City Should Tread Carefully On Municipal Broadband
Push is coming to shove in the discussion over municipal broadband in Jamestown.
Before the City Council and BPU board make a decision, here are a few things worth considering.
According to a 2019 broadband mapping program by the state Office of Information Technology, 96% of houses in Jamestown had access to cable, DSL broadband, wireline broadband and wireless broadband internet. Spectrum and Windstream are both offer 1-gigabite service, with 2-gigabite service coming soon.
Access to the internet, by and large, isn’t a problem in Jamestown.
Cost is the real issue. Mayor Eddie Sundquist said a feasibility study released to the public on Thursday shows the average cost of internet in the city for 100 megabits per second is $75 to $100 a month without promotions. He said with a municipal broadband structure, city residents could receive one gigabit per second for $30 to $40 a month. That would mean internet speeds are 10 times faster at half the cost.
That could certainly be beneficial to almost every Jamestown resident and business, minus, of course, the businesses that already provide internet in Jamestown.
It must be asked, then, if the city can realistically run a network and be paid a lot less each month than private internet companies.
That’s where things get murky.
The city’s study says Jamestown would make enough money to be able to reinvest profits back into necessary upgrades once the initial buildout is done. But a 2017 study by the University of Pennsylvania paints a gloomier picture.
It analyzed 20 municipal fiber projects that reported the results of their municipal fiber operations separately. Of those, more than half (11) generated negative cash flow. Unless operations improved substantially, those 11 projects would not be able to operate over the long haul, let alone cover the capital costs needed to establish operations. Of the others, five are projected to take more than 100 years to recover their costs, and two others are projected to take over 60 years. Only two are on track to break even, and one of those is based on a highly urban, business-oriented model that few other cities are likely to be able to replicate, and the other includes data from two years of stronger performance when it offered only DSL service.
We’re not saying the University of Pennsylvania study should be a death knell for the city’s municipal broadband plans. Stimulus money and other public funding available to Jamestown may have significantly changed the build-out costs for those 20 projects analyzed in 2017. And, things may have changed over the past five years. But it would make sense for the city’s Broadband Commission to examine the situations in each of those 20 situations rather than relying on the best-case scenarios.
If the city chooses to go this route, it is taxpayers who will be on the hook if the city’s network falls in line with those in the Pennsylvania study and can’t pay for itself over time. It’s easy to be flush with stimulus cash and forget the days when city budgets were much tighter. Those who have been involved with Jamestown’s finances over the past 30 years know the day will return when Jamestown will be back to pinching pennies. That must be weighed as part of this decision.
Tread carefully, Jamestown.