Government-run internet not only subpar, it’s costing taxpayers big

A new report from the James Madison Institute’s Center for Technology and Innovation describes the push among some Florida municipalities to expand government-owned broadband networks as an “experiment” that is failing.

“Government-owned broadband networks have a dismal track record. They routinely fail financially, underperform operationally, and saddle taxpayers with decades of debt,” reads the report, authored by JMI Policy Analyst Turner Loesel.

That’s despite billions of dollars private companies are investing “to deliver faster, cheaper, and more reliable internet across the state,” the report finds.

“The track record is clear, the outcomes are predictable, and Florida cities should put a stop to it before more taxpayers foot the bill,” the report recommends.

The most glaring example in the report comes from Ocala, where the Ocala Fiber Network, a government-run entity, has been operating for 30 years while managing to reach less than 11% of the city and serving only about 5% of its population.

The report found that between 2021 and late 2024 the service had not expanded to a single residential area. Yet last year, the city approved $1.6 million for new fiber infrastructure and is exploring bond financing for a $90 million citywide expansion.

It’s also despite another private company, Wire 3, planning a $100 million investment to build a new fiber network it estimates would serve “tens of thousands of Ocala and Marion County residents” by 2027.

The report also questions whether the need is there, finding at least 13 private broadband providers delivering fiber, cable, fixed wireless, or satellite connectivity that is typically faster than services at comparable or lower prices.

The report further found that the Ocala government-run broadband lacks accountability. Worse, a group advising the city on its broadband program, Uptown Services, described that lack of accountability not as a negative, but as a key advantage, by facing “less ROI pressure.”

But as the JMI report notes, “less pressure to generate a return on investment also means there are fewer consequences for poor performance.”

Private providers, reliant on a return on their investment, face real consequences when they fail to hit actionable targets, while government-run programs can merely shrug off losses and continue operating despite weak performance. Simply put, the decision to continue offering subpar service is political, and too often the sunk cost argument becomes a justification for more spending — at taxpayer expense.

The state, to lawmakers’ credit, has recognized the threat and taken action. State law requires government-owned broadband networks to prove their programs can turn a profit and cover debt taken on by the program within four years. If they don’t, the law requires the program to shut down. And the law further blocks local governments from subsidizing programs with other public revenue, such as from utilities or various local fees.

While that protection is critical, it’s not stopping other cities from forging forward with ill-advised government broadband plans.

Williston, for example, is pursuing a $4.6 million loan-financed fiber network that would serve a small town of just 3,400 people. It’s important to note that there are already 11 internet providers serving the city, raising questions about whether the proposed government service is duplicative and financially suspect.

Gainesville officials seem to understand this, voting in 2022 against residential fiber expansion because of concerns about the state’s four-year profitability requirement.

Meanwhile, national data suggest these types of municipal broadband programs lack solvency, directly refuting supporter claims that government-backed programs keep prices competitive and serve underserved communities.

Research from the University of Pennsylvania found that about 93% of such programs required additional funding to remain solvent, while 73% lost money in the most recent fiscal years.

A town in Utah spent $39.5 million on a municipal network, but eventually sold it to Google for — wait for it — just $1. The city paid $3.3 million a year for more than 10 years to pay back the debt incurred by creating the failed program.

This is critical in understanding the fundamental problem: If an investor-backed program misses its projects, the investors lose, but when a government-run program falters, taxpayers are the ones taking the hit.

And evidence continues to mount that the risk is unnecessary. Spectrum is currently expanding its broadband network without risk to taxpayers, with $7 billion in rural fiber investments throughout Florida.

If local leaders want faster service in harder-to-serve areas, they should instead focus on removing barriers, such as permitting delays and right-of-way issues, rather than having cities become failed internet service providers.