News: CJ Exclusives

Six N.C. city systems make list of ‘broadband boondoggles’

MI-Connection in Mooresville and Davidson makes Taxpayer Protection Alliance's group of "dirty dozen" debt-ridden city internet systems

RALEIGH – A North Carolina municipal broadband network has made the Taxpayers Protection Alliance’s “Dirty Dozen” — 12 high-profile taxpayer-funded internet projects that have cost the public more than $2 billion.

The North Carolina network is MI-Connection, which provides broadband service to the Charlotte suburbs of Mooresville and Davidson. MI-Connection —$80 million in debt and has an annual operating deficit of $6 million, according to the Alliance — is one of six North Carolina municipal broadband systems profiled in a recent TPA report of government-run internet service providers. 

Mooresville and Davidson borrowed $80 million in 2007 to purchase a bankrupt cable television system and turn it into MI-Connection, the Alliance says. “Little did local taxpayers know that the massive outlay was just the beginning of tax dollars being used to subsidize the municipal broadband and telecom scheme — or that MI-Connection would threaten the financial stability of both towns,” the Alliance says.

The Alliance report says municipal broadband networks frequently go over budget, customer subscription numbers rarely meet projections, and bonds used to finance the projects strain municipal budgets for decades, causing credit ratings to drop. The Alliance says there are “almost no circumstances in which it would be wise for government to build, manage, or control a broadband network.” In nearly all cases, the Alliance says, the private sector is already providing a broadband network in the area where there is a municipal network, adding that those public networks compete unfairly against private enterprise. It says the best thing government can do to make sure residents and businesses are served by a competitive internet system is to reduce tax burdens and regulation.

Before policymakers decide to build a government-owned network, the Alliance urges officials to commission a study determining that the private sector is not able to provide internet service in the market, making government intervention the only fallback. The study should be conducted by a professional embraced by policymakers and the independent stakeholders in the community who would be affected by such an undertaking.

Rep. Susan Martin, R-Wilson, represents one area that is serviced by a municipal broadband company. Greenlight provides broadband services to Wilson and surrounding areas. Martin said she doesn’t disagree that many of the government broadband experiences haven’t panned out but says there could be a role for government in broadband infrastructure.

“I think what we’re seeing now is that the access to really high-speed and quality digital infrastructure is important for so many areas of life and it’s not just a luxury anymore,” Martin said. “I think making sure that infrastructure is in place could be part of government’s role.”

Martin has signed on as a primary sponsor to the BRIGHT Futures Act (House Bill 68), which seeks to boost broadband expansion in rural and underserved areas of North Carolina.

“What we’re trying to accomplish with the BRIGHT Futures Act is to see if there are smarter ways that we can partner and really leverage whatever resources we do have,” Martin continued. “Unfortunately there’s a lot of infrastructure that we have invested in across the state that is sort of dark fiber where we’re not able to tap into it even though it’s there.”

Dark fiber refers to fiber-optic cable that has been put in place but goes unused. Often, companies lay more lines than needed to curb future costs.

Martin said she hopes government won’t take over the role in providing internet services. However, she said that often there’s not a sufficient return on investment for the private sector to get more involved.

While Wilson’s Greenlight municipal broadband network wasn’t listed in the Alliance’s “dirty dozen,” it and MI-Connection were among more than 200 networks mapped out on the Alliance’s webpage. The page, called “Broadband Boondoggles: A Map of Failed Taxpayer-Funded Networks,” charts debt, waste, and broken promises left behind by the municipal networks.

The price tag for Greenlight, which started in 2008, has topped $33 million, including a $3.2 million subsidy from the city’s gas fund, the Alliance says.

Five other North Carolina municipal broadband projects listed among on the map. They include:

  • Altitude Community Broadband in Highlands. The town offers fiber-to-home and fixed wireless service to residents and business in the downtown area, the report says. However, anyone living outside that specific area may be unable to access it. The program began in 2016 and has a total debt of $250,000, the Alliance says.
  • PANGAEA, in the western North Carolina communities of Tryon, Columbus, Mill Spring, Saluda, Lake Lure, Rutherfordton, Spindale, Forest City, Ellenboro, Bostic, and Cliffside. The network, started in 2003, cost more than $3 million to build but serves only 100 locations, primarily schools, the alliance says.
  • Fibrant in Salisbury. Fibrant, started in 2008, was launched in 2015 and has speeds of up to 10 gigabits per second. The Alliance lists $32.1 million in total debt by Fibrant. It says the city council is looking at options to offload the fiber network by leasing parts out to third parties or completely sell the network.
  • Tri-Gig in High Point. Started in 2015, Tri-Gig is a public-private partnership that adds additional expenses to a network that already costs taxpayers $24 million, the Alliance says.
  • Holly Springs Dark Fiber. The project cost taxpayers $1.5 million, with city officials acknowledging that the project likely will not pay for itself for at least 10 years, the Alliance says.
  • Greenlight in Wilson. The price tag for the broadband service, which started in 2008, has topped $33 million, including a $3.2 million subsidy from the city’s gas fund, the Alliance says.

In addition to MI-Connection, the Alliance’s “dirty dozen” includes Burlington (Vt.) Telecom, Cedar Falls (Iowa) Utilities, Click Network in Tacoma, Wash., CT Gig Project in Connecticut, Electric Power Board in Chattanooga, Tenn., Fibernet Monticello (Minn.), iProvo in Utah, KentuckyWired, Lus Fiber in Lafayette, La., Memphis (Tenn.) Networx, and Utopia in Utah.