Jump to Navigation
My Turn
Other Views from Those in the Know
Dr. Joseph P. Fuhr Jr.
economics professor
Broadband, Yes, But Not at Government Expense

An increasing number of Floridians are turning to broadband to access the Internet. But that does not mean they don’t care who provides this service, or how new broadband infrastructure is built and paid for. According to a new poll by the Florida Coalition for the New Economy (CNE), nearly three-quarters - 73 percent - of Floridians don’t want government to use local, state or federal taxpayer funds to compete with the private sector.

This includes broadband.

In some areas where there is an actual or perceived lack of private broadband access, governments have built their own broadband networks. These government-owned networks (GONs) are financed with taxpayer dollars and receive support from state and federal lawmakers through the 2009 American Recovery and Reinvestment Act. They also quite often compete directly with private sector broadband providers that already exist in the area or that would like to invest in an area. According to the poll, 53 percent of Floridians oppose the very idea of local governments offering the same Internet service as private providers.

Clearly municipal governments currently using, or contemplating using, public funds to build and maintain government-owned broadband services should take note: your constituents would rather you save these hard-earned dollars for higher priorities such as education and public safety.

Besides the poll results, there are other significant reasons to think twice about GONs – many of which I examine in a recent study. GONs rarely meet their stated goal of universal service because it is too costly to build networks large enough to reach all consumers. As noted, many are also duplicative; existing in areas already served by private companies. Finally, the capital needed for properly building these networks crowd out spending on other essential social services including law enforcement, healthcare and education.

There are many examples that illustrate the unnecessary strain these networks can place on taxpayers.  The City of Orlando even tried a free, public Wi-Fi program seven years ago. Built to support 200 users, a paltry 27 people were using it on average each day. According to a piece in Forbes Magazine, the city kept the system running for 17 months – well past the planned six-month trial period – and eventually decided the low usage rates did not justify the $1,800 monthly expense.

GONs frequently fail financially because they lack clear and sustainable business plans that are based on realistic cost-benefit analyses. GONs also have difficulty keeping up with constantly changing technology. As a result, policymakers rarely have a clear idea of how much these networks will cost in the long run. Ultimately, local governments are simply ill-suited to build and maintain broadband networks.

Broadband Internet access is necessary for success in today’s technology-based economy. In particular, high-speed broadband provides important social benefits, including access to innovative health care, education and job creation tools.

Floridians understand these benefits, but when told about the drawbacks of government-owned networks outlined above, they are even more likely to oppose them. According to the CNE poll, when told the majority of these networks either fail or require more taxpayer funding than estimated, 80 percent of voters oppose them. Nine in ten - 89 percent - said they would rather their government stick to spending money on policemen, teachers and healthcare, rather than GONs.

There are more direct paths to promoting broadband expansion. Municipalities should explore public-private solutions to bring broadband to their cities and counties. For example, reducing the tax and regulatory burden on private telecommunications firms could be enough to compel them to invest and create jobs in underserved areas.

At a time of declining local revenues and rising budget deficits, taxpayers have a right to see that their tax dollars are benefitting the community instead of being squandered on GONs.

Dr. Joseph P. Fuhr Jr. is a professor of economics at Widener University in Chester, PA. and author of “The Hidden Problems with Government-Owned Networks” a study done for the Coalition for the New Economy.


Main menu 2

by Dr. Radut.