The Ohio Senate passed an omnibus budget that places necessary guardrails on taxpayer-funded broadband services, which are commonly called government-owned networks (GONs). This provision permits GONs to provide broadband service in unserved areas while placing restrictions that will protect taxpayers from having their dollars wasted. As more and more taxpayer dollars are spent to close the digital divide, it is important to ensure that these funds are spent only in areas that are most in need. The guardrails proposed will prevent subsidized overbuilding of networks and will instead focus on bringing unserved communities online.
A key taxpayer protection included in the budget prevents GONs from subsidizing networks through revenue gained from utilities or pole attachment fees. Unfortunately, this has been a problem with municipal broadband networks. NTU pointed out earlier this year how GONs can use a captive customer base to subsidize their broadband service:
“While some of the topline numbers from municipal broadband providers are held up by advocates, a captive customer base can make these benchmarks deceiving. For example, the Information Technology and Innovation Foundation points out that while a report claimed Ammon, Idaho has the lowest prices for broadband ($9.99/month), once the monthly utility and construction fees charged by the municipalities are factored in, the price for consumers nearly quadruples. Residents who want to connect to the fiber network in Ammon must also pay an upfront cost of $3,200-$3,600.”
The guardrails also require GONs to obtain the same approvals and authorizations as private broadband providers. Allowing networks run by the government to operate by a different set of rules would discourage private sector investment.
NTU applauds the inclusion of this pro-taxpayer provision. Broadband speeds are rising and costs are falling for consumers. Preventing GONs from overbuilding and leveraging their role as regulators will help prevent taxpayer dollars from going to waste.