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Wall Street Journal: Let’s Not Follow EU on Broadband

Wednesday, August 21, 2013

Ev Ehrlich’s piece on the state of America’s high-speed Internet networks vis-à-vis Europe (“The Myth of America’s Inferior Broadband,” op-ed, Aug. 5) misses an aspect of EU broadband policy that many cities in the U.S. try to emulate, with predictably disastrous results: government-owned broadband infrastructure.

Municipally built broadband networks have saddled local taxpayers with a mountain of debt. Taxpayers in Provo, Utah, spent $40 million to build a relatively small network only to sell it for $1 a few years later. But Provo is just the latest exhibit in a long pantheon of failed initiatives that include Groton, Conn. ($38 million taxpayer loss) and Marietta, Ga. ($35 million taxpayer loss). Cities as large as Philadelphia, New York and Chicago and as small as Lompoc, Calif. and Acworth, Ga., have also unsuccessfully tried.

These projects fail because of the difficulty of winning enough customers to pay down the tens of millions of dollars in upfront construction and equipment costs while covering huge annual operating expenses to pay for administrative staff, customer service and upgrades. In Provo, the $40 million network requires another $20 million in upgrades before its new owner, Google, deems it operational.

Of course, 6% of the country still lacks access to wired broadband network, and in those communities there could be a case for these highly speculative, risky ventures. But for the rest of country, the economics make little sense in light of a nearly $4 trillion budget shortfall nationally for modernizing our water infrastructure, roads, railways, bridges and schools.

Md. State Sen. Catherine Pugh

Annapolis, Md.

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