Fort Dodge, Iowa Broadband Boondoggles
This article was originally published in the Fort Dodge Messenger on September 17, 2019.
Recently, the Fort Dodge City Council decided to put a referendum proposal to allow the Council to establish a new government-controlled broadband utility on the Nov. 5 ballot, doing so under the guise of a purported need for faster, cheaper, more reliable internet service in the City of Fort Dodge.
Fort Dodge Facts
The referendum vote on November 5th is to give the city council the authority to establish a broadband utility.
This could be the only vote the citizens will ever directly have over the government-owned broadband system.
Once the utility is formed, it can issue revenue bonds without a public vote – just a public hearing that very few people attend and rarely if ever makes a difference.
Once the utility is formed, it can take action to build whatever system it wants, borrow and spend as much as it can raise in debt financing, charge whatever prices it wants, etc. without any more votes from the citizens it is supposed to serve.
Voting “Yes” for this referendum cedes all control over the future of a government-owned broadband system to the board of the utility, which is appointed by the mayor.
No one knows how much it will cost just to get to the point of knowing the price tag of the GON system. Pella recently authorized $792,000 for the design and business plan consultants. Charles City spent nearly $400,000 for the same thing. Being a much larger city, Fort Dodge can reasonably expect to pay substantially more than either Pella or Charles City.
Fort Dodge already has good speed with their internet services. The average download speeds in the quadrants of Fort Dodge to be 38.4-55.7 Mbps. That is really pretty good and faster than almost anyone needs.
During the public forum in Fort Dodge, Curtis Dean stated that the average download speed in Fort Dodge was only 23.59 Mbps, which is clearly false given the numbers he reported to the city council on 8/26. He also said 23.59 Mbps was 21.7% slower than the Iowa average (which if my math is correct, the Iowa average would be 30.13 Mbps). It appears that Fort Dodge is actually substantially higher than the Iowa average.
Also in the public forum, Curtis Dean made a big point about how important highspeed internet is to education. However, 60% of Fort Dodge’s students are eligible for free and reduced lunches provided by the schools due to low household incomes. Those households are not going to want to pay more money for higher speed internet, if they pay for internet at all.
Still in the public forum, Curtis Dean was asked why other ISPs haven’t come to Fort Dodge to build a FTTH system. His response was illustrative of the challenges of building a GON: 1) Fort Dodge already has 2 ISPs, so the market isn’t big enough for 3; and 2) access to capital is a challenge.
If the market isn’t big enough for 3 ISPs, why would a GON have any chance of success?
Since access to capital is such a problem, it will likely fall on the taxpayers to financially support a GON.
The only “successful” GONs in Iowa are in communities that have an electric utility that can be leveraged to borrow funds via electric utility revenue bonds and then use that money to help build the GON.