Do you trust Washington to get internet policy right?

President Trump wants to spend $1 trillion to improve our country’s infrastructure.

And a top priority within that initiative is to provide broadband access for all Americans …

According to the FCC, 34 million don’t have adequate service for downloads, and 47% of our nation’s students lack the connectivity capable of supporting digital learning applications.

However, having the federal government provide our internet service might not be the best way to go.

Municipalities across the country tried, and it didn’t work out so well.

Failures galore

More than 450 communities have built government-owned, taxpayer-funded broadband internet projects … even though private services were already available.

Politicians promised faster speeds, a boon for local businesses, job growth, and internet for all. Although that sounded good at town meetings, the reality is much darker.

Costs were vastly underestimated, subscriber rates did not meet expectations, and quickly changing technology left many with outdated networks.

Now, rather than having money for improving education and infrastructure projects,  government officials have lost billions on these networks as shown in the map below, leaving taxpayers holding the bag for years to come.

Source: Taxpayers Protection Alliance

Here are three examples of those government broadband networks now floating in red ink that were named in a report compiled by the Taxpayers Protection Alliance:

  Burlington Telecom, Burlington, Vermont — Moody’s downgraded the city’s credit rating six levels to the edge of junk bond status during its broadband-induced budget disaster. The city owes $7.3 million on the project — or $1,825 per subscriber.

  Cedar Falls Utilities, Cedar Falls, Iowa — After 20 years of development, the project is incomplete. Meanwhile, the city’s bond rating has fallen from A1 to A3.

  Utah Telecommunication Open Infrastructure Agency (UTOPIA), Utah — $500 million of taxpayers’ money spent. On top of that, an audit found that the project loses $13 million annually, and taxpayers will be stuck paying off the network’s bonds until at least 2040.

Such a deal …

study by the State Government Leadership Foundation cited more examples of failed government-owned networks.

This one is sure to get your attention …

City officials in Provo, Utah issued $39 million in bonds to cover the costs of its broadband network in 2004. When the cash dried up in 2011 and subscriptions dwindled, the city began charging $5.35 on electric bills so they could afford the $278,000 in monthly bond payments.

Then in 2013, the city sold the failed network to Google for $1. Yes, one dollar!

“If we build it, they will come is not a good way to invest taxpayer money.” — Evan Swarztrauber, TechFreedom

As a condition of the cheap sale, Google agreed to provide free basic 5mbps service to residents for seven years, as well as other free internet services to public institutions and schools. Taxpayers were left to foot the bond payments for the following 12 years.

What’s more, if Google decides it no longer wants the network, the city has to buy it back for $1.

Evan Swarztrauber, the communications director for TechFreedom, a non-profit dedicated to promoting innovation and freedom in technology, put it quite well when he said in a recent interview,

“If we build it, they will come is not a good way to invest taxpayer money.”

Government needs to get out of the way!

Roads, bridges, and water management systems are crumbling around us with each passing day. So any effort to improve them is welcomed …

But with such a dismal track record, it’s obvious that politicians and government bureaucrats should put their efforts into fixing our traditional highways and leave the information highway to private sector engineers and innovators.

And with more tax breaks and less red tape, a competitive environment will emerge for attracting companies to underserved areas.

Standing up for the Sound Dollar,


1 Response to Do you trust Washington to get internet policy right?

  1. If we let “industry” have its’ way with the internet, we can kiss Net Neutrality good-bye.
    And your examples of local, “publicly-funded” broadband are both over-simplified, and deceptive.

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