January 17, 2018
In Fort Collins, Colo., the City Council recently voted 7-0 to move forward with construction of a municipal broadband network.
In Colorado, local governments are restricted from using taxpayer dollars to build their own broadband networks, but cities have the right to hold ballot measures opting out of the restriction. In Fort Collins, that resolution passed with 57 percent of the vote last November. In addition to providing gigabit speeds, the Fort Collins network has also promised to maintain net neutrality and prohibit data caps.
The catch? Construction, which is expected to begin immediately, will take five years to complete. It could also leave Fort Collins taxpayers on the hook for up to $150 million in bonds to finance the building and operation of the network.
A business plan released last year states the system would need at least a 28 percent take rate to succeed. According to BroadbandNow, Fort Collins already has 23 internet providers with 9 offering residential service, and over 90% of residents have a choice of two or more providers.
Late last year, the Coloradoan laid out a worst-case scenario: if the broadband system doesn’t secure enough customers to make it financially viable, the city would still be on the hook for paying off the bonds. This “could result in every electrical utility customer being billed $17 a month for the life of the bonds, or about $2,420 per premise.”
A University of Pennsylvania study last year found that failure is likely in these scenarios – only a small percentage of municipal networks generate enough revenue to pay back the debt that cities incurred to build them.
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