The non-profit and non-partisan Taxpayers Protection Alliance Foundation (TPAF) recently released a new study reporting on more than 200 failed municipal broadband internet programs across the country. According to TPAF, government-owned broadband systems promise the public faster connection speeds, better prices, and greater job opportunities. However, many of these systems fall short of their promises by operating over budget and blocking privately-owned companies from providing better services. The failed broadband programs take valuable spending power away from other government projects (e.g. education, infrastructure, and public safety).
One of the worst offenders is right here in Washington. Click! Cable TV in Tacoma—one of the largest government-owned broadband efforts in the U.S.—has accrued a debt of $37,400,000 since its inception in 1997. Due to a loss in cable subscribers, higher electric bills in Tacoma compensate for the $9,000,000 in annual losses; over the next five years, estimates show an additional deficit of $37,000,000 that will fall on city taxpayers. Due to the growing deficit, Tacoma officials say they have increased their rates again.
Another failure is the Douglas County Public Utility District. Serving only 260 people, the government-owned utility still owes $5,500,000 on their system, equating to about a $21,000 debt per person. Next, Pend Oreille County Public Utility District’s Community Network System (CNS) owes $5,250,000 for a smaller service area, despite the $27,000,000 in “free” money it received through the 2009 federal stimulus package. Accordingly, Pend Oreille officials acknowledge there is no profit to be made in their expansion across the rural area it serves. Another money-loser is the Okanogan County Public Utility District, which services about 2,000 people with $3,300,000 in debt (as of 2015). Despite $5,500,000 in grant money and a $3,700,000 loan – thanks to the federal taxpayers via the American Recovery and Reinvestment Act—the Okanogan County Public Utility District still owes $3,271,027.
Stories similar to local utilities in Washington are spread across the country, with some deficits in the neighborhood of $475,000,000. Washington Policy Center has long opposed government-owned municipal broadband networks. In the Policy Guide for Washington State (Fourth Edition), WPC advises city, state, and local governments against operating monopoly municipal broadband networks. Instead, market forces to expand broadband into rural areas should be encouraged, and a “hands-off” approach to regulating and taxing advances in the telecommunications and technology industries should be adopted. The numbers show that government-owned broadband needs constant bail-outs. Government ownership and regulation of broadband networks stifles competition and innovation, and ultimately leaves taxpayers to pay the price. More information about these policy recommendations can be found in Chapter Nine: Technology and Telecommunications Policy of the Fourth Edition of WPC’s Policy Guide.
Follow up at https://munibroadbandfailures.com/ for the most recent updates on TPAF’s study, as results are still being published as information requested under Freedom of Information Act (FOIA) is released.
Carrie Schmaus is a WPC research assistant as part of WPC's Doug and Janet True Internship Program.
