March 14, 2017
As the Coalition for the New Economy reported last month, the city of Sun Prairie, Wis. wants to sell its government-owned broadband network. The network only has 200 subscribers, about five percent of city residents, and the city is carrying millions of dollars in debt for it. Armed with records obtained through a Freedom of Information Act (FOIA) request, Watchdog.org last week posted a deeper look into the network’s finances. Here’s what readers learned.
The city’s electricity customers helped front the cash for the network. Watchdog reported that Sun Prairie’s public utility system gave “its telecom division a nearly $600,000 loan in 2000 to build the fiber ring.”
The network also has operated in the red the majority of years it’s been in existence. According to Watchdog, “The city-owned internet service provider has lost money, often significant amounts, in at least 10 of the 16 years in operation …” In its first six years, the network didn’t make a dime, running a deficit of $454,000 in 2001 and a $452,000 deficit in 2002. The network made money from 2006 to 2008, but then was back in the red in 2009. It has been operating with deficits for the last several years, including a $166,000 shortfall in 2015.
That is very bad news for taxpayers. According to Sun Prairie Utility Manager Rick Wicklund, “[T]he city — and its taxpayers — are ultimately responsible for the loans, should the internet utility default.” Sun Prairie Utilities Commission Chairman Ted Chase said he knows the “operation and expansion of such a business comes with significant risk.”
While a sale of the network obviously would eliminate the risk to taxpayers—a good thing—Brett Healy from Wisconsin’s MacIver Institute warned residents that they might not make back all the money they’ve sunk into the network. In a recent column, Healy noted that “taxpayers are still waiting for basic information about the potential sale of the network and, more importantly, what sort of rate of return will taxpayers see if the sale goes through.”
CNE is waiting as well.
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