Gov’t-Funded Internet Projects Are Wasting Billions Of Taxpayer Dollars

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Eric Lieberman Managing Editor
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A number of government-owned Internet networks across the country are so outdated and poorly financed they are collectively costing taxpayers billions of dollars.

In fact, there are so many networks in debt that the Taxpayers Protection Alliance (TPA) created a comprehensive map called “Broadband Boondoggles” to display all of the failed or failing projects across the country.

“Many cities have lost millions of dollars on public broadband because cities often run into costly complications and have unrealistic uptake projections,” Brent Skorup, research fellow in the technology policy program at the Mercatus Center, told The Daily Caller News Foundation.

The TPA details 12 of the unsuccessful government-sponsored initiatives, with most of the floundering stemming from mismanaging budgets, deploying antiquated technology, and general lack of customer subscription. (RELATED: 2016’s Assault On The Internet Was Brutal. Will 2017 Be Worse?)

These projects cost the public more than $2 billion, according to the TPA.

Then-President Barack Obama visited the Cedar Falls Utilities facility (which is named in the report) in 2015 to tout the Iowa town’s municipal broadband service. (RELATED: Obama Admin Wants To Surrender US Control Over Internet To Global Bureaucracy)

“We’re going to clear away red tape, we’re going to foster competition, we’re going to help communities connect, and help communities succeed in our digital economy,” Obama told the crowd of about of 200, according to The Des Moines Register. “And the good news is we know it works because of you. You guys were like the guinea pigs on this thing.”

Cedar Falls Utilities was able to pocket $1 million in Obama’s stimulus package in 2009, but the project remains largely incomplete even after 20 years of development, according to the TPA report. The city’s electric, water, and gas company had to take on at least $14.7 million in debt during initial construction, with an additional $2.4 million borrowed from electric and water utility customers without their consent.

The TPA report accuses Obama of not only ignoring the financial issues plaguing the network and the “astronomical cost to consumers,” but also of erroneously claiming that the technology was superior.

Click Network, based in Tacoma, Wash., is another telling example — it lost about $9 million a year due to its outdated technology. Several would-be consumers gradually turned to alternatives to tradition cable TV as the market for content viewing services and tools expanded and improved.

“In 2009, Click boasted 24,400 cable subscribers. That number had fallen to barely 18,000 by 2015. As a result of the 25 percent drop in subscribers, Click, which was never reliably profitable, fell deeply into debt,” TPA’s report reads.

“‘If we build it, they will come’ is not a good way to invest taxpayer money,” Evan Swarztrauber, the communications director for TechFreedom, a nonprofit dedicated to promoting innovation and freedom in technology, told TheDCNF.

That is why Swarztrauber isn’t surprised that subscriptions fell.

“Government-run networks have struggled to poach customers from private providers who don’t even have the benefit of building their networks on the backs of taxpayers,” he said.

A municipal Internet and telecommunications company called FiberNet Monticello in Minnesota was supposed to earn enough money to pay off its $26 million in bonds, but reportedly couldn’t even afford to pay for its own operating expense.

“Government leaders began bailing out FiberNet by giving the network secret loans using tax dollars, including a $3.1 million loan from the city’s Liquor Fund and $323,000 from the General Fund,” reads the TPA’s report.

After the $16.8 million construction project was completed in 2010, officials allegedly knew that it would not be able to pay off its debts.

“Records provided during court hearings indicated the city clearly knew the project would be unable to generate enough revenue to make it financially viable,” according to the TPA’s analysis. “That apparently didn’t bother city leaders who were more interested in building a government-owned broadband network in Monticello than making sure it was a wise decision.”

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