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Government Broadband Fails, So Citizens Have to Pay

July 1, 2014

Americans for Prosperity’s Kuper Jones has a must-read piece on Forbes today about UTOPIA, Utah’s failed government-owned broadband network. Jones first gives an excellent overview of UTOPIA’s financial situation. He notes:

  • The system is $500 million in debt;
  • The system had a negative $146 million in assets by the end of the last fiscal year; and
  • The system gets $13 million in sales taxes annually from the communities it serves.

According to Jones, these numbers are why local officials are scrambling to get an Australian capital firm to help manage the situation. (See CNE’s reporting on the negotiations here and here.) Jones says UTOPIA has three options: 1) Go along with the plan set out by the Australian firm, which would result in a public-private partnership in which the local governments would still retain ownership of the network 2) Sell the network and pay off some debt or 3) do nothing.

As CNE readers know, the first option would require all residents pay an $18 to $20 “monthly tax” even if they don’t subscribe to the service. Jones notes “One of the most alarming aspects of this deal says if a citizen refuses to pay the tax or is unable to pay their UTOPIA bill on time, UTOPIA bill collectors can have other utilities, such as water, shut off as a penalty.”

Jones urges policymakers in the 11 UTOPIA cities to reject this plan for that reason. Instead, he suggests they sell the network outright. Jones writes, “Selling the network won’t fully relieve the debt already accrued by UTOPIA, but it will put a dent in it while also removing government control from the broadband network that has plagued Utah for over a decade.”

While the Coalition for the New Economy supports public-private partnerships to expand broadband access, in this case, Jones is right: it’s time to sell UTOPIA.