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Top Failures in Government-Owned Broadband Networks

February 6, 2015

iStock_000003994351MediumHave a hard time keeping all the municipal broadband failures across the country straight? Given the mind-boggling taxpayer losses associated with these experiments, we can’t blame you. Fortunately, Charles Davidson and Michael Santorelli at New York Law School last month issued a two-page summary of some of the most egregious government-owned broadband failures. They are:

  • Bristol, Va., whose system is $70 million in debt.
  • Cedar Falls, Iowa, where the city-owned network caused Moody’s to downgrade the city’s debt rating.
  • Provo, Utah, where the city is still $40 million in debt despite the fact it sold its network.
  • UTOPIA, another system in Utah that is up for sale right now.
  • Lafayette, La., which invested $150 million in its network – $10,714 for each subscriber.
  • Monticello, Minn., where the city network was sued after it defaulted on its bonds.

The summary also reminds local lawmakers that:

  • GONs Won’t Solve Most Pressing Broadband Challenges. “Community-specific” barriers impede broadband growth in some communities – and building a GON won’t solve these access issues.
  • GONs Costs Outweigh Benefits. Strained local budgets are simply ill-equipped to keep up with the continual investment needed to sustain a cutting-edge broadband network.
  • State and Local Lawmakers Have Important Roles. State and local lawmakers need to concentrate on breaking down barriers to private investment. GONs just provide an additional barrier.

The two-page summary concludes, “Pursuit of a GON often necessitates real tradeoffs that may negatively impact core aspects of local governance. Cities contemplating GONs will have to determine whether the associated debt may limit future bond issuances for other projects.”

Wise words.