Washington state lawmakers are considering a bill that would promote wasteful government-owned broadband networks (GONs). The legislation would do so by preventing private providers from being eligible to receive state taxpayer broadband funds.
A bill would amend Washington’s existing broadband service expansion grant and loan program. The bill would prohibit incorporated businesses and limited liability corporations formed to expand broadband access from eligibility for the funds. The measure would allow local governments, Native American tribes, nonprofits, cooperatives and public-private partnerships to continue receiving the funds.
During a hearing on the bill in March, state Sen. Drew Hansen stated, “We don’t need to continue giving state money to private, for-profit entities.”
When asked why he believes that, Hansen suggested that federal grants are available for private companies for broadband infrastructure expansion. However, the $42.5 billion federal Broadband, Equity, Access and Deployment program — the main driver of taxpayer money for broadband expansion — allows for-profit and non-profit entities, such as local governments, to receive the money. Prohibiting private providers from tapping into a state grant program creates an unlevel playing field in favor of GONs.
The Taxpayers Protection Alliance has warned of the dangers of GONs, which often fail. They typically fail to meet their coverage goals, leaving taxpayers to prop them up with higher taxes or power rates.
Forbes Mercy, the president of Washington Broadband Inc., a Yakima-based internet company, testified against the bill. Mercey told The Center Square that Washington state is pushing for more government-run internet, which would not be good for consumers. “Anybody who knows the government knows their service is marginal at best compared to the private industries that (build broadband),” he said.
In an op-ed opposing the legislation, Washington Policy Center argued that GONs “can often be a short-term fix with long-term consequences.” That think tank pointed to the failure of Seattle’s attempt at a citywide public Wi-Fi program from 2005 to 2012. WPC noted that many businesses began offering free Wi-Fi as a customer benefit, covering Seattle with more reliable network access.
Other, more recent GONs have experienced similar issues, building broadband infrastructure with taxpayer funds only to meet resistance. This is largely because private providers are able to offer improved services and lower prices. Take rates for the GONs become lower than anticipated and the networks struggle financially.
WPC called the legislation a “de facto handout to GONs over private businesses, in spite of the benefit private enterprise offers broadband customers. In particular, this bill would hurt small ISPs who may try to set up a clientele in an underserved area where bigger ISPs have yet to invest. Precluding them from receiving the same benefit as a GON for the same purpose is punitive and raises costs for everyone in the long run.”
The deck is stacked in favor of GONs in those states where they are allowed. From a nearly limitless supply of capital to the ability to create more red tape for private providers, the playing field is anything but level. The state of Washington does not need to pass a bill that would further advantage the growth of GONs and encourage less competition in the broadband marketplace.
