Newport officials say they want to spend $21.9 million to create a government-owned Internet network because it’s good for the economy, even though two private providers already offer the service.
City officials have hired a Colorado-based consulting firm, Magellan Advisors, which has a reported history of telling bureaucrats whatever they want to hear.
The city would offer the service through its public utility department.
David Williams, president of the Washington, D.C.-based Taxpayers Protection Alliance, said the city officials should know better.
“These projects have failed across the country. We’ve seen this time and time again, not only in Tennessee, but we’ve seen it across the country,” Williams said.
“When will public officials learn from the mistakes of other people, other municipalities and other states? How many of these programs have to fail before they realize that it’s just a bad idea for government to be in the Internet business?”
Williams sent a letter to several Newport officials last month and specifically told them more than 200 taxpayer-financed municipal broadband projects around the nation have failed to meet expectations.
“Residents are forced to pay the cost, city bond ratings take a hit and the customer base never materializes. This hits the economies of local communities and that is what matters the most,” Williams wrote in the letter.
Williams cited Memphis, where taxpayers and electric customers spent $32 million on a broadband network they later had to sell for $11.5 million to avoid bankruptcy.
As reported, officials in Provo, Utah, built a $40 million municipal broadband network that ultimately failed. City leaders later sold it to Google Fiber for $1.
In the letter, Williams said a recent study showing the network “would be a boon for Newport was based more on fantasy than reality.”
Williams said no one in Newport has responded to his letter.
Mayor Connie Ball and the city’s five aldermen did not return Tennessee Watchdog’s repeated requests for comment. No one at the Newport Utilities Department returned repeated requests for comment, either.
“A little bit of an added wrinkle to what is happening in Newport is these Magellan folks that go in and do these studies. And I’m using air quotes when I say the word ‘studies.’ They know what the answer is already going to be,” Williams said.
“Magellan always recommends that government build these networks. It is really what I call jeopardy research. They know the answer. They just want to come up with a question. It’s a waste of time and money. The sad thing is, the Newport people will look at this study and say ‘They took their time to do this, blah, blah, blah.’ They are going to be on the hook for tens of millions of dollars.”
Drew Johnson, writing for the Daily Caller, said Magellan’s study “appears to inflate the number of people who will use the service, lowball the cost to operate the network, and wildly exaggerate the economic benefits of the project.”
Fiberbroadband.com reports Magellan’s consultants are already in Johnson City, trying to encourage its Power Board into developing a government-owned broadband project.
Watchdog.org meanwhile, last year reported about how consultants around the country encourage politicians at the local level to build ratepayer-supported broadband networks. According to that report, consultants promise the network “will attract business and improve the area’s quality of life.”
That story quoted Georgia Public Policy Foundation President Kelly McCutchen, who said, “unlike government leaders, consultants can’t be held accountable for the results by voters.”
“Typically, these consultants are the only ones that come out good on these deals,” McCutchen told Watchdog.org.
The website said Magellan’s consultants have planned and developed public fiber-optic networks in more than 200 communities around the United States, including in Jupiter, Florida, and Stark County, Ohio. All homes and businesses in Stark County already had broadband services at reasonable prices, Watchdog.org said.
Williams said Magellan officials have thus far declined to discuss what methodology they’re using to prove a need, if any, for government-owned Internet in Newport.
Tennessee Comptroller spokesman John Dunn said Newport officials sent him a proposal for government-owned Internet. Dunn said Comptrollers are reviewing the plan to determine whether it’s economically feasible.
Williams believes Magellan will push city officials into believing the city’s private providers aren’t good enough.
“Certain people believe government can do things more efficiently than companies and corporate America. No matter what the private sector offers there will never be a trust that the private sector can offer these things,” Williams said.
“But Charter or AT&T go into an area and they supposedly charge too much, and no one likes them and they fail. Who cares? It’s not taxpayer money. It is the shareholders’ money. On the other hand, if it’s the government then it’s electric ratepayers and taxpayers who end up footing the bill. We don’t care if the private sector fails — because it’s their own damn money.”
Newport has 6,880 people, the U.S. Census says.
“Tennessee, for some odd reason, has become the epicenter of wasteful broadband and unnecessary broadband,” Williams said.
“I don’t know what’s in the water down there, but it’s not good for taxpayers.”
Contact Christopher Butler at email@example.com
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