Government broadband projects aren’t a new phenomenon. Even though the government has provided funding for the expansion of high speed internet networks since the 1990s, there are still issues with access. Of course, in rural areas user fees often cannot cover a private providers investment in building out networks.
As a result, many push for direct involvement of the government in the broadband projects. However, overwhelming evidence indicates private industry applies this funding best. As much as publicly funded internet projects appeal to local politicians, their track record is inferior.
The same realities that make it a challenge for private internet service providers also apply to the government broadband projects. First, they are still dealing with areas with sparse population. As a result, they still may not have enough potential subscribers to help justify the high speed networks over time. Next, they may face the same geographic challenges installing the network. So what advantages to they provide and what is the most likely outcome?
Government Broadband Recipe for Higher Taxes Explains ISEG Executive Director Ted Bolema
Dawson Bell’s article “Bill Would Let Townships Impose Property Tax Hikes For Broadband Projects,” ran in the April 6, 2020, edition of the Michigan Capitol Confidential. Bell quotes Dr. Ted Bolema, Executive Director of the Institute for the Study of Economic Growth (ISEG). Bell notes Dr. Bolema is a regulatory law and economics expert.
Theodore Bolema, director of the Institute for the Study of Economic Growth at Wichita State University, said that local governments can either use their regulatory powers to favor their own projects or rework regulations to help private companies.
“Governments have no sustainable advantage in offering broadband, as compared to private companies that bring far more experience from other communities where they operate,” said Bolema, who is a member of the Mackinac Center for Public Policy’s Board of Scholars. “So the only way governments can compete is by giving themselves regulatory advantages or by arranging for taxpayer subsidies for their operations. Instead of building government-run systems that drive off private alternatives, local governments could help private companies obtain regulatory approvals and access to rights-of-way.”
Publicly funded broadband initiatives have a poor record of success.
Read the whole article about government broadband projects at the Michigan Capitol Confidential.