Willmar Pauses Plans to Build Taxpayer-Funded Broadband Network

The Willmar City Council will hold off on plans for a government-owned (I,e, taxpayer-funded) network (GON) for now as leaders of the Minnesota city work with Charter’s Spectrum on a fiber project for the Willmar Industrial Park.

The Council, at its February 18 meeting, directed city staff to follow through with a proposal from Spectrum to extend fiber to the industrial park at no cost to city taxpayers if the city did not build a GON, according to the West Central Tribune.

The agreement requires Spectrum to offer those services by March 3 and set a timeline to increase services to residents of the city. Spectrum now offers download speed of up to 1 gigabit per second to about 83 percent of residents currently, according to Broadband Now. In contrast, any GON would take months, or even years to build to service the industrial park.

City Operations Director Kyle Box said that if Charter does not meet the Council’s requests, members could still approve the planned GON (the Connect Willmar Initiative) in 2025.

The city of about 21,000 residents has already squandered $675,000 in taxpayer money planning and researching the GON, which they intended to provide fiber to all residences and businesses in Willmar. The Council had signed an agreement with local provider Hometown Fiber to operate the network, an open-access model that would allow other provides to lease some of the fiber. As the Taxpayers Protection Alliance (TPA) previously pointed out, the open-access model can run into the same problems as middle-mile networks. Those problems include duplicative fiber, as major providers already have their own infrastructure in place, and waste of taxpayer money when private companies decline to lease the fiber.

Hometown Fiber founder and CEO Kyle Moorhead admitted previously that large broadband providers are unlikely to lease fiber from the city. Moorhead said he hoped that smaller providers would have entered into agreements to tap into the GON, although that would have required a lease fee of 35 percent of revenue to the Willmar Connect Initiative.

“I think that your local incumbents, unless it was absolutely free to them, I don’t think that they would come on board,” Moorhead said. “That’s our take on it, but what we are trying to do here is bring new businesses in.”

Hometown Fiber estimated a generous take rate of 40 percent of households and businesses in Willmar. TPA noted in its report “GON with the Wind: The Failed Promise of Government-Owned Networks” that consultants’ projections often miss the mark, with revenue being less than expected when competitors lower prices and prevent GONs from capturing the anticipated market share.

Willmar already has several providers offering internet through various means, including cable, satellite, 5G and fixed wireless.

The Council planned to build the GON in three phases over three years at an approximate cost of $25 million funded by general obligation bonds backed by city taxpayers.

Charter Communications Senior Director of Public Relations Mike Hogan told the West Central Tribune  that Willmar will be part of a network evolution project that will see the company invest more than $6 billion to upgrade its infrastructure to deliver symmetrical multi-gigabit speeds across its service areas. He pointed out that the private investment will allow the Council to spend taxpayer money on other needs such as public safety and street improvements rather than “an unnecessary network that will leave the city with debt.”

As Hogan noted, GONs are often duplicative and tend to hemorrhage taxpayer money. Willmar city officials have made a wise decision not to build their own network.