Lawmakers in a Virginia county are considering spending up to $20 million in taxpayer money to build a government-owned internet network.
In December 2016, lawmakers on the Fauquier County Board of Supervisors proposed allocating $20 million in taxpayer funds over the next five years to build an internet network for rural residents.
If completed, the municipal broadband project will serve about 10,000 households in the county.
Following Fashions in Fauquier
Caleb Taylor, director of policy and operations with the Virginia Institute for Public Policy, says providing taxpayer-funded internet would be a big mistake.
“This is something that has kind of been a long-term conversation throughout Virginia,” Taylor said. “The government simply does not have the internal mechanisms to profit-maximize and cost-mitigate. Would you give me $150 so I can put internet into your neighbor’s house? Most people are going to say ‘no.’ They’re going to have to accept that cost if Fauquier goes with this, but maybe it should be part of their further exploration, to actually ask that question.
“In [homeowners’ associations] all over the United States, an HOA will literally contact a broadband internet company, saying, ‘We want you to run internet out here. How much is it going to cost? Okay, that’s too much. What can we do to lower that cost?’ And then they collect it from the neighborhood. It’s done.”
‘The Economics Don’t Work Out’
Daniel Lyons, an associate professor at Boston College Law School, says the history of taxpayer-funded internet projects is littered with failure.
“There have been a number of high-profile failures of municipal broadband systems,” Lyons said. “The economics don’t work out. Beyond that, you have two problems when municipalities come in and try to run their own network, either in lieu of or alongside private capital. One is that taxpayer dollars tend to be bottomless, and so it makes it harder for the private competitors to compete fairly against them.”
“The other thing I get concerned about is, once the government has chosen a technology, the government is on the hook for a sunk cost, and that can harm technological development,” Lyons said. “For example, everybody is talking about fiber being the thing right now. … Fiber is really expensive. Assuming the government goes in and builds a fiber-optic network throughout a city, and then some new technology comes along that’s even better, the government has an incentive to limit the rollout of this new technology, because they’re still trying to recover the cost of that old network.”