• Commentary

Are Most Government-Run Internet Operations Money Down the Drain?

In recent years, several cities and towns have developed their own broadband networks. Often, municipalities take on this task for compelling reason. In fact, their goal is quite noble. They want to provide affordable high-speed internet service to areas that private network providers aren’t adequately serving. Government-run internet is their solution.

More often than not, however, they find they face the same challenges as private industry. One advantage cities do have is to remove barriers they might impose on private companies. Correspondingly, they provide an unfair sense of their relative success or failure.

One such potential case can be seen in Marshall, Michigan. Indeed, the city and its staff claim to have beaten the odds. Surprisingly, they developed a government-run internet that is a success. However, not everyone is convinced that is true.

Reason to Doubt Marshall Claims on Government-Run Internet Broadband Success Story Explains ISEG Executive Director 

Madeline Peltzer’s new the article “Municipal Broadband Boosters Like City of Marshall’s Chances,”  published in the Michigan Capitol Confidential on August 19, 2019. Peltzer quoted Dr. Ted Bolema, Executive Director of the Institute for the Study of Economic Growth (ISEG), as a regulatory law and economics expert.


But Theodore Bolema, founding director of the Institute for the Study of Economic Growth at Wichita State University, doubts that claim. “These companies are in the business of expanding and looking at costs versus benefits,” he said. “They also don’t have a limited amount to invest: If a project looks like it will be profitable, capital markets will provide the financing because they expect to get a return on the investment.”

Bolema said he suspects the real reason internet companies don’t expand into towns like Marshall is because city officials pave the way for municipal operators to establish themselves while making the process expensive and difficult for everyone else.

Madeline Peltzer
Michigan Capitol Confidential

Read the whole article on Marshall’s government-run internet operation at the Michigan Capitol Confidential