Massachusetts Middle Mile Network A $90 Million Failure
February 27, 2017
In 2008, Massachusetts officials handed over more than $40 million in state taxpayer dollars to provide broadband to underserved communities. The project, which came to be known as MB123, was a middle mile system that was supposed to connect 123 towns, 73 of which (59 percent) already had access to broadband service.
How are things going in the Bay State? According to The Berkshire Eagle:
- Network construction was finished a year later than expected.
- The network operator, Axia NGNetworks USA, Inc. “is still struggling to break even.”
- Axia, which is responsible for the cost of running the network, lost $1.5 million in the first three quarters of 2016 alone and has lost $10.4 million overall.
- Axia has never earned more than $2.1 million a year even though, before the network was launched, annual revenues were projected to reach more than $9 million.
- Axia and the “Massachusetts Technology Collaborative have been embroiled in litigation over finances since July 2014.”
- In all, the network has consumed nearly $90 million in taxpayer funds—$45.4 million from federal taxpayers and $44.3 million in “matching” funds from Massachusetts.
- Only 550 of the 1,245 community institutions (44 percent) that have access to the middle mile network have purchased service.
- Some of the institutions that can connect to the network already had purchased broadband service from other providers.
- Not one library has purchased the network’s gigabit offering, which can cost up to $1,200 a month.
Community Broadband Networks Initiative Director Christopher Mitchell, a vocal supporter of government-owned broadband, told The Eagle MB123 “was basically a bridge to nowhere” and that “dollar for dollar, it was not a wise investment at the time.” Mitchell also said the price tag for the gigabit package was “one of the most expensive prices I’ve heard quoted to me in the last year.”