What Makes Local Governments Think They Can Run Their Own Broadband Business?
Medina County Has a Muddled Idea for Muni Broadband; The Ohio Taxpayers Association Opposes It
S.O.B. Alliance member Scott Pullins has a post on this at The Pullins Report, and has his Ohio Taxpayers Association (OTA) on the case of this suburban Cleveland county, for this reason:
Medina County Commissioners are planning to borrow and spend over $8 million in taxpayer dollars to build a high speed broadband network for the benefit of a few, politically connected companies. This is money that should be used for more important purposes like supporting our schools, our roads, and our safety forces. The Ohio Taxpayers Association has sponsored this website as a public service to educate Northeast Ohio taxpayers about this wasteful project and take action.
I’d like to see more detail, which I suspect Scott will provide, but Medina appears to be making at best a dangerous move, and at worst engaging in serious political cronyism (it’s unclear to me from the description above whether all residents will benefit from the network).
It’s one thing for the City of San Franscisco to, as I understand it, commit little if any money to a muni broadband project with the likes of deep-pocketed companies Google and EarthLink, which I would expect will run the system and assume the primary risk of financial loss (if I’m wrong, the City by the Bay is run by people who are dumber than a box of rocks). It’s quite another to go into serious municipal hock for that purpose.
Scott has some great research at the web site set up to oppose Medina County’s plans explaining why, with rare exceptions like San Francisco, muni broadband projects often fail in the short run, and will hold back the march of technology in the long run.
Here’s another supporting item from The Institute for Policy Innovation, along with an excerpt about down-the-road issues and existing failures:
But government ownership of networks will shut out, rather than provide, competition. What do you think will happen when a private network company comes into a market and can provide better/faster/cheaper service than the government-owned network? Do you think that a local government that has come to depend on the subscriber revenue from its municipal network will “play fair”? Of course not — they will favor themselves and hinder the new competitor as much as possible. The result is that constituents who live in the area served by the municipal network will pay higher costs for network access, not the lower prices offered by a potential competitor.
Financially, these municipal networks are failing. Marietta, Ga., has had to sell its municipal network at a substantial loss. The city spent $34 million of its taxpayers’ dollars on the network but sold it for $11 million — a loss of 23 million taxpayer dollars. In Ashland, Ore., millions of dollars in cost overruns have forced the city to borrow from other city funds in order to cover the overruns.
If local officials want to become broadband entrepreneurs, they should resign their elected offices and start a network company. Then they can assume the financial risks themselves with voluntary investors, rather than playing at broadband with taxpayers as their underwriters.
I encourage readers to do more of their own research on this. If you conclude that you’re against what Medina County is doing, go to the opposition web site the OTA has set up, specifically its “Take Action” page, and either e-mail or call as suggested.
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UPDATE: Here is an interesting piece on what Google is doing as it rolls out WiFi in its headquarters hometown of Mountain View, California, which includes some controversy over privacy.
