Here we go again. Leaders of another Minnesota county believe they’ve discovered the secret to economic prosperity: constructing and operating a successful municipal broadband network. With over 20 commercial broadband providers currently providing service in Dakota County as well as some of the fastest broadband speeds in the state, county leaders are nonetheless trying to become an internet service competitor.
They started this effort in 2017 by creating the Dakota County Broadband Board, a “joint powers agreement” between 10 cities and Dakota County. Their big plan is to provide internet services to local businesses with the dream of expanding one day into residential service.
Minnesota’s countryside is littered with failed attempts at government-run broadband networks. In recent years, Moorhead, Monticello and most recently Lake County have wasted hundreds of millions of taxpayer dollars in their failed attempts to design, construct and operate municipal broadband networks.
While the locations vary in size and scope, the results are always the same: Taxpayers are on the hook when the failed networks are sold for pennies on the dollar. Making matters worse for taxpayers, they are forced to pay off massive debt accumulated by these failed experiments, further increasing the taxpayer burden and damaging municipal bond ratings.
Why would Dakota County in particular want to go down this road when, according to Tax-Rates.org, “Dakota County has one of the highest median property taxes in the United States”?
Nationwide, so many communities have tried and failed to compete with private sector internet providers that over 20 states now have found it necessary to protect taxpayers by restricting or prohibiting government-owned networks. As with other failed projects that have come before theirs, Dakota County claims they’ll do it differently — they’ll “partner” with providers, or “only sell excess network capacity.”
However, elected officials arrogantly ignore the lessons learned from past failures, and naively assume that constructing, operating and maintaining a broadband network is as easy as selling six packs at the municipal liquor store. What they fail to understand is that in addition to the millions in capital costs sunk into building the network, there are also millions of dollars required to operate and maintain that network in the future and provide high quality service to their commercial customers. The magnitude of the error of these underestimated cost assumptions is compounded by revenue projections for municipal networks that are all but made up.
Dakota County commissioners don’t have to look any further for an example of the fate that lies ahead of them than one of their own: the city of Eagan. Six years ago, Eagan spent over $3 million in taxpayer funds to construct their “AccessEagan” broadband network, attempting to sell excess fiber capacity to providers. Eagan’s six-year run had annual operating losses every year and was quietly shut down in June. It isn’t a surprise that Eagan officials declined to participate in the larger Dakota County broadband experiment.
Perhaps another reason Eagan declined to join the countywide effort is the lack of public support. According to Public Opinion Strategies (POS), “The vast majority of Americans are strongly opposed to government-owned broadband networks.” POS officials go on to explain that “access to high-speed internet ranked dead last in terms of the issues that voters wanted elected officials to prioritize, and voters are not convinced government-owned networks are essential to local economic growth.”
It’s that sound reasoning from voters that brings us back to why the Dakota County broadband effort is wired to fail: Government-owned networks fail for a variety of reasons but the biggest issues are their inability to provide quality service, keep up with rapidly changing technological innovation, and survive in a constantly changing, highly competitive marketplace. In this environment, government-owned networks are left in the dust.
Let’s hope Dakota County taxpayers don’t become the next casualty of the failed broadband dreams that have nearly bankrupted other communities.
Annette Meeks is CEO of the Freedom Foundation of Minnesota.