The Traverse City Light & Power Board is moving forward with an ill-advised Government-Owned Network (GON). Earlier this week, Grover Norquist sent letters to members of the Traverse City Light & Power Board, urging them to call off this project before it ends in tragedy for taxpayers and utility ratepayers. The full text of the letter is pasted below.
April 1, 2019
To: Members of the Traverse City Light & Power Board
From: Americans for Tax Reform
Re: Don’t be fooled by GON proponents
Dear Board Member,
On behalf of Americans for Tax Reform (ATR) and supporters across Traverse City, I write to urge you not to be fooled by proponents of the Government-Owned Network (GON) plan pending before you. As has been demonstrated by the GON disasters throughout the country, where GONs have either failed outright or are being propped up by taxpayers, government entities are not capable of successfully playing in the broadband space.
Even in its early phases, Traverse City Light & Power’s GON experiment seems on track to end in tragedy. Its partner, Fujitsu, which was selected to create a “business, design and operational plan,” has a less than stellar track record when it comes to GONs. Just take a look at KentuckyWired, for example.
Kentucky officials selected to work with Fujitsu for its statewide GON, KentuckyWired, which was sold to taxpayers as a $350 million project that would be complete by the spring of 2016. Now, around three years past its intended date of completion, less than a third of the network has been installed, none of it is usable, and a recent report from the state auditor concludes that taxpayers will end up wasting around $1.5 billion on this redundant network over its 30-year life.
In addition, city officials should also note that proponents of Traverse City Light & Power’s GON plan cannot help but see the outcome through rose-colored glasses. It is in the best interest of Fujitsu – which has been chosen to determine the extent to which there is a business case for the network – if the city moves forward with a plan, as it would also be the equipment provider and eventual operator.
Fujitsu aside, a GON in Traverse City would be a huge mistake. As has been demonstrated by dozens of GON failures throughout the country, the construction and maintenance of broadband networks are not functions that government entities are well suited to take on, as they require ongoing and expensive maintenance and upgrades in order to function properly. Too late in the game, government officials realize the costs for such undertakings were grossly underestimated, and that they lack the necessary financial resources and expertise to remain up-to-date in such a rapidly changing industry.
Along with underestimated costs, demand for GONs is often significantly overestimated. Despite having access to a GON, consumers often choose to remain with their trusted private sector providers. Underestimated costs and overestimated demand is a recipe for a financial gap that the city’s taxpayers and utility ratepayers will be forced to fill.
Rather than moving forward with this GON project, Traverse City officials should follow the lead of those in Solon, Ohio, who recently rejected a proposal that would have given Fujitsu $45,000 for a feasibility study for a potential GON. ATR opposes Traverse City Light & Power’s GON plan and urges officials to pull the plug before its too late, and city’s taxpayers and utility ratepayers are left on the hook with nothing to show for it.
Americans for Tax Reform