Here is an editorial in the Deseret News today. It is just an opinion.
And I know Roger has been a reader of this list (Roger runs UTOPIA).
But I have always been against municipal ISPs on principle. Some things the
government is good at, some things they are not good at.
Roads and Streets == OK
Police and Fire == OK
EMS = OK but there are private providers that are OK too.
Water and Sewer = OK but there are many private systems
Power and Gas = Meh - I work in a city that has sold off their power and
gas to private because it was not a revenue center and they had lots of
power distribution problems.
Telecommunications != OK
They almost always seem to be problematic. And they compete with all of you
(us) folks that can do a better job. (Sorry Roger, but that is my
BY BILLY HESTERMAN
FOR THE DESERET NEWS
A longstanding principle of the Utah Taxpayers Association is if a service
can be found in the yellow pages, then government shouldn’t be providing it.
We have seen far too many times where government attempts to compete with
the private sector and ends up wasting taxpayer money. One prime example of
this is the failed UTOPIA boondoggle that continues to plague the 11 cities
that created the entity.
On Aug. 14, the Utah Infrastructure Agency, which was created in 2011 to
give UTOPIA more borrowing capacity, will vote on taking out a $13 million
bond to further build out the UTOPIA network in hopes of making the whole
effort profitable. The vote will likely pass but the effort to make UTOPIA
and UIA a success for taxpayers will never be realized.
This attempt to continue to send money after a bad idea has to stop.
The private sector is already providing the same service that can be
obtained through UTOPIA and it is past time that the local governments that
created this mess find a way out.
Recently, the University of Pennsylvania released a study that examined 20
municipally owned fiber networks from across the nation; UTOPIA was included
in the study.
The report found that a majority of these networks struggle to recover the
costs that were incurred to build them. It went on to show that of the 20
projects, only nine have had a positive revenue stream but that of those
nine, five are generating returns so small that it would take more than 100
years for the project costs to be recovered. Only two of the 20 networks are
expected to earn enough to cover their project costs during the useful life
of the networks.
The Penn report went on to state that these government-owned ventures
struggle to ever make a profit and put taxpayers in danger of seeing their
local government increase debt, lose bond rating status and elected
officials becoming distracted from other important issues because they are
solely focused on the government’s fiber business. The report found that if
UTOPIA continues in its current state, that the project will likely never
turn a profit. It observed in a five-year span from 2010-2014 that the
network only obtained 11,000 subscribers and that with a low subscription
take the network was realizing less than $30 in revenue per household in the
cities that make up UTOPIA. That is well below the $446 per household
benchmark achieved by other projects that the report looked at.
I am often asked why the Utah Taxpayers Association cares so deeply about
the UTOPIA issue. One statement from the Penn report sums up why we have
taken the position we have as the report states, “Many cities managing these
projects have faced defaults, reductions in bond ratings, and ongoing
liability, not to mention the toll that troubled municipal broadband
ventures can take on city leaders in terms of personal turmoil and
distraction from other matters important to citizens. City leaders should
carefully assess all of these costs and risks before permitting a municipal
fiber program to go forward.”
The risks and consequences are too much for taxpayers to shoulder.
UTOPIA and UIA officials should vote against the upcoming $13 million bond
and start looking for new directions to take the network that will be
beneficial for taxpayers instead of continually investing money into a
sinking ship that will never be sea-worthy.
Billy Hesterman is the vice president of the Utah Taxpayers Association.