Five government-owned internet networks in Tennessee are among several others nationwide that don’t spend public money wisely and also steer business away from private competitors, according to a report a taxpayer watchdog group released Wednesday.
The Washington, D.C.-based Taxpayers Protection Alliance published their report on their website this week.
Free market forces, however, may eventually render these Government Owned Networks (GONs) a waste of public resources, the TPA report said.
“Despite the unfortunate habit of policymakers ignoring the financial and viability problems posed by GONs, these taxpayer-funded networks may soon be on their way out thanks to the ever-changing technological landscape,” TPA officials wrote.
“As the United States continues deployment of 5G wireless services and cable companies lay more fiber that will bring faster service to customers without taxpayer subsidization, local officials may soon realize that GONs are an unnecessary and inefficient use of households’ hard-earned dollars.”
In their new report, TPA officials called out the following five Tennessee GONs, among many others nationwide:
• Chattanooga Electric Power Board: TPA officials said in their report that EPB’s high-speed internet network “is often held up by government broadband advocates as a shining example of success, but the system wouldn’t have been built without massive government subsidies and studies have shown it’s not financially feasible even with taxpayer handouts.” These handouts include a $111.5 million federal stimulus a decade ago. Some private Internet Service Providers said they avoided entering the Chattanooga market because they couldn’t compete with the taxpayer-backed EPB, the report said.
• Clarksville’s CDE Lightband: The TPA report cited a Tennessee Star article about the network’s many outages, which outraged subscribers, even though officials promised their GON would deliver better Internet service than the city’s private providers.
• The Jackson Energy Authority: TPA officials said the Jackson Energy Authority launched its EPlus Broadband network in 2004 — “but not without its share of controversy that included pushback from Jackson residents.”
• FiberNet of Morristown: According to the TPA report, “FiberNet hasn’t gained a strong enough foothold among city residents that it is likely to ever turn a profit.”
• PES Energize of Pulaski: The TPA report cited a 2017 study that found the project cost per household in Pulaski was $2,425, but the system was only generating revenue of $797 per household. “That examination found the Pulaski system to be one of the worst-performing municipal networks as its cash flow was so miniscule that it would take 490 years to recover the cost to build it,” according to the TPA report.
Representatives from four of the five GONs did not return The Star’s requests for comment Wednesday.
The only person who did respond, Morristown Utilities spokeswoman Patricia Contic, said she had no comment on the TPA report.
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Chris Butler is an investigative journalist at The Tennessee Star. Follow Chris on Facebook. Email tips to [email protected].
