City-owned broadband squeezes taxpayers

By David Williams

Guest Columnist
Posted 4/20/17

“There you go again.”

Ronald Reagan uttered those words in a 1980 debate, possibly turning the tide of the election in the Gipper’s favor and changing history.

North Carolina lawmakers would do well to remember that famous …

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City-owned broadband squeezes taxpayers

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“There you go again.”

Ronald Reagan uttered those words in a 1980 debate, possibly turning the tide of the election in the Gipper’s favor and changing history.

North Carolina lawmakers would do well to remember that famous line this year as the topic of taxpayer-funded broadband networks bubbles to the surface again.

The current North Carolina law was enacted in 2011 to set limits on the growth of these schemes. It was supported by another great statesman, U.S. Sen. Thom Tillis, who was then the state House speaker and who has since introduced legislation in the U.S. Senate to protect laws like North Carolina’s from federal encroachment.

Yet here we go again.

Government-owned broadband supporters have been trying to reverse the “level playing field” law nearly since the ink was dry on the statute. They’ve failed and failed again because the majority of state lawmakers believe that municipal broadband poses a significant threat to taxpayers.

The majority is right. The Taxpayers Protection Alliance Foundation recently launched a website that maps more than 200 muni networks all over the United States. From sea to shining sea — literally — taxpayers have suffered when their local leaders built city-owned networks.

For example, San Bruno, California’s network has been in business since 1999, but the city still is paying off debt for its system because it has fewer than 5,000 subscribers. That level of interest was well below what local leaders had planned for.

Up north, there is Lake Connections, Minnesota, which took on $10 million in debt and swiped more than $66 million from federal taxpayers for its construction. Down south, LUS Fiber in Lafayette, Louisiana was at one point shedding $45,000 a day.

Back here in North Carolina, the city of Wilson spent more than $33 million on its municipal network, including a $3.2 million raid on the city’s gas fund.

In Mooresville and Davidson, the towns borrowed $80 million for its municipal network in 2007 and by 2009 were running a deficit of $6.4 million. Today, it continues to lose about $6 million annually. Meanwhile, the town of Salisbury is “seeking proposals for new financially stable business models” for its network, which could include selling the Fibrant network entirely.

Don’t get excited and think selling the network will be a financial windfall. Provo, Utah’s $39.5 million network was sold for $1.

Supporters of high-risk municipal broadband schemes like these are behind current efforts to destroy the North Carolina’s carefully crafted law that protects taxpayers. Having lost a federal court battle to undo the statute, government-network advocates are back in Raleigh seeking another way to slip their hands in taxpayers’ pockets.

Lawmakers who care about their seats should be careful when these folks come calling.

Last year, we attempted to assess taxpayers’ appetites for government networks. What we found is that several priorities are much higher on voters’ lists. In fact, access to high-speed internet service ranked dead last as the issue voters want elected officials to prioritize.

Additionally, while 63 percent of our respondents said they are concerned about low pay for teachers and firefighters, only 29 percent said they were worried about adequate access to broadband. That’s probably because nine in 10 survey respondents said they have internet at home and the vast majority of those who did said they were satisfied with their service.

We also found two-thirds of voters oppose the idea of their local leaders incurring debt to provide a high-speed internet network. A plurality said they would have a less favorable impression of an elected official who supported building a government internet network.

Individuals in Raleigh must listen to these numbers, rather than political rhetoric.

We hope Republican lawmakers will remember their roots and that they were elected because of their devotion to protecting taxpayers and the free enterprise system. Simply put, we hope these lawmakers will ask themselves, “What the Gipper or Senator Tillis do?”

Certainly, lawmakers will conclude they don’t want to go down this road again.

David Williams is president of the American Taxpayers Alliance, a nonprofit and nonpartisan organization dedicated to educating the public through the research, analysis and dissemination of information on the government’s effects on the economy.