Government-funded Internet infrastructure called a bad idea

by WorldTribune Staff, April 30, 2017

Wake Forest, North Carolina is just one of many American towns considering broadband options for its residents.

In 2007, Cornelius, Davidson and Mooresville, North Carolina spent $92.5 million to purchase and upgrade a bankrupt cable television system and turn it into MI-Connection, a government-owned internet, cable TV and telephone company.

“Taxpayers were soon on the hook for $6 million annually and an outstanding debt of $60 million in bond payments on the initial purchase of the network,” according to David Williams of the Taxpayers Protection Alliance (TPA).

“Totaling less than 15,000 subscribers, MI-Connection has cost taxpayers millions and continues to receive warning letters from state officials about its financial condition and outlook,” Williams told Watchdog.org.

The TPA cited several instances where taxpayers were left holding the bag for government broadband schemes:

  • Residents in Provo, Utah spent $77 million building and funding operational losses associated with iProvo. The government network hemorrhaged so much money city leaders sold it for $1 so taxpayers wouldn’t have to spend millions more on additional bailouts.
  • In Sun Prairie, Wisconsin, a taxpayer-funded Internet service has just 200 customers – but is more than $9.3 million in debt.
  • A fiber-optic Internet and cable television network in Tacoma, Washington that cost $100 million in public funds to build now loses about $9 million annually thanks to plummeting customer numbers. Local residents are forced to bankroll the failing service year after year.
  • The Chattanooga, Tennessee government Internet, cable and telephone service charges such exorbitant prices for its gigabit service that business owners who can utilize gig-speed broadband can’t afford it. In addition to shaking down federal taxpayers for more than $110 million in construction costs, Chattanooga’s Electric Power Board (EPB) borrowed more than $28 million from Chattanooga’s electric customers to fund marketing expenses. Despite all these costs to the public, EPB’s high-speed government Internet service never lived up to promises that it would spur business development and revolutionize Chattanooga’s economy. Now other cities in the region have faster and cheaper private Internet service and are beginning to leave Chattanooga in the dust.

“When federal, state and local lawmakers get too involved in this arena – sometimes going as far as to get in the Internet business and sell services directly to consumers – taxpayers always lose, Drew Johnson, national director for Protect Internet Freedom, wrote in an opinion piece for The Hill.

“If lawmakers want to help more Americans gain access to lightning fast broadband Internet service, they should create a welcoming environment for Internet providers by reducing tax and regulatory burdens, and then get the heck out of the way.”

Taxpayer-funded Internet projects “are a waste of money that will threaten the financial well-being of state and local governments,” Williams told Watchdog.org.

 

 

 

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