Column: Municipal broadband’s rocky coast littered with avoidable mistakes

(WAVE) - The siren’s song of a government-owned broadband network is luring Oldham County to a potential disaster. Consultants, spinning stories of local governments navigating the rough currents of starting up local internet service from scratch, hope Oldham’s elected officials miss the signs of the numerous shipwrecks littering municipal broadband’s rocky coast.

Judge Executive David Voegele is intrigued with the story of Ammon, Idaho. He should balance the sales pitch he’s getting with some independent research of his own.

Start with Broadband Boondoggles, a project by the national non-profit Taxpayers Protection Alliance.

The report lays out in detail a trail of broken promises of government-owned broadband in 30 communities across the United States: Networks financed by borrowing that were unable to cash-flow sold at huge losses. Projections for the number of customers who would switch from their current providers missed the mark by a mile. Local governments hid the ball from taxpayers to avoid accountability for botched decisions.

In 2017, Pulaski, Tennessee’s government-owned network generated revenue of only $797 per household against $2,425 in costs.

Salisbury, N.C., borrowed $40 million to fund construction of a network that generated such poor returns the city could only pay the interest on the debt incurred to build it, leading to an eventual downgrade of their bond rating.

Then there’s Kentucky’s own broadband debacle, Kentucky Wired.

Both the Courier Journal and Herald Leader recently reported on the challenge for students who have been forced into distance learning but lack decent home internet service. Those students and their parents would be outraged to know Frankfort has spent more than $500 million on Kentucky Wired since 2015, and the program has yet to provide a broadband connection to a single household anywhere in the state. Kentuckians are right to tell legislators to step up and shut down this unmitigated disaster.

The desire for enhanced internet access and bandwidth is understandable. The COVID-19 pandemic has accelerated the trend toward remote work and education, a trend likely to stick around after children go back to school and workers can return to the office.

But the best intentions cannot overcome the fact that providing high speed internet to unserved areas is really, really expensive. For years, billions of dollars in government grants have been shoveled out of Washington D.C., to subsidize network build-out to areas with low household densities, and yet 19 million Americans still lack broadband access.

Life is full of trade-offs. The understandable appeal of living without neighbors makes it cost-prohibitive for internet providers to string wire to those homes. Just as many households have been waiting for decades to get water and sewer services, until there is a breakthrough in wireless technology that blankets the rural United States, the lack of high-speed internet access will be a fact of life for a small percentage of Americans.

The need to generate a sufficient return on investment will apply to a publicly-funded effort the same as it does to the private providers. Government-owned networks don’t get a pass on the laws of economics.

Judge Voegele promises to move at a deliberate pace. The evidence of failed government-owned networks is plentiful. Do the homework or risk embarking on a journey that ends up as the next shipwreck on the shore.

Andrew McNeill is a Visiting Policy Fellow with the Bluegrass Institute for Public Policy Solutions, Kentucky’s first and only free market think tank. He can be reached at amcneill@freedomkentucky.com.

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