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The Wayback Machine - https://web.archive.org/web/20180129214112/https://stopcityfundedinternet.com/
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THE ISSUE
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ABOUT US
City-Run Internet is Too Risky for West Plains Taxpayers
The City of West Plains is considering building an unnecessary taxpayer-funded internet service—a decades long, high risk project. Instead of putting our tax dollars at risk and letting the government run our internet, West Plains should focus on more pressing priorities, like fixing our roads and bridges, increasing public safety and supporting our schools.
City-Run Internet: A History of Failed Promises that Leaves Taxpayers Footing the Bill
For nearly two decades, local governments across the nation have made promises of faster and cheaper broadband networks, an improved quality of life, a burgeoning local economy and job growth. Time and time again, however, an alarming number of these city-run networks have failed to deliver on their promises, leaving taxpayers to foot the bill. But that’s not the only reason we should work together to stop West Plains from building government run internet.
West Plains Has More Important Priorities
West Plains is already a “Gig City,” with other private internet providers. In fact, residents already have access to a Gig connection for $80 per month. $80 per month is a price that is in line with many other cities around the country. The City of West Plains should focus its limited taxpayer funding on more pressing priorities, like fixing our roads and bridges, improving public safety and supporting our schools. And spending taxpayer dollars subsidizing a broadband utility would mean fewer resources for other services residents need and enjoy.
West Plains Taxpayers Should Have Lower Rates, Not Bigger Government
In recent years, the city electric utility has stockpiled a significant amount of residents’ money, building up nearly $15 million in “unrestricted” cash. The City of West Plains should lower rates for residents or invest in more reliable electrical services, not subsidize an expansion into government run internet.
Research Suggests Taxpayers Should be Wary of Government-Run Internet
One of the most comprehensive study of municipal internet projects to date conducted by the University of Pennsylvania found that just 10 percent of projects bring in enough revenue to recover their construction costs within 40 years of their launch. The others won’t be paid off for decades more. More alarmingly, the same study found that 55 percent of projects operated at a loss.
Around The Nation: Failed City-Funded Internet Projects
Throughout the country, local governments have taken it upon themselves to build out government-run internet services, promising faster and cheaper service and a growing economy. But too often, these services don’t live up to expectations, which means taxpayers are stuck with unanticipated costs for years to come. Just a few examples:
Provo, Utah: Failed, $40 Million in Debt, Sold for $1
In Provo, Utah, local taxpayers spent $40 million on a fiber optic experiment called iProvo that quickly began hemorrhaging money — losing nearly $10 million per year. After a $5.35 monthly tax on residents’ electric bills failed to bail out the disastrous broadband project, city officials were forced to sell the network for $1. Source: Taxpayers Protection Alliance
Image: By Creator: Javin Weaver – Own work, CC BY-SA 3.0
Cedar Falls, Iowa: Increased Debt, Lower Credit Ratings
Building and launching the government-owned network required the city’s electric, water and gas company to take on $17.1 million in debt and cash a $1 million federal grant. The debt became so stifling that Moody’s downgraded the bond rating of Cedar Falls Utilities from A1 to A3. Despite the enormous cost of the Cedar Falls broadband network to the public, the project remains largely incomplete after 20 years of development. It remains to be seen whether the benefits of this network will justify the significant costs associated with this municipality’s ambitious expansion plans. Sources: New York Law School and Taxpayers Protection Alliance
Image: By Creator: Javin Weaver – Own work, CC BY-SA 3.0
Lafayette, Louisiana: $160 Million in Debt
Launched in 2007, the Lafayette project has been proclaimed a major success by the mainstream media and supporters of big government. In reality, the Lafayette Utilities Service (LUS) broadband project has failed to deliver on its goals. The Reason Foundation conducted an extensive study on the LUS broadband service. According to the results of their analysis, after six years of operation, the LUS project left the city with more than $160 million in debt. Not only was the project losing $45,000 a day, but it was 30 percent short of the revenue projections from its business plan. Source: The Reason Foundation.
Monticello, Minnesota: Defaulted on Debt, Unlikely to Deliver Return
FiberNet Monticello is a municipal internet and telecom company that offers high speed internet bundled with phone and cable TV service. Unfortunately for Monticello taxpayers and the investors who funded the taxpayer-subsidized network in the Twin Cities bedroom community, FiberNet has turned into a boondoggle with devastating financial implications. FiberNet Monticello, which was supposed to earn enough money to pay off more than $26 million in bonds, couldn’t afford to pay for its own operating expenses. The city ultimately defaulted on its debt, resulting in bondholders receiving just 22 cents on the dollar. Monticello city administrator Jeff O’Neill said it’s unclear whether the city’s broadband network may ever generate enough business to give bond holders a better return. Source: Minnesota Public Radio and New York Law School.
Image: By Creator: Hockeymom428 – Own work, CC BY-SA 4.0
Groton, Connecticut: Sold for $550,000, Remains $27 Million in Debt
Built amidst much acclaim and anticipation in the mid-2000s, the network quickly collapsed under the weight of soaring debt and tepid consumer demand. In early 2013, the city sold the system to private investors for $550,000, representing a loss of over $30 million. The city and its taxpayers remain responsible for more than $27 million in loans. Source: New York Law School.
In The Media
Municipal Broadband Is No Utopia
“The record of these projects is decidedly mixed. In a 2012 study of government-owned broadband networks, Widener University’s Joseph Fuhr Jr. concluded that “Many cities and municipalities have entered into the broadband market with disastrous results.” The failed networks, he said, “have neither the resources nor the expertise necessary to provide consumers with reliable state-of-the-art broadband connections.”
The false promise of 'municipal broadband' networks
“At a time when most communities face huge unmet needs for roads, bridges, water, and electric systems, spending scarce taxpayer dollars on government internet might be good PR, but it seems like risky economics.”
“Given how badly most of the networks examined in the study have failed, one can see why these utilities aren’t more transparent about their costs. Eleven of the 20 are operating at a loss, and all but two will fail to pay back the costs their installation by the time the projects become obsolete.”
Municipal Wi-Fi Networks Run Into Financial, Technical Trouble
“Across the United States, many cities are finding their Wi-Fi projects costing more and drawing less interest than expected, leading to worries that a number will fail, resulting in millions of dollars in wasted tax dollars or grants when there had been roads to build and crime to fight.”
Broadband consultants collect hefty fees as they push taxpayer-supported networks
“For many local governments, the promise is seductive. A cottage industry of consultants and network builders — who stand to profit handsomely — sell the idea to misty-eyed government officials that building a municipal broadband network will spawn a local Silicon Valley microcosm that will be a monument to their incumbency,” she wrote. “But what they don’t see is that the economics of the grand venture doom it to likely failure.”
“For the most part, municipally-built broadband networks have the economic chips stacked against them and, where tried, have saddled local taxpayers with a mountain of debt and half-built networks that are then sold at fire-sale prices to vulture investors. Taxpayers in Provo, Utah, for instance, spent $40 million to build a relatively small and modest network only to sell it for $1 a few years later because they underestimated the massive costs of operating, upgrading and maintaining it.”
“Widespread failure of municipal broadband networks across the country should serve as a lesson to big-government proponents. Governments shouldn’t be in the internet business, let alone any business outside of governing. Hardworking Americans’ tax dollars shouldn’t be used to gamble on expensive broadband network infrastructures.”
City-Run Broadband Internet Is a Disaster in the Making
“But despite project after project proving that local bureaucrats can’t effectively run these private networks and despite the millions and millions that keep getting flushed, the projects keep getting planned. They’re in search of a holy grail that would be well-run and provide optimal service at low prices universally and at a profit to the government. So far, that doesn’t exist.”
We need your help. If we’re not able to gather support from our community, West Plains residents may be footing a bill to pay for an expensive build out of internet fiber that history suggests does not have high chance of success. Interested in learning more and helping to protect West Plains taxpayers? Sign up below and we’ll be in touch.
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