Morning Consult - June 1, 2017
Written by Mariam Baksh
A University of Pennsylvania study questioning the financial viability of municipal-owned networks for high-speed internet access is drawing criticism from local activists.
The dispute over how best to fund broadband networks in cities has proved a vexing problem for federal decision-makers. And the Penn study casts doubt on some methods favored by local groups.
The study concluded that 11 out of 20 municipal broadband projects were “cash-flow negative” over the five years from 2010 to 2014. It cautioned local decision-makers to carefully examine the data before committing to bonds for constructing and operating their own high-speed fiber networks. ...
“They are using phantom costs,” said Christopher Mitchell in a phone interview with Morning Consult. Mitchell, who runs the broadband project for the Institute for Local Self Reliance, said the life of the fiber is up for debate. More importantly, he added, factoring that sort of depreciation is not appropriate for determining the prospect of the projects going forward.
In one high-profile case, the report predicted it would take 412 years for the municipal broadband project in Chattanooga, Tenn., to “turn positive.” But according to a report by the Chattanooga Times Free Press, the city recently reported that it had already paid off its loans.