New Buckeye Institute Policy Brief Highlights the Problems with Government-Owned Broadband NetworksFeb 14, 2018
Columbus, OH – In The Buckeye Institute’s most recent policy brief, Broadband “GON” Wrong: Remembering Why Government-Owned Broadband Networks Are Bad for Taxpayers, Greg R. Lawson looks at the problems with government-owned and run networks and their high cost to taxpayers.
“Government-owned networks have been springing up across the nation for years and Ohio is no stranger to these government-owned and controlled projects that unfairly compete with the private sector,” said Greg R. Lawson, research fellow at The Buckeye Institute. “While these GONs might seem alluring, they frequently fail to live up to the promises made by government officials, and have often led to taxpayer subsidization to maintain operations.”
In the paper, Lawson looks at two Ohio case studies, the City of Lebanon and Medina County. The network in Lebanon was plagued with problems almost from the start, as was outlined in a Buckeye report in 2006, and was eventually sold to Cincinnati Bell at a loss. Unfortunately, Medina County did not heed the warning signs that Lebanon’s experience offered, and according to the Medina County Port Authority’s chief operating officer, a mere 140 customers are connected to the network and the county commissioners have already had to subsidize the network twice to the tune of $1.6 million.
Lawson also outlines a number of problems with government-owned networks, most notably the high cost to taxpayers and the poor service provided, which were highlighted in a University of Pennsylvania Law School report. The study found that in the 20 GONs it reviewed, 11 generated a negative cash flow, and of the nine cash-flow positive projects, five of them would take more than 100 years to recover their costs while two would take more than 60 years.
“Ohio’s state and local policymakers should take a long hard look at broadband “GON” wrong in the City of Lebanon and Medina County before venturing into new government-owned networks,” Lawson stated in the paper. “Local governments should focus their money and attention on providing their citizens with safe roads and drinking water, and let the private sector worry about adding new internet users.”
Broadband “GON” Wrong: Remembering Why Government-Owned Broadband Networks Are Bad for Taxpayers was authored by Greg R. Lawson, research fellow at The Buckeye Institute.