Government-Owned Internet Projects are a Bad Deal for Taxpayers, Consumers

Published May 20, 2016

Despite claims of helping low-income earners access the Internet, and thereby joining the digital economic revolution, taxpayer-funded Internet infrastructure projects have a long and expensive history of failing to achieve their stated goals, even though government Internet services enjoy advantages over private businesses.

In Los Angeles, a 2015 taxpayer-funded municipal Wi-Fi program spent nearly $500,000 to build a series of government-owned Internet access points, also called hotspots, but users seeking to get online while outside were left high and dry, because none of the access points actually worked.

Between late 2015 and March 2016, reporters from the Los Angeles Times surveyed 24 California locations between Long Beach and Pasadena, testing the quality of municipal Wi-Fi hotspots serviced and maintained by the South Bay Regional Broadband Consortium, a municipal wireless-Internet program funded with telecom taxes added to Californians’ telephone bills. What the reporters found may surprise some: Nearly $500,000 had been flushed down the drain by the project.

An initial check of 18 hotspot locations, conducted in late 2015, revealed that none of the taxpayer-funded access points were even broadcasting a Wi-Fi signal.

In January 2016, the California Public Utilities Commission, the government agency commissioning SBRBC’s seemingly results-free project, determined only two of 24 locations were online. A follow-up investigation in March 2016 by Times reporters found three of the 24 taxpayer-funded hotspots were broadcasting availability but were unusable for getting online.

“The best results were on a section of Crenshaw Boulevard in Leimert Park where several businesses were broadcasting free Wi-Fi on a community network,” Times reporter Doug Smith wrote in an April 1 article.

In other words, the voluntary donations of private individuals were objectively more effective than a government program funded by the compulsory extraction of taxpayers’ money. The privately donated Wi-Fi access worked, and the taxpayer-funded Wi-Fi access didn’t work.

Despite the long trail of failed taxpayer-funded Internet programs, beginning in places such as Provo, Utah, and running through California’s South Bay region, lawmakers in other cities continue to insist these programs can work if properly administered.

Most recently, Washington, D.C., city councilmembers began exploring the creation of large-scale taxpayer-funded Internet services. Councilmember Vincent Orange proposed creating a government task force to study creating a citywide network of Wi-Fi hotspots at taxpayers’ expense, competing with private-sector businesses for users.

But as government Internet programs fail in spite of the uncompetitive advantages they enjoy over the private sector, and taxpayers are the losers.

When government tries to be everything to all people, it almost always becomes nothing but a burden on everyone — and an expensive one at that.

Instead of extracting more money from taxpayers to provide services the private sector can and does provide, city lawmakers such as those in California’s South Bay and in Washington, D.C., should stick to providing core services, such as ensuring public safety and protecting property rights.

[Originally published at the Washington Examiner