DU Prof Warns Fort Collins Voters About Government Broadband

Oct 24, 2017 | Uncategorized

As you may know, the Chamber opposes City Ballot Issue 2B, which would allow the City of Fort Collins to establish a telecom service to provide broadband.

We’ve written about our position and why we took it here and here.

Over the weekend an opinion piece was published by Ronald Rizzuto, Ph.D., a University of Denver finance professor that details why city-owned broadband is a bad idea. It is titled Fort Collins voters beware of Ballot Question 2B.

It’s short and worth taking the time to read, but here are a few salient points:

  • The City government would be authorized to borrow up to $150 million to build a broadband system, but decision making would be transferred away from the voter-accountable City Council to an appointed board or commission.
  • The $150 million of bonds would be secured with a pledge of higher electricity rates if broadband revenues fall short. Let me add my own editorial comment here. What real incentive will city staffers and leaders have to run a lean and profitable broadband service when they have a guaranteed funding source to cover any missteps?
  • Municipal broadband systems have a poor financial track record. A study of 20 such systems found that only 2 were generating enough cash flow to pay off the debt during the planned life of their broadband systems.
  • The bonds may not cover all of the costs meaning additional taxpayer assistance.

For our part, Chamber leaders believed there were too many unanswered questions with the City’s proposal and asked them to delay putting it on the ballot. They demurred so we find ourselves in the position of opposing Ballot Question 2B as an idea not ready for prime time.