Financial Implications of Opelika's (AL) Municipal Broadband Network

Beginning in 2013, the city of Opelika (AL) became the state’s first “Gig City,” offering broadband Internet services to its 11,000 households over a $43 million fiber-optic network constructed and operated by the city’s electric utility, Opelika Power Services (“OPS”). How is Opelika’s system doing financially?

According to Mayor Gary Fuller, the city’s network, in its fourth year of operation in 2016, is “on pace with our five-year plan to be at break even.” As explained in this perspective, this rosy assessment is entirely at odds with the city’s own books. The city’s telecommunications service has experienced large and continuing financial losses through 2016, accumulating millions in financial losses during its four years of operation. Before “break even,” these millions in losses must be recovered and the $42 million in debt paid. In this persepective, I conduct an analysis of the OPS broadband network’s financial health using the city’s financial statements. By any meaningful financial metric, OPS’s broadband network is unlikely ever to be “profitable.”