Louisville, Kentucky City Council Boots Up Taxpayer-Funded Internet

Published July 28, 2017

The Louisville Metro Council, the legislative council of Louisville, Kentucky and Jefferson County, approved a proposal to spend a one-time sum of $5.4 million to expand a taxpayer-funded broadband network in the metropolitan area.

Currently, Louisville’s municipal broadband internet service covers about 21 miles in the metropolitan area. The new project will expand the government-owned network to more than 118 miles, costing taxpayers about $47,000 per mile of fiber.

The metro council voted unanimously on June 22 to approve Mayor Greg Fischer’s (D) budget, including the infrastructure project.

Government vs. Business

Mark Jamison, director of the University of Florida’s Public Utility Research Center, says private companies always provide such services more effectively and economically than government does.

“We have a long history of the government trying to provide telecommunication services all over the world, and in all cases the private sector has performed better than the government,” Jamison said.

Government expansion in these cases often involves running private companies out of business, Jamison says.

“In instances where the government has competed with the private sector, they’ve tended to drive out some of the private-sector participants, so they don’t add anything to the market, and in general they don’t perform very well financially,” Jamison said. “For example, there was a study of city governments providing fiber optics, and the ones that were so-called ‘profitable,’ their payback period was basically a century. It was taking them a tremendous amount of time to recover their upfront cash.”

‘Taxpayers Are on the Hook’

Jim Waters, president of the Bluegrass Institute Bluegrass Institute for Public Policy Solutions, says taxpayers get stuck with the bill for funding projects to completion, even if technological advances outstrip the government’s pace of development.

“Taxpayers are on the hook for this project, even if this technology becomes obsolete,” Waters said. “It would terribly unfair to the communities of Kentucky, who are already struggling meeting pension obligations, educating their children, and providing public safety for their communities, if all of a sudden they had an unfunded mandate demanding they pay for the maintenance of this network in their community.”