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$39 Million taxpayer dollars “GON” for a $1 purchase

April 22, 2013

If you thought Groton, Conn.’s sale of its failed government-owned network for $150,000 (after investing $35 million into it), was outrageous, wait until you read about Provo, Utah.

According to the Huffington Post, after investing $39 million into a municipal network the city of Provo has agreed to sell that network to Google … for $1. (While the city has agreed to the terms, the city council must approve the deal; that action is expected to happen in a vote tomorrow.) The city had been looking for a buyer for the network for 18 months, The Washington Post said.

The bad news for taxpayers doesn’t stop with the $38,999,999 loss. (The loss equals about $340 for each of Provo’s 115,000 residents.) According to the article, “Even as Google takes ownership of the municipal network, Provo will have to pay off loans for its construction for another dozen years, according to agreements released Thursday by city officials.” Additionally, the Huffington Post says utility ratepayers will continue to pay a $5.35 monthly fee even after Google takes over and whether or not they subscribe to Google’s service.

The Washington Post speculated whether Google would offer similar deals to other cities that have government-owned networks. While Google wouldn’t confirm whether it had such plans, and while it also remains very unclear how a deal with these financial terms (and that leaves existing debt on the table) benefits taxpayers, sales like the Provo one could actually encourage the creation of GONs. Certainly the news from Provo has caused the administrators of struggling GONs to think about – or wish for – a deal with Google. And lawmakers in those cities that are considering whether to enter the broadband market to think, “If we build it (and fail), will Google come [bail us out]?”