Opinion: Traverse City shouldn't build own broadband network

Even though it’s jam-packed with internet options, Traverse City wants to use millions in taxpayer money to build its own broadband network. It’s a foolish plan because there is a plethora of competition and a growing technological evolution in how internet will be delivered.

Traverse City Light & Power, the city’s public utility, is moving forward with a plan to connect all residents and businesses with high-speed internet at an estimated cost of $16.3 million.

Tim Arends, executive director of the utility, told the Traverse City Record-Eagle that fast internet speeds are as crucial today as electricity was 100 years ago.

"We view it as a critical infrastructure as the streets are, and government certainly should be providing this if the private sector will not," he told the media outlet.

The thing is, the private sector offers a host of internet options. And we’re not talking about lagging speeds, as Traverse City and its 15,000 population are covered by plenty of broadband.

BroadbandNow¸ which tracks internet options across the country, shows that every resident of Traverse City can access download speeds of 25 megabits per second through two satellite providers and that all but 1.5 percent of residents can get speeds of 100 Mbps through Charter Spectrum (businesses can access 1 Gbps.)

In all, Traverse City is served by more than a dozen providers through cable, fiber, DSL or fixed wireless.

The utility hopes to fund most of the cost of the broadband system through a loan paid back by ratepayers ($2.4 million may come through a USDA grant.) Although slightly better than asking taxpayers to fork over all of the money, this can also be a risky proposition because many municipal broadband projects have found the customer capture rate much lower than expected. It turns out that new entrants cause incumbent providers to compete harder for the business. Who knew?

Jarrett Skorup, communications director for the Mackinac Center for Public Policy, finds the grant application curious since that program is intended to offer funds to areas of greatest need.

“It seems odd to me that they are applying for this as those funds are intended for underserved areas,” he said.

That sentiment was echoed by Michigan Cable Telecommunications Association Executive Director Matt Groen. “We feel money that is obtained through grants should go to those who truly do not have access to broadband, and will not in the foreseeable future due to the cost prohibitive nature of providing service,” he told Michigan Capitol Confidential. 

Skorup said rather than look to build their own broadband networks, cities such as Traverse City should instead look to cut red tape – such as high permit fees and utility pole access – that make high-speed internet growth more difficult.

“Our position is you should do everything in your power as a municipality to make it more feasible for providers to expand broadband,” he said.

New technologies will eventually make fiber-to-the-home unnecessary. Traverse City already has fixed wireless options. Cable providers nationwide are touting a plan to offer their own 10 gig speeds in places. 5G promises to offers speeds of 1 Gbps and up to many more areas wirelessly in the coming years.

“It seems silly to me that you’ll borrow millions of dollars to build a government broadband network that will be obsolete in a couple of years,” Skorup said. 

Not only would such a network be obsolete in the future, it isn’t needed now. Traverse City should instead look to reduce regulatory burdens that could impede the expansion of broadband – expansion that wouldn’t require the unnecessary use of taxpayer dollars.

Johnny Kampis is an investigative reporter for the Taxpayers Protection Alliance Foundation