For the fourth consecutive year, Tullahoma’s municipal broadband is more than $1.6 million in debt, says a Tennessee Comptrollers audit report released this week.
The city’s municipal broadband, known as LightTUBe, was $1.8 million in debt, a slight reduction from $2.1 million in 2013 and 2014.
Members of the Tullahoma Utility Board have told state auditors every year since 2012 — about the same time they began offering LightTUBe — they would operate at a loss the first three years.
TUB officials failed to return repeated requests for comment this week, but they told state auditors — as they have every year since 2012 — LightTUBe is “net income positive.”
Don’t put a lot of stock in that, warns George S. Ford, who released a study last week critical of municipal broadband nationwide.
“The fact that they’re running a deficit means they are not income positive, at least not in any traditional textbook definition of what net income is, because there is a deficit,” said Ford, also an economist with the Phoenix Center for Advanced Legal and Public Policy Studies.
“Someone might say they are making money, but they are not making enough money to cover their debt. That’s my guess as to what is going on.”
As reported, four years ago TUB officials said LightTUBe would revitalize Tullahoma’s economy, especially its Gigabit Internet, which runs 150 times faster than traditional speeds.
The Gigabit service once cost $300, but, according to its website, now costs $89.95.
City officials told Tennessee Watchdog that Gigabit has one customer.
In 2014, Tullahoma Mayor Lane Curlee told Tennessee Watchdog that TUB officials have done a poor job attracting customers to its Gigabit service.
LightTUBe’s basic service, meanwhile, had 3,100 customers, according to city officials, about one-third of the market against its main competitor, Charter.
Tullahoma has about 18,000 residents, according to U.S. Census figures.
Revenue bonds paid for the $17 million needed to bring municipal broadband to Tullahoma, all of which was backed by taxpayer money, city officials said.
University of Colorado professor Ronald Rizzuto has said in a study that most municipal broadband networks lose money.
TUB General Manager Brian Skelton has refused to talk to Tennessee Watchdog, except for once in 2013, when he hung up as we asked questions.
Skelton told the Tullahoma News he and other LightTUBe officials are “not in this to make money.”
Ford said Skelton’s sense of civic duty could backfire and discourage private Internet Service Providers from coming to Tullahoma.
Some private ISP owners have already said, for instance, they won’t invest in areas with municipal broadband backed by an endless supply of taxpayer money.
Politicians who tout the benefits of municipal broadband will forever deny its problems, Ford said.
“It’s very difficult for them to be honest with themselves about the problem. The way they present finances and treat cost sometimes is very suspect,” Ford said.
“Economic development is like crack to a politician. They want it so bad. Sometimes they get their rose-colored glasses on, and they refuse to see the reality of what’s really going on.”
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