WASHINGTON, D.C. – A new study from the State Government Leadership Foundation (SGLF) found that government-owned broadband networks should be a “last resort” for municipalities looking to expand Internet access. The report is timely because, all over the country, state laws that limit government ownership of broadband, due to their negative impact on consumer tax bills, competition among broadband providers and the flow of private investment into digital infrastructure are under threat. Just last year, the Federal Communications Commission voted to pre-empt such state laws in North Carolina and Tennessee that restrict expansion of government-owned broadband networks. This report provides a cohesive economic analysis of the cost and risk associated with government owned broadband networks.
“The debate over municipal broadband networks is heated, and a central question in the argument is how these government interventions into the business of building digital networks affect the economy,” said report author Dr. George S. Ford, Chief Economist for the Phoenix Center for Advanced Legal and Public Policy Studies. “I conclude that because there are questionable economic advantages resulting from government-owned broadband – but numerous disadvantages – municipal broadband should be a last resort option, reserved for markets where private entry is not possible.”
SGLF leaders reacted favorably to Dr. Ford’s report.
“As Dr. Ford points out, municipal broadband networks are not cheap,” said Mississippi Lieutenant Governor Tate Reeves. “Captive electric ratepayers across the nation have been saddled with thousands of dollars’ worth of subsidies to pay for government-owned networks in direct competition with the private sector. As a conservative Republican, I believe there are more effective ways to promote broadband development in our cities and states: Let the market, not the government, drive those decisions.”
“While the government should always be putting the best interests of its citizens first, advancing these government-run broadband networks has the exact opposite effect,” said Indiana Senate Majority Leader Brandt Hershman. “Whether driving out private-sector competition or passing along a hefty bill to taxpayers, there are true risks associated with this concerning issue. I’m glad to see today’s study shine a light on it all.”
“Dr. Ford makes it clear that there’s a lot to consider before we allow our cities to compete with private sector broadband providers,” said SGLF Chairman Congressman Tom Reynolds. “There are many important functions that our local and state governments are responsible for. We should encourage private-sector competition in the states to invest and build our fiber networks. That creates jobs and lowers risk to taxpayers.”
The full study can be found here.