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Tallahassee Democrat: Joseph Fuhr: Don’t look to government for broadband access

Monday, December 10, 2012

As we watch federal lawmakers in Washington grapple with how to handle more than $50 billion in across-the-board spending cuts set to happen automatically at the beginning of January, we are reminded that — even in the best of times — budgeting involves choices. Whether it’s the federal budget, a household budget or a city budget, a dollar spent here means another dollar not spent over there.

Lawmakers can take a cue from millions of families across Florida in looking for ways to rein in spending: Cut redundant or duplicative programs.

That means not only eliminating or consolidating redundancies within government, but also ending programs that duplicate services provided by the private sector.

A good example of one such program is government-owned broadband networks (GONs). There are now more than 100 of these taxpayer-financed broadband networks nationwide; Florida has, and has had, several. Generally, GONs add to the debt load of the municipality that runs them, a burden that certainly has come true in Florida.

About 10 years ago, Quincy spent $3.3 million to build a fiber-optic network. In 2005, the system (NetQuincy) cost the city $930,000 to operate. It brought in only $415,000 in revenue that year, a loss that was shared by the city’s 6,500 residents. The network eventually failed.

Orlando also experimented with a free, public Wi-Fi system in 2005. The network was designed to serve a mere 200 users, but the city couldn’t even meet that very low target. Over the 17 months the network was operational, an average of 27 people used the service each day.

Orlando’s system cost taxpayers $1,800 a month to operate.

More recently, the state has witnessed the North Florida Broadband Authority (NFBA). In 2009, the authority received a $30 million grant from the federal government to construct a wireless broadband network that would serve the poor and educationally disadvantaged in more than a dozen cities and counties.

Several participants, including Bradford County and the city of Perry, have dropped out of the consortium. Columbia County was the most recent defector. Earlier this month, county commissioners voted unanimously to withdraw from the NFBA, citing financial concerns, lack of transparency and an ongoing federal investigation into possible conflicts of interest.

In April, Perry City Manager Bob Brown noted the network didn’t “have anything up to serve one customer, anywhere.” Perry administrators also said they decided to withdraw because broadband was readily available in “100 percent of the city … from multiple providers.”

Of course, not all Floridians are fortunate, not all have access to high-speed broadband, and they should. However, this service is one that the private sector is able and willing to provide given the correct incentives. The existence of a GON, unfortunately, is a huge disincentive. Many GONs do not have to pay the same taxes and fees private providers do and are often exempt from the regulations by which their private sector competitors must abide. Like cities and states, private investment decisions involve choices — giving a subsidy to a GON makes it more likely a private broadband provider will invest elsewhere.

Instead, city and county governments should look for ways to partner with the private sector, not compete with it. Public-private partnerships are far more successful at actually providing service anyway — and they do not add to taxpayer debt.

Community access to broadband has many benefits — it enhances telemedicine options, adds to educational infrastructure, and improves small-business productivity — but government-owned networks also come with significant costs. Many municipal governments are lured into these deals with promises that the networks will eventually add revenues their coffers.

Instead, in Quincy, Orlando and the cities and counties “served” by NFBA, GONs have been a financial drain. Cities looking to increase broadband should learn from the North Florida Broadband Authority example and look for ways other than government ownership to fulfill their community broadband needs.

Joseph P. Fuhr Jr. is an economics professor at Widener University and a researcher for the Coalition for the New Economy. His recent research has dealt with government-owned broadband networks (GONs) and their fiscal pitfalls and dangers. Contact him at

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