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Commentary Working & the Economy

Opinion: Hogan Must Avoid Siren Song of Municipal Broadband

Taxpayers have learned to hold their breath any time a state or local politician talks about “broadband investment.” Despite his reputation as a trustworthy guardian of Marylanders’ hard-earned dollars, Republican Gov. Larry Hogan recently joined the ranks of politicians eager to squander taxpayer money on government-owned (i.e. taxpayer-funded) networks (GONs).

On Aug. 16, Hogan announced that Maryland will be providing “an additional $10 million this year as the first installment of a five-year $100 million initiative that will finally provide another 225,000 Marylanders in rural communities with access to reliable and affordable high-speed internet services.” But, publicly-funded broadband plans are usually duds that cover few residents at an astronomical cost. Gov. Hogan should stop squandering taxpayer money on the digital domain and focus on reducing barriers to private internet deployment.

It’s hard for politicians to say no to photo-ops, especially when officials can boast about “closing the digital divide.” Despite Maryland boasting the fastest average internet speeds in the country, state officials are keen on throwing GONs into the mix with significant funding and little justification.

In 2017, Hogan’s administration created the Office of Rural Broadband, which was responsible for doling out the $100 million to create and expand these dubious networks. Cited “successes” of the office include a refinancing of the city of Westminster’s $17 million in debt incurred during the building of a fiber network.

Westminster built out the network and then contracted with a company called Ting Internet to deliver access to the city. But millions of dollars of debt later, the city has preciously little to show for its public-private partnership.

Ross Marchand

Ting told residents in May that the “the Westminster Fiber Network is live and ready for service” yet the network covers far fewer residents than other area providers (according to multiple tracking websites). Even back in 2017, the company covered some of Westminster and acknowledged being “frustrated” at its (lack of) connectivity amidst regular outages. Taxpayers have access to preciously little data about the network and whether there are concrete plans to improve access and reliability.

The failure of large, publicly-owned networks is hardly limited to Westminster. In 2011, Maryland unveiled the $158 million One Maryland Broadband Network, funded mostly by federal stimulus money. At the time, officials touted an “ambitious” engineering and construction endeavor that would provide secure internet access to thousands of businesses and public buildings via a comprehensive fiber optic network.

There were problems right from the get-go; a state audit uncovered that, leading up to construction, Department of Information Technology officials “orally agreed to pay the project manager an 8% markup on subcontracted services” against department policy and without the knowledge of department leadership. Payments flowed to contractors without any verification that progress was actually being made, at significant cost to state and federal taxpayers. And, eight years later, the state has next to nothing to show for the expensive project. The Baltimore mayor’s office has admitted that it’s an “asset that’s underused,” with zero private sector engagement and little indication of a “last-mile” underway that can connect to businesses.

Budget-busting broadband bridges to nowhere are unfortunately all too normal across the U.S. A 2017 study by University of Pennsylvania Professor Christopher Yoo and legal scholar Timothy Pfenninger found that a majority of municipal fiber networks “do not generate enough cash to cover their current operating costs and only two out of the 20 are on track to recover their total project costs during their 30-40 years of expected useful life.”

Fortunately, taxpayers and consumers needn’t rely on the failed promises of municipal broadband to secure internet access for the future. The next generation of high speed wireless service, 5G, is quickly coming to cities across the country with coverage predicated on small-cell (pizza-box sized) deployments on telephone poles rather than expensive fiber networks.

Maryland can reap the benefits of this low-cost, high-speed technology, but only if they signal to providers that cities such as Baltimore, Columbia, and Silver Spring will keep deployment barriers low. Maryland can lead the way in fast, reliable internet coverage without squandering the hard-earned dollars of taxpayers across the state.

Ross Marchand is the director of policy for the Taxpayers Protection Alliance.


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Opinion: Hogan Must Avoid Siren Song of Municipal Broadband