The Knoxville City Council will be voting this evening on whether to put tax and ratepayers on the hook for the Knoxville Utility Board’s (KUB) government-run broadband plan. As plenty of cities and even a few states have learned the hard way over the years, doing so would be a terrible mistake.


Knoxville does not need to look very far to see a current example of a Government-Owned Network (GON) failing to deliver on promises and turning out to be a terrible deal for taxpayers. 


KentuckyWired, a 3,000-mile GON that is currently being constructed in the Bluegrass State, was sold to taxpayers as a $350 million project that would be complete by the spring of 2016. Unfortunately for Kentuckians, those projections could not have been more wrong.


More than five years past the supposed completion date, fiber construction for KentuckyWired is still “in progress” in some parts of the state and a report from the state auditor has concluded that taxpayers will end up wasting a whopping $1.5 billion on this redundant “government owned network” over its 30-year life.


KentuckyWired is not the exception. It is the rule. Where GONs have not failed outright, they have required massive additional subsidies from taxpayers and ratepayers. This is because government entities lack the experience and expertise needed to build out and maintain a state-of-the-art broadband network. 


After the initial construction cost, frequent and expensive technology upgrades will be necessary in order for a GON to remain current in such an innovative field. This fact is something politicians often forget to mention.


If underestimating the true costs is not problematic enough, government entities also grossly overestimate the demand. Despite having access to a government network, most consumers choose to remain with their trusted private sector provider.


Underestimated costs and overestimated demand is a recipe for a financial gap that taxpayers and ratepayers will always be forced to fill. Even in the very early stages of the KUB’s plan, it is clear that its proposed GON will face the same fate.


The Knoxville Utility Board’s own business plan projects that its fiber division will rack up $123 million in losses over the first 10 years alone, which is why the Board is planning to subsidize it with its electric operation. This will leave all ratepayers – including those that do not subscribe to the GON – at risk for future rate increases.


Adding insult to injury, a consumer survey conducted by the Board finds that there is almost no legitimate demand for its proposed GON. A May 2021 report by Gillan Associates, An Analysis of the Fiber-to-the-Home Broadband Business Plan of the Knoxville Utility Board, summarizes key findings of the survey:


“There is no evidence of widespread dissatisfaction with existing providers. On a scale of 1 to 10, only 11% of Comcast subscribers and 8% of AT&T customers rated the service as a four or less… Even if unsure of their speeds, a majority think their service is fast enough…Only 1% of subscribers choose 1 Gbps service, even though it is broadly available.”


One of the arguments for this largely duplicative network is that it would allegedly expand broadband access into unserved communities. While expanding broadband access to those who do not have it is a laudable goal, the private sector, which has a track record of success, is already working on it.


Comcast, for example, has proposed to expand gigabit availability to every single unserved home and business in KUB’s footprint in Knox, Grainger, and Union County. Comcast would build and operate the network as well as provide most of the funding and take on the risk. This approach would make more efficient use of tax dollars and take ratepayers off the hook for future increases.


The private sector has invested $1.7 trillion over the years into the reliable networks we have today and is eager to invest more. Government simply needs to get out of the way. Wasting taxpayer dollars on a redundant network is useless and will only lead to more problems.