cost of public broadband infrastructure. They also lack the technical knowledge to fully understand how quickly technology can change and what this means for ongoing construction projects. But with just little political courage, a little foresight, Sun Prairie officials could move to restrain their own public sector and keep regulations in check. If they do just this much, the broadband projects they are now working to coerce into production, will sprout naturally in a cost-effective manner with long-term benefits.

Approving an additional $4.5 million expansion of the Sun Prairie project is irresponsible.  Taxpayers deserve elected (and non-elected) officials that serve as guardians of tax dollars, not a rubber stamp for wasteful and unnecessary projects.