Mark Goldberg


www.mhgoldberg.com





Fox Group Dispatch

Community networks are hard

A few weeks ago, the Financial Post ran a story by Emily Jackson about the drive by some advocates for communities to build their own networks (“Left in the digital dark ages, small town Canada chases its own gigabit dream“).

Community networks are also attracting the attention of major cities. San Francisco has appointed a panel studying the development of a billion dollar community broadband network.

It seems that many have forgotten the days of telephone and telegraphs operated as part of government postal departments. With very few exceptions, those were not happy times.

In the Financial Post story, Emily Jackson quotes me saying:

“Governments have a really lousy track record of operating things for consumers,” said telecom consultant Mark Goldberg.

Governments are good at building things, he said, but there isn’t any “political glory” associated with maintenance when, for example, aerial fibre cables get cut in ice storms. Plus, there’s a risk of setting up monopolies since private-sector companies can’t compete against their own tax dollars.

There are times when community networks can make sense, but too often, naive business plans overestimate the demand for ultra high speed service, while underestimating the costs of ongoing maintenance and system upgrades.

The Taxpayer Protection Alliance Foudation has produced a website that details “Broadband Boondoggles: A Map of Failed Taxpayer-Funded Networks.” (Also, see its “Dirty Dozen” report [pdf, 2.9 MB]) Among the examples of failed networks stands UTOPIA, the Utah Telecommunications Open Infrastructure Agency, with half a billion dollars in taxpayer funding.

Utah Telecommunication Open Infrastructure Agency (Utah) – A consortium of 16 cities in northern Utah spent more than $500 million in public funds to build the regional fiber network known as UTOPIA. Thanks to high overhead costs and weak customer numbers, UTOPIA loses $13 million annually, is suffocating under more than $442 million in debt and is considered to be one of the biggest broadband failures in U.S. history. In 2015, the network only had around 11,000 subscribers and is adding fewer than 500 new customers per year. Taxpayers are on the hook to continue paying off bonds used to fund the network until at least 2040.

As I told the Financial Post, if a community bands together seeking more advanced communications infrastructure, then absolutely, the municipal leadership should be advocating for it. The challenge is designing the right network architecture and business structure to deliver it, and in doing so, ensuring no citizens are left behind.

Community networks are hard to get right, and very costly when done wrong.

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