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Jacob Posik is the director of communications at Maine Policy Institute, a free-market think tank headquartered in Portland.
Three items recently published in the Boothbay Register underscore the serious and legitimate concerns taxpayers should have with the recent explosion of government spending dedicated to procuring broadband services in local communities.
On April 13, two citizen-led petitions were turned over to the town that would halt Southport’s efforts to construct a $2.1 million government-owned network (GON), which was narrowly approved by local voters last May by a vote of 95-86. The vote allowed the town to seek bonding not to exceed $2.48 million to construct the network.
The first petition would rescind the authority of the town’s selectboard to pursue the construction of a GON to provide broadband service to local residents. The second petition would create a fund to assist the approximately 25 homeowners identified by the state as being “underserved” in access to broadband service. Both petitions received many more signatures than required to result in a special town meeting to consider them.
According to the Register, the town has already spent $640,000 to construct the network, but it’s not living up to the expectations set by its proponents.
“The sign on the fire station says this is tax neutral, and it’s anything but,” Tom Myette, one of the petition organizers, told his local selectmen.
Apparently, the town needs about 320 subscribers to sustain the project without asking taxpayers to fork over more cash to keep it afloat. So far, only 134 people have subscribed. Myette also challenges the assertion that 320 subscribers could keep the project viable and says he has heard the “break even number is more like 500.” This would basically amount to the entire town ditching their current provider in favor of the local GON.
Government-owned networks are typically broadband fiber networks owned and managed by a municipality through a contract with a private provider. Municipalities often must borrow millions of dollars to construct the network, all in the hope that enough residents eventually subscribe to the service in order to pay off the bonds (plus interest) 10 or 20 years down the road. Many of these projects do not have a track record of success.
According to BroadbandNow, 99.8 percent of Southport is served by a private provider, Spectrum. Several other satellite and 5G providers are also accessible to its residents, according to the website. It’s unclear why anyone in the town felt it was necessary to build an entirely duplicative service network when just a small handful of residents lack access to broadband service.
Instead of pursuing government-owned networks simply because hordes of cash have been sent to states from the federal government as part of its coronavirus relief spending, there are other options available that are much friendlier to taxpayers.
For example, a more cost-effective strategy would be to provide vouchers for unserved residents to help them procure broadband service on their own. This would not require town-wide borrowing, paid back with interest, to duplicate a service that has already been constructed and provided to the town’s residents by the private sector.
Or, as Myette suggested to the selectboard in March, satellite providers like Starlink could also be a more frugal option for the town to assist those still unserved.
“Starlink will do the same thing for the 10 percent unserved. It costs $500 to install, and $99 per month. That’s much cheaper than $2.1 million,” he said.
Despite the possibility that Southport’s work to construct a GON could be halted as early as this summer, the ConnectMaine Authority just awarded the town a $400,000 grant. Nonetheless, the selectboard must schedule a special town meeting within 90 days to consider the petitions.
As efforts to expand access to broadband continue, taxpayers should remain wary of GONs since these projects often overpromise and underdeliver. Just because policymakers in Augusta saw it prudent to hand out federal tax dollars meant for unserved areas to construct GONs in communities that don’t need them, doesn’t mean your community has to suffer through one of these boondoggles.
Instead, like Myette and company in Southport, you can offer solutions that keep the delivery of broadband services in the hands of experts – broadband providers – rather than turning them over to local communities that do not have the resources to financially recover when these projects inevitably go south.