March 20, 2017
The New Hampshire Senate currently may soon consider bill that would “encourage” municipalities to create government-owned Internet Service Providers (ISPs). (Current New Hampshire law limits government-run ISPs to areas that are currently unserved by any provider.) In a column in the Manchester Union Leader, former New Hampshire President Tom Eaton says this legislation, Senate Bill (SB) 170, is a bad idea.
Eaton argues that SB 170 “would hurt taxpayers, consumers, and private companies that have invested hundreds of millions of dollars into broadband infrastructure in the state.” He also says, “[F]inancing government-owned competitors where private sector networks already exist is a slippery slope, fraught with financial risk to taxpayers and unintended consequences for consumers.”
To prove his point, Eaton notes that Groton, Conn. lost nearly $34 million on its government-run ISP, Provo, Utah lost $39 million, and Burlington, Vt. lost $10 million. Even though each of these cities eventually was able to sell its respective network, even after the sales, the communities remained responsible for the debt they took on to build them.
Eaton also worries about the effect government competition could have on private investment, and private job creation. The former Senate president says government competition “sends a strong signal” to private companies “that their investment in network expansion and upgrades can and will be put at risk by unfair competition.” These fears, Eaton concludes, will “inevitably” lead these companies to “decrease or withdraw their investment, and direct it to areas where they can more confidently achieve a return.” Eaton said this would harm “consumers all across our state, as network penetration into rural areas is slowed” due to “suppresse[d] innovation, investment, and efficiency,” which are the “keys to lower prices and improved services over time.”
While noting the private sector’s “remarkable progress over the last decade” in improving broadband access in New Hampshire, Eaton also outlines the proper role of government when it comes to promoting broadband. Options available to municipalities include issuing a request for proposal (RFP) for “private companies to deploy services to a specific geography and at a specific minimum service level or higher.” There’s no need to change state law to allow for that because, as Eaton points out, the state’s current statute “allows for such an arrangement to be funded through municipal bonding, thus achieving the broadband goals of the town at a lower cost and with much less risk.”
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