In 2004, Provo began building a government-owned network. Despite borrowing $40 million for the project, the city council claimed it would generate positive cash flow in a few years. The network failed, and the city was forced to sell for just a single dollar, leaving residents with a $40 million tab. The city’s taxpayers are still paying off that debt to this day. Congressman John Curtis, who inherited the failing network when he became mayor of Provo in 2010, said the debt “dictated the city’s every move” and the local paper described the network as “a millstone around our necks.” Cities that join UTOPIA could meet a similar fate.
In 2002, Bristol Virginia Utilities (BVU) began building a government-owned broadband network. The project had cost over $130 million as of 2015. That year, three BVU officials pled guilty to multiple charges of corruption, having received hundreds of thousands of dollars in kickbacks and falsified invoices. The charges included conspiracy to commit mail fraud, money laundering, and defrauding the United States. Two of the officials were sentenced to years in prison. The schemes had masked the fact that BVU was nearly $50 million in debt, despite the government granting special treatment to the broadband network not afforded to private competitors. The city was forced to sell the failing network for only $50 million, leaving taxpayers with tens of millions in debt, as even federal grants weren’t enough to cover the $80 million loss.
In 2017, the city’s utility, Traverse City Light & Power, began building a government-owned network, despite already holding $14 million in pension debt. The broadband project was originally projected to cost $4.2 million with the loan getting paid back in a few years from customer bills. The project missed all of its projections, and the cost has skyrocketed to nearly $30 million, financed by debt. In 2021, the network had fewer than 25% of potential customers signed up and revenue was less than 40% of its annual goal that year. The city now wants to borrow an additional $10 million to help build the network. If the project continues to flounder, losses will have to be covered by increased customer elecriticy rates, as is too often the case with broadband networks operated by city-owned utilities.
These are just a few examples in a long line of failed government-run networks. We’ve seen it all—taxes and debt, increased electric bills, and corruption. A study from Unitersity of Pennsylvania found that nearly 90% of government-run networks are financial failures because they can’t attract enough customers to cover expenses. Simply put, government shouldn’t be in the business of business, especially when it comes to the Internet.