The Louisville Metro Council is mulling the idea of a government-owned broadband network (GON). This would be an inappropriate and irresponsible use of hard-earned taxpayer dollars.
The roughly $5.4 million GON plan before the Council would span 90 miles in Jefferson County, with the majority of its footprint overbuilding KentuckyWired – a more than $330 million statewide GON currently being constructed.
While proponents of government Internet have painted a very rosy picture of the Louisville GON plan, residents of the city should not take the bait. Dozens of examples nationwide have proven GONs are a terrible deal for taxpayers. GONs in Bristol, Virginia; Memphis, Tennessee; Marietta, Georgia and many other cities failed, and then were all sold for pennies on the dollar, leaving taxpayers on the hook for millions.
Why did all of these undertakings end in similar tragedy?
Government entities are not capable of building out and maintaining broadband networks, as they lack the expertise and resources necessary to remain up-to-date in such a rapidly changing industry. This truth is already being echoed in Louisville, as the plan pending before the Metro Council notes that half of total project dollars will be spent in the last 6.6 miles alone, a claim that private industry experts cannot piece together.
These experts have thoroughly reviewed this small stretch of land, and concluded that at least three quarters of construction in the area would be above ground. To put this point in context, the experts explained that even if the 6.6 miles required the extreme of digging up the streets, laying the fiber, and then rebuilding the streets – a method that would only be required to run fiber to the home, which is not nearly as far as the Louisville plan is intended to go – private providers estimate it should still cost about $1 million less than the city’s projected expense.
The Louisville Council, like many others that have attempted to play in the broadband industry, is way out of its element.
In addition to the Louisville GON plan being a very risky way to spend taxpayer dollars, it is also wildly inappropriate. Currently, more than 35 providers offer service in Louisville. And thanks to their commitment and investments to the area over the years, 99.9 percent of Jefferson County’s population has access to speeds of 50 Mbps. While some purport adding a GON to the mix would simply result in more competition and choices for consumers, that is a very shallow perspective.
GONs unfairly compete with private providers because government entities can subsidize costs with tax dollars, and thus charge consumers below the cost of service. Private sector providers, on the other hand, cannot do this because it would drive them out of business. As such, private providers are discouraged from expanding, investing, and remaining in areas where GONs are present, as their odds of success are hindered by unfair competition from an entity that doesn’t need to turn a profit.
Since it is vigorous competition between providers that spurs innovation, improves quality of service and drives prices down, GONs leave consumers at risk for fewer choices, outmoded technology and deteriorating service.
There is no justification for pouring millions of hard-earned taxpayer dollars into “competition” with the private sector. Doing so would inflict a great deal of harm on taxpayers and consumers in Louisville, and chill innovation.
If the Metro Council truly wants to improve broadband service in Louisville, they should put the GON plan to halt, get out of the way, and allow the private sector to thrive.