Government-Owned Networks (GONs), sometimes called “municipal broadband,” is generally a city- or county-owned network that offers broadband service. Broadband refers to any high-speed internet connection. Broadband can be “delivered” through multiple means, including cable, fiber optic, wireless, or satellite connections.
Municipalities have attempted constructing and operating broadband networks for decades under the guise that they could provide better, cheaper service to their communities than private providers.
Nothing guarantees that the network will be bought once the infrastructure is built, which means that the government runs the network.
The same government that has a hard enough time providing the essential services we need. So, are these types of projects good public investments? All the evidence says no.
Internet prices are 13% higher in cities with municipal broadband than those without, according to this study.
Municipal broadband provides no discernible economic benefits, nor does it lead to more residents getting connected. Visit this study to learn more.
There are other policy solutions for a community seeking to expand access to broadband. These can include encouraging low-income residents to participate in federal subsidy programs or partnering with private-sector providers to fill in gaps in coverage, as Hopewell Township, NJ has done.
Cumberland and Salem counties are considering building a $30 million network that would require at least $9 million from county taxpayers. The so-called “middle mile network” wouldn’t connect a single home or business.
No internet service provider has supported this proposal or agreed to partner with the county to make use of the network. The only potential partner is the City of Vineland, which would need to spend tens of millions to build a new city-owned network that connects to the counties’ network.
Cumberland County has a poor track record of managing its services, especially in recent years.
While Cumberland County considers a “network to nowhere,” the City of Vineland is exploring whether or not to borrow tens of millions for a city-run broadband network. The city is not in a position to expend such a large amount of money to finance a network, and neither are the city’s working families.
GONs have a high rate of failure. A 2022 University of Pennsylvania study found that nearly 90% of GONs are financial failures. This either results in the network receiving continuous bailouts from taxpayers, or the network being sold off to a private company. In one example, the City of Provo, Utah spent $39 million to construct a city- network and, after failing to generate any revenue, they sold it for $1—leaving taxpayers with the debt.
The City of Vineland is in no financial position to undertake such a project when it is facing multiple financial challenges – like a surprise $5 million cost overrun on to its $17 million fire station replacement project—or its residents facing an average $4,800 increase in property taxes to cover pension contributions.
Providing broadband service would be far more complicated than any of the services it manages now. Unlike traditional utilities like sewer, water, and electricity which generally require static maintenance cost, broadband is dynamic and requires constant upgrades and improvement to meet ever growing demands for more data.
