Municipal Broadband Is No Utopia

[Commentary] Like most utopian dreams, the Utah Telecommunications Open Infrastructure Agency, or Utopia, hasn't panned out.

Utopia, a consortium of 11 municipalities to build a fiber-optic network, was initially financed in 2004 with a $185 million bond; it was supposed to be completed in three years and have a positive cash flow in five.

The project is a prime example of why governments should not be in the business of building or operating broadband networks -- and why the federal government should not be in the business of cheerleading for them.

Today Utopia has about 11,000 subscribers, less than one quarter of the 49,350 projected to be on board by September 2007. Its failure to attract the anticipated number of customers has caused a spectacular financial failure. Utopia has lost at least $3 million and as much as $13 million annually.

[Schatz is president of Citizens Against Government Waste, Van Tassell is vice president of the Utah Taxpayers Association]