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Guest opinion: Utah cities keeping taxpayers in the dark on government broadband projects

By Caden Rosenbaum - Special to the Standard-Examiner | Nov 26, 2022

Editor’s note: A previous version of this article was inadvertently attributed to the wrong author.

The economist Arthur Okun described the redistribution of money through taxation as a “leaky bucket.” Some funds get lost in transit, some go to administrative costs and so on. Yet most Americans are willing to tolerate some leaks if it means helping their fellow citizens in need.

When it comes to government-run broadband projects, however, the more apt metaphor is a burst pipe. And Utahns are all too familiar with seeing millions of their hard-earned tax dollars squandered when local governments try to get in the broadband business.

Consider Provo, whose taxpayers are still paying down the $40 million debt they incurred when the city’s fiber network failed and was sold to Google for just $1. Or consider UTOPIA, the ill-suited name given to a taxpayer-funded network built by 16 Utah cities.

Over two decades, UTOPIA has saddled these cities’ taxpayers with hundreds of millions in debt that, in some cities, will be paid back over the course of nearly 40 years — twice the useful life of the network. It’s a bubble waiting to burst, yet UTOPIA continues its search for new localities to join the project and spread around the debt — a model that increasingly resembles a pyramid scheme.

Utah taxpayers aren’t alone in suffering the effects of failed government broadband experiments. A University of Pennsylvania Law School study found that, across the country, nearly 90% of municipal-owned fiber networks are financial failures.

And given this history, it’s no surprise that Utah taxpayers are wising up to the risks of government-run and taxpayer-funded broadband projects.

In 2020, Kaysville voters defeated a proposal to put the city $22 million in debt to build a fiber network on top of existing private-sector networks that already provide high-speed internet to residents.

Instead of local governments realizing taxpayers aren’t interested, they are going the opposite route: keeping their residents in the dark and ramming these projects through with little to no debate or public input. Cities like Lehi and Mapleton negotiated backroom deals to turn over tens of millions in taxpayer dollars to handpicked companies and consultants.

In fact, cities can join UTOPIA with less than 48 hours’ notice, committing tens of millions to an enterprise already half a billion in debt. The city of Payson joined UTOPIA under just such circumstances. Similar backroom efforts are underway in Alpine, Herriman and Highland.

American Fork is the worst offender. Without any notice, the city committed $9 million from their general fund to jumpstart a fiber network that will require an additional $31 million in debt to complete.

It’s a particularly appalling move for a city that already fleeced its taxpayers for a failed fiber project in 2001. American Fork is still over $2.5 million in debt from that attempt — over two decades later. Taxpayer advocates are already gearing up to block the city from bonding for more debt. If they succeed, it’s unclear whether residents will ever see that $9 million down payment refunded.

The backdrop to all of this behavior makes it even more reckless. America is facing 40-year-high inflation, supply chain disruptions, crumbling infrastructure and workforce shortages. Cities should be focused on helping citizens get through this turmoil and shoring up core government services.

One thing these cities all have in common, other than irresponsible use of taxpayers dollars, is that they are already connected to high-speed internet. To the extent that there are any small gaps in service, partnering with private providers to fill those gaps would be way faster and less burdensome on taxpayers than building duplicative, government-run networks. Further, these projects divert broadband resources from the Utahns who really need them — those who live in rural and remote regions that lack any broadband service at all. Projects like UTOPIA or the one in American Fork are only going to detract from, and delay, important efforts to connect rural Utah to service.

Utah taxpayers deserve transparency in how their dollars are spent. If local officials are trying to avoid a conversation about the risks and trade-offs of broadband spending, then it’s certainly a conversation worth having at the state level.

Caden Rosenbaum is the tech and innovation policy analyst at Libertas Institute, a libertarian think tank based in Utah.

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