Regulatory Reform

Government-run UTOPIA is not good for Utahans

A new bill seeking to curb Utah’s government-owned broadband networks incited anger among observers, indicating confusion remains regarding the policy—and the state of broadband.

Promoting broadband is in the public interest, but government-run broadband networks like Utah Telecommunications Open Infrastructure Agency—termed UTOPIA—are not the way to broadband paradise.

In 2002, local government leaders commenced work on UTOPIA—the nation’s largest government-owned wholesale fiber operation—as a reaction to private telecommunications providers’ supposed unwillingness to make available high-speed broadband services. Altogether, 11 communities pledged approximately $500 million over several decades to back the bonds UTOPIA sold to finance network development. However, UTOPIA never overcame initial hurdles and currently serves only 10,000 customers while nursing $215 million in debt.

State Representative Curt Webb recently introduced legislation aimed at UTOPIA to ensure that “interlocal” entities act within the boundaries of member cities—including charging only member residents a utilities tax to fund the service. While the amended bill would not directly prohibit infrastructure expansion, it would require cities to become members of UTOPIA in order to receive its services—an easy choice for local entities if UTOPIA lives up to its name.

The bill seeks not to stifle broadband deployment, but to generate accountability for the municipalities that put taxpayers on the hook to fund UTOPIA’s services. Answerability is important for many reasons, but one in particular should resonate with Utahans. Currently, citizens in a non-member community experiencing difficulty with UTOPIA’s service have no means of recourse; the non-member city claims that it is not responsible for UTOPIA services, while UTOPIA is likewise not liable for non-constituents’ service quality. Legislation would clarify where the responsibility lies for providing high-quality service.

Utah is not the first state to consider guidelines for government-owned broadband networks. Given the nation’s congested highways, worn bridges and failing water infrastructure, states like North and South Carolina have looked to stop wasting scarce funds on government broadband—especially given the promise of private sector investments.

In 2001, only four percent of Americans enjoyed broadband access. Today, a majority of homes not only have access, but are able to choose between multiple wireline and wireless providers. This is the result of private sector investment, and in the past four years alone broadband providers have invested amounts equal to $2,000 per American household.

Despite a hopeful broadband future, some Americans today remain disconnected from the Internet. Many blame the private sector, pointing to the accretion of power by private sector entities and touting government-owned broadband as the solution.

However, government-owned broadband alone will not solve America’s connectivity issue. The true barrier to broadband access today is not broadband deployment, but broadband adoption. According to the Pew Research Internet Project, half of Americans who aren’t online don’t see the Internet as relevant to them. Since some Americans don’t see the relevance of broadband and others do not own a computer, adoption numbers remain low even in areas with broadband access.

Government-owned networks are inefficient in promoting broadband and harm the broadband economy. They reduce private companies’ incentive to deploy networks, for their networks are in direct competition with government-run entities that enjoy an unfair advantage: making the regulations and, if business goes south, forcing taxpayers to foot the bill.

Given Americans’ concern with Congress and government efficiency, it is troublesome that authorities in states like Utah are entrusted with limitless funds to run failing entities. When endless taxpayer dollars are applied to a system that is better run by the private sector, the result is UTOPIA—and not in the Sir Thomas More sense.

In Depth: Regulatory Reform

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