The Cost of Muni Broadband in Lebanon, Ohio

Marc Kilmer, a research associate specializing in technology issues with the Buckeye Institute in Ohio, isn’t letting city leaders in Lebanon, Ohio, simply declare victory and go home on their multi-million-dollar municipal broadband boondoggle. The city is in the process of unloading the system to Cincinnati Bell. Of the ten-year project, which never made any money and was never competitive with commercial cable and DSL services, Derrick Zucco, head of Lebanon’s telecommunications department, said, “We’ve accomplished what we wanted to do and now want to focus on core servicesââ?¬â??police, fire and road.” Of course, some would say that the Lebanon government should never have stopped focusing on police, fire and road to fiddle around with what amounted to a costly broadband venture. With some unpleasant financial facts, Kilmer throws some cold water on the feel-good fest:

What exactly has the city accomplished? It ran up over $9 million in debt, diverted taxpayer money from other departments to prop up the system, and used city resources to battle a variety of legal challenges related to the telecommunications department. If this is how city leaders define success, I would hate to hear their definition of failure. Unfortunately, this sale will only partially rectify these past injustices to city taxpayers. For one, the $8.62 million offered to the city by Cincinnati Bell will only cover payment on the bonds taken out by the city to finance the system. The city’s electric fund also loaned the system over $2 million. Those funds will not be recovered by the sale. Furthermore, the city extracted almost $900,000 from city taxpayers in telecom permits. While an appeals court stopped the city from collecting any more money, ruling that the practice was unconstitutional, there is no evidence that the city will return this improperly collected money.

Full commentary here. And, despite all this, other municipalities seem bent on making the same mistakes, as Kilmer cites here.