Consumers Burdened by Government Owned Networks

May 21, 2010 written by John Watson

Broadband access is important to all communities in Tennessee.  The FCC’s recently released National Broadband Plan established a roadmap to help increase Internet access to underserved and unserved areas.  In the current economic decline, cities nationwide more and more are depending on the much-needed investment and job creation that studies show are gained from increased broadband deployment.  The Tennessee General Assembly is now considering legislation that will expand Government Owned Networks (GON) in the state through a provision to the Omnibus Technical Corrections Bill, Amendment SB 3880/HB 3796. 

SB 3880/HB 3796 will grant the municipalities the ability to compete with the private sector in an attempt to provide broadband to more Tennesseans.  While increased broadband access is crucial to reviving the Tennessee marketplace, government owned broadband networks hurt broadband consumers and the Tennessee taxpayers.  Moreover, they have backfired in the past. 

In 2007, Memphis’ taxpayer-owned public utility invested roughly $30 million in a municipal broadband network, Memphis Networx, under the auspices of helping expand broadband access.  Networx squandered millions of Tennessee consumers’ hard-earned dollars without a demonstrated result.  A study released last year observed that,

“the biggest problem with municipal projects is that they commit taxpayer money to projects that nearly always  run over budget for construction, are not financially sustainable once they are built, and rely on future subsidies.” 

It is disheartening to think that Tennessee legislators would support a program that would increase the budget deficit and consequentially place an additional burden on taxpayers.  CDF supports a competitive broadband market, which is vital for helping our state economy grow, and helping Tennesseans to return to the workplace.   

The Tennessee consumers cannot afford to make the same mistake twice.