Traverse City is on the verge of doing something unique — and not in a good way. As broadband networks owned and run by cities, large and small, fail all around the country, the cherry capital is pushing forward its own attempt with a government internet provider.
In 2017, the executive director for Traverse City Light & Power said they were exploring a network built and run by the public entity because the private sector wouldn’t do it. “Charter, our biggest cable company here, has no intentions of providing fiber to every home ... so we’re offering something that is not being provided by the private sector.”
This turned out to be wrong: Residents in Traverse City do have access to the internet at broadband speeds. Charter rolled out data speeds of 1 gigabit per second and businesses can purchase up to 10 Gbps. That puts Traverse City in the top 10 percent in Michigan.
The city is still moving forward and wants a $2.4 million grant from the federal government to cover part of a $16 million loan to build the network — despite the fact that that federal program is meant for rural areas with no broadband providers. The entity’s board recently selected Fujitsu as their fiber network partner. The company pitched that it will “design, build, operate and run a new broadband utility to serve Traverse City.”
Fujitsu touts its previous partnership with KentuckyWired — one of the most ambitious government broadband project in the country. Kentucky aimed to deploy a 3,200-mile statewide fiber-optic network with hopes that this would spur broadband in rural areas. It’s mostly been a disaster. So far only 708 miles of cable have been built, and the project is already $188 million over budget. The project is now requesting state subsidies so it can stay afloat. A recent audit from the state estimates the total cost could approach $1.5 billion — more than four times what was originally planned.
This case helps illustrate a common trend for government-run broadband deployment attempts: financial issues like those facing KentuckyWired are the norm. A recent University of Pennsylvania study found that municipal broadband is rarely viable, while the Mercatus Center, an economic research think tank at George Mason University in Washington, D.C. found overall negative economic effects of these types of projects.
Traverse City has other issues it can and should focus on. The city, county and electric utility have promised millions in pension benefits to retirees that they have not set aside enough to pay for. Instead of adding another $1,000 per resident in debt for a broadband network, these public entities should focus on dealing with this more pressing concern.
Internet access has been getting faster and more efficient in Traverse City for a long time, and there’s no reason to believe it won’t continue to do so. That doesn’t mean every person has the optimal internet speed at a price that fits neatly in their budget. But that’s not a good enough reason for putting every taxpayer on the hook for a plan fraught with risks.
About the author: Jarrett Skorup is the director of marketing and communications at the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Michigan.