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A government-owned broadband network could have serious impacts for Maine taxpayers.

The Midcoast Internet Development Corporation is a proposed vehicle that would create a government-owned broadband network (GON) in communities across Maine. GONs are burdens to taxpayers that seldom lead to greater access or lower costs for high-speed internet.

Below is important information to consider about the impacts of this proposed GON, as Mainers weigh this option for their communities:

WHAT ARE GOVERNMENT-OWNED NETWORKS?

From Burlington, VT, and Groton, CT, to Opelika, AL and Provo, UT, municipalities across the country that have tried to build or operate their own broadband networks have failed. Government should focus on improving municipal services – addressing crime, fixing roads, beautifying public spaces, picking up trash, bolstering tourism and addressing the basic needs of their citizens – not building broadband networks. 

What do local governments know about such highly technical, increasingly complex, and expensive ventures? Not nearly enough, considering that those localities, and countless others, tried to build GONs that ended up draining taxpayer dollars. Burlington dipped into general revenues to keep their network afloat until it failed completely, and Groton’s GON lost $2 million per year, eventually being sold at a $30 million loss.

 “Too many towns, and the millions of taxpayers who live in them, have been lured in by the false promise of inexpensive, fast, and reliable government-owned (taxpayer- or ratepayer-funded) internet networks.”

Taxpayer Protection Alliance

 “Extensive evidence suggests that GONs lead to higher consumer costs and taxpayer burden as they push their financial losses on to consumers and taxpayers to avoid going out of business. Policymakers should look for other options that will result in better and more options for consumers when it comes to advancing access to broadband in cities and counties across the U.S… Government-owned networks are exactly what policymakers should avoid if they want to improve consumer welfare and expand access to broadband at affordable prices.”

American Consumer Institute

According to a recent study by University of Pennsylvania Professor Christopher Yoo:

  • Only two of the nineteen [government-owned] networks surveyed earn enough to cover the costs of development over 30 to 40 years of useful life.
  • Eleven of the twenty networks do not generate enough revenue to cover even operating costs.
  • Seven of the nine networks that could recover costs would need more than 60 years to do so and five would take more than 100 years.

WHAT COULD A GOVERNMENT-OWNED NETWORK MEAN FOR MAINERS?

Local officials in some Maine communities are attempting to build their own version of a GON through the creation of the Midcoast Internet Development Corporation (MIDC). Here’s what you need to know about how it would impact your community:

  • Increased Taxes:
    • GONs place enormous tax burdens on residents. At a time when property and other taxes are extraordinarily high for Maine residents and when people are struggling to recover from a devastating pandemic, new costs to maintain this network would drive taxes even higher and leave residents vulnerable to future increases.
  • Higher Costs for Service:
    • GONs rarely, if ever, deliver on promises of lower prices for high-speed internet service. One study found that towns or cities with GONs had broadband prices that were 12% to 15% higher than places without a GON presence.
  • Lower Quality Service:
    • Local governments do not have the resources or expertise that private internet service providers (ISPs) have to build out broadband network infrastructure, operate them efficiently, and keep them regularly updated and serviced while remaining under budget.
  • Public-Private Partnerships Should Focus on the Unserved:
    • The pandemic has heightened the importance of quickly and efficiently expanding access to high-speed broadband, but that should not be used as a pretext to depart from the existing public-private partnerships that focus on getting broadband to those who need it, not wasting taxpayer money to compete against the private sector in already served areas.
  • Obsolete Technology:
    • A GON would tie down taxpayers to technology that could be obsolete within a decade. Imagine still using dial-up to connect to the internet today… that’s what the future could hold if Mainers commit to forming the MIDC.

A GOVERNMENT-OWNED NETWORK WILL NOT CLOSE MAINE’S DIGITAL DIVIDE

There are better solutions to expand access to high-speed broadband than committing to the Midcoast Internet Development Corporation. Public-private partnerships that allow the expertise of private ISPs to be the driving force for innovative change and expansion are proven solutions that should be considered in the fight to close Maine’s digital divide. Instead of wasting government resources to build out broadband to areas already adequately served, scarce public funding should focus on creating incentives for the private sector to expand.