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Letter


An Open Letter to the South Carolina Senate: Support Fair Broadband Competition!

April 9, 2012
By Brent Mead


Dear Senator:

On behalf of the National Taxpayers Union’s (NTU’s) 4,400 members in South Carolina, I urge to you to support House Bill 3508. This important legislation sets basic rules for competitive fairness between government-owned broadband networks and private sector providers. This common-sense bill ensures that if a local government forces taxpayers to underwrite a communications business, the entity will at least have to compete in the marketplace on a level playing field and provide independent audits of associated costs to citizens.

While not revolutionary in nature, HB 3508 is a very important for your taxpaying citizens. As NTU points out in a recent study, Municipal Broadband: Wired to Waste, costs to taxpayers associated with municipal broadband networks have skyrocketed in recent years. In nearby Tennessee, nine government-owned broadband networks covering fewer than 490,000 residents have accumulated an astonishing $176.5 million in bonded indebtedness tied to their networks. Those same cities have seen debt service costs rise from $100,289 in 2001 to over $11.9 million in 2010.

HB 3508 would implement vital safeguards to protect taxpayers from the creation of duplicative and wasteful municipal broadband networks. For example, the legislation addresses the issue of hidden costs by requiring yearly audits that reflect the “full cost of providing the service, including all direct and indirect costs.” This standard currently applies to similar services such as government-owned telephone networks. Furthermore, the bill extends existing “fair competition” statutes to municipal broadband networks. In sum, HB 3508 is hardly radical in that it merely applies current law to a new service.

Publicly-subsidized municipal communications networks are expensive, debt-laden projects whose ability to “compete” often depends on money swiped from taxpayers’ wallets. HB 3508 would set reasonable guidelines for operating such networks in order to properly account for risks of government-backed business ventures the likes of which have failed all across the country in recent years.

South Carolina is not alone in seeking prudent limits on localities’ ability to construct expensive and often duplicative networks. Georgia considered similar legislation earlier this year and North Carolina actually passed controls last year. During these difficult times it is important to ensure scarce public resources are used wisely. HB 3508 sets basic rules of competitive fairness and gives taxpayers a clear idea of the costs associated with municipal broadband. Our members look forward to its passage.

Sincerely,

Brent Mead
State Government Affairs Manager