Willmar spurns Charter offer, narrowly votes to build GON

In a surprising decision on Monday, the Willmar City Council decided to move forward with building its own government-owned broadband network (GON). This comes despite an existing offer from Charter Spectrum to connect the city’s industrial park with fiber at no cost to taxpayers.

The council voted 4-3 to continue plans on its $24.5 million GON, called the Connect Willmar Initiative, which will be an open-access network. City leaders have worked on the project for the past two years, spending $675,000 in local taxpayer money in the process. The project intends to provide fiber to all homes and businesses in the city of about 21,000 residents.

The decision at the March 3 council meeting proved peculiar. At the previous meeting just two weeks earlier, council members directed city staff to work with Spectrum on the proposal to extend fiber to the industrial park, the West Central Tribune reported. Charter offered that olive branch if the city chose not to move forward with its GON. The company also said it would commit to connecting more premises with fiber. It seemed to be a win-win for the city, its residents, and its businesses alike.

However, rather than take the primary local internet provider up on its offer, the council narrowly gave its approval for the city-owned network instead.  One of those members voting against the project, Steve Gardner, said that, with interest, the GON’s cost could rise above $30 million. He said the city should be cautious with taxpayer money. Even though the city plans to fund the project with a bond issue, city taxpayer money will back those bonds if the project fails.

Charter, which currently offers broadband download speed of up to 1 gigabit per second to about 83 percent of residents, said in a statement on Tuesday that it remains committed to serving the city. The company also warned,  “The City of Willmar’s decision to invest in a government-owned network is both risky and unnecessary, bringing uncertainty and expense that will burden taxpayers for years.”

The Council previously signed an agreement with local provider Hometown Fiber to operate the network, which would allow other providers 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.

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 enter into agreements to tap into the GON. This would require a lease fee of 35 percent of revenue to the Willmar Connect Initiative.

Hometown Fiber estimated a generous take rate of 40 percent of households and businesses for the Connect Willmar Initiative. 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. This would mean Willmar taxpayers would be left holding an expensive bill.

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

It is a shame that Willmar city leaders unnecessarily decided to build this GON when it already enjoys sufficient high-speed internet coverage. Further, they had an offer on the table to receive more broadband infrastructure in the city at no risk to taxpayers.

Johnny Kampis is director of telecom policy for the Taxpayers Protection Alliance