Municipalities need not be in telecom business

Last updated on May 13th, 2019 at 02:33 pm

Michael isn’t the only Jackson with credibility issues …
The Village of Jackson in Washington County has a very competitive broadband market. Businesses and residents in Jackson can currently choose between four private sector broadband providers.
But if you read some recent statements from public officials with the Village of Jackson, you might conclude they are the victims of a conspiracy to prevent the businesses and residents from having any access to broadband services.
Just recently, Jackson Village Administrator Del Beaver was quoted as saying that cable and telecom providers have such a huge investment in copper wiring, they will not extend services to small markets such as Jackson until the corporate decision-makers say so. He said many of Jackson’s businesses could not afford to wait.
Nothing could be farther from
the truth.
The fact of the matter is that positive decisions regarding the Village of Jackson and hundreds of other small Wisconsin communities have already been made. Investments have been made and infrastructure has already been installed by no fewer than four private sector broadband providers currently offering service in Jackson.
Member companies of the Wisconsin State Telecommunications Association (WSTA) have invested billions of dollars to deploy broadband in rural, suburban and urban communities across the state. These are indisputable statements of fact.
Of the four private sector providers in Jackson, there are two competing wired options (SBC and Charter Cable) and two competing wireless options (Netwurx and NConnect).
The Village of Jackson ignored the facts and the risks inherent with entering an already crowded market, and started a government-owned telecommunications utility. For those of you scoring at home, they will provide wireless broadband as the fifth competitor in the market. In doing so, they have placed Village of Jackson taxpayers at risk for more than $400,000.
It may be little consolation to the taxpayers, but the taxpayer exposure wasn’t always more than $400,000. At a village meeting last July, the publicly available documents indicated the "theoretical investment required" for the project would be between $220,278 and $268,654. Less than a month later, the Village Board approved a contract for $401,017. Several months after that, the village applied for a $414,000 state trust fund loan to cover project costs.
The costs and the risk to the local taxpayers continue to escalate. More recently, the village has encountered additional unanticipated costs associated with the access points required to complete their installation.
Statements by Village of Jackson officials make you wonder if there was any real game plan in place before they committed the taxpayers to this project. When asked where the money is coming from to cover the six-figure expenses, Del Beaver said the village "juggled" the books and borrowed from the water and sewer utilities.
Another fact: Two-thirds of all Internet service providers have gone out of business in the last several years. It would be an understatement to say it is a volatile market with fierce competitors and rapidly changing technology. Undeterred, the village is making a $414,000 bet with taxpayer money that they will survive as the fifth entrant to the market.
Nobody who starts a business plans to fail. But within the last six months, the project consultant who helped convince the village to pursue this project went out of business.
Make no mistake … if the Village of Jackson utility cannot cover its expenses, the taxpayers are firmly on the hook for the cost of the project. To put the taxpayer exposure in perspective, the $414,000 State trust fund loan they applied for is more than Jackson’s annual shared revenue payment from the state. This is an unnecessary risk to the taxpayers and the other services currently provided in the village.
Village representatives are also fond of saying that it is questionable whether the new state law governing municipal entry into telecommunications applied to them. I would suggest that they review a copy of a Nov. 4, 2004, letter from an assistant attorney general at the Wisconsin Department of Justice about the applicability of the new law. To quote briefly from the letter, "The Village has to comply with the statutory procedural requirements prior to passing a resolution authorizing borrowing from the state trust fund." I would be happy to share a copy of that letter with the village if they have misplaced their copy.
In large and small communities across Wisconsin, the member companies of the WSTA are making the investments necessary to provide the latest technology and highest quality service to their customers. The decisions and the investments have been made, the infrastructure has been installed, and customers of our member companies are reaping the benefits.
All this, and no risk to your local
taxpayer …

William Esbeck is the executive director of the Wisconsin State Telecommunications Association (WSTA) in Madison.

March 18, 2005, Small Business Times, Milwaukee, WI

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