Cleveland, Tennessee Council votes to build GON, despite residents’ concerns

Despite concerns from local residents, many of whom asked for a public vote in the issue during a March hearing, the City Council in Cleveland, Tennessee, approved a motion last month to move forward with creating a city-owned (taxpayer funded) broadband network.

The Cleveland City Council recently voted 7-2 to create the Cleveland Utilities Authority, the first step in the development of a $72 million fiber network. Project costs will include an $8 million start-up loan from the electric division of Cleveland Utilities, which will operate the network, and a $64 million bond issue backed by local taxpayer money.

In its proposal for the network, Cleveland anticipates a 30-percent take rate. Research from the Taxpayers Protection Alliance (TPA) has found that most GONs don’t get the number of customers they anticipate when competition responds by adjusting pricing or services. And, Cleveland is hardly an internet desert, with AT&T, Spectrum and T-Mobile Home Internet already covering nearly all of the city.

Even GONs with higher take rates have failed. Despite meeting an expected take rate of 45 percent, the GON in Newport, Tennessee, has been unsuccessful and customers of operator Newport Utilities have felt the fallout in the form of increased power rates.    

In casting a dissenting vote on the measure, Councilman Tom Cassada said he thought the city was overstepping its bounds in getting into the broadband business and he was worried that residents would see long-term electric rate increase.

“It’ll come back to us. ‘Council, why did our rates go up?’” Cassada said at the meeting.

Construction on the network is expected to begin in March 2024 and completed in two to three years.  TPA will provide periodic updates on the project as they become available.