Government Broadband Signals Bad Deal


February 16, 2016 3:29PM

Whether it’s our doctors’ offices, our farmland, classrooms, or personal savings, it seems that government is constantly sticking its nose where it doesn’t belong. In every case, we the people receive less for more. Why? Because when government gets into a business that private entities can and are providing, the end result is nearly always lower quality service, higher prices, and less competition. So when the state and certain municipalities want to establish and expand government-owned broadband, we should expect the consequences to be no different.

This issue has created a rift within the Republican-held legislature, with some lawmakers on the right supporting the efforts to increase government’s broadband market share, while others within the party maintain that private companies are better suited for the job.

On Feb. 3, two state lawmakers – Rep. Kevin Brooks (R-Cleveland) and Sen. Janice Bowling (R-Tullahoma) introduced a bill that would repeal a law that restricts the growth of government-owned broadband networks; but House Speaker Beth Harwell (R-Nashville) seems to oppose the bill, stating, “My preference would be that the private sector take this over.” Rep. Glen Casada (R-Franklin) agreed and outlined some of the drawbacks of government-owned broadband. He said, “If we allow towns to compete against the free market, number one, they will lose money and that’s a drain on the taxes that taxpayers pay, and number two, it will force the loss of jobs in the free market.”

Speaker Harwell and Rep. Casada are right to reject the notion that government-owned broadband won’t have unintended economic consequences across the state. Taxpayers should consider the following facts:

  • Tennessee Has An Adoption Problem, Not An Access Nearly all Tennesseans – 96 percent – have access to broadband service and 85 percent have access to speeds of 25 megabits per second or faster. Far fewer Tennesseans – 76 percent of businesses and just 72 percent of households – have adopted broadband. What conclusion should we draw from these figures? Instead of building costly broadband networks themselves, lawmakers should talk about the value of broadband adoption for citizens – but leave the building of networks and providing of Internet services to the private sector.
  • Government-Owned Networks Are Not Self-Sustaining. According to the University of Denver’s Ronald Rizzuto who has studied several municipal networks in Tennessee, 75 percent to 80 percent of government networks operate at a deficit. In fact, just three of the nine Volunteer State networks Rizzuto has studied consistently earn a profit.
  • You Can’t Replicate Chattanooga. Chattanooga’s municipal broadband network has been widely praised and is often cited by municipal broadband supporters as a model for other cities. Never mind that Chattanooga received an $111 million subsidy from the State to build its network. With a nearly $19 trillion debt, we would suggest this was a bad investment of taxpayer dollars.

The bottom line is this: When government grows the private sector shrinks. We should ask lawmakers to get off the Internet and get back to working on returning more decisions to the privacy of our kitchen tables.