As infrastructure spending is being proposed by the Biden administration and debated by senators in Washington DC, drafts of the bill contain billions of dollars of government spending on “broadband” to help provide service to more Americans. History shows that more government spending on this will only lead to greater losses foisted onto the backs of taxpayers.

Speaking from first hand experience, Utah’s Congressman for the 3rd District, John Curtis, wrote about his experience with government owned broadband. Published June 13, 2021 on Fox News, and titled “Biden’s broadband plan – government run networks don’t work. Here’s what we learned in Utah”, his op-ed speaks the truth on what he experienced as Mayor of Provo while witnessing the $39 million implosion known as iProvo. Ultimately, the entire network was sold to Google Fiber for the sum of $1. 

As he explains: “You read that right. We sold it for $1 because that’s how little the government-owned network was worth. Its technology was out of date and its infrastructure was unworkable. We had to come to terms with the fact that we had a decade-old network and just like a computer that’s a decade old it was near worthless. Technology advances so quickly that what is cutting edge today may be obsolete in just a few months.” 

Even if one is happy that fiber is in the ground and being used, Provo taxpayers were left with a $38,999,999 loss. That is a massive amount of money that could have been spent on critical services like law enforcement salaries or health care services for those in need.

Congressman Curtis explains the serious flaws that are prevalent in government owned networks: taxpayers do not sign up for the risk involved in these ventures, and government should not be stepping out of its core competency and into the business of business – that should be left to the private sector. Private companies typically spend over $70 billion per year improving their broadband networks, and that is a race that the government should not enter.

iProvo is not the only Utah municipal fiber disaster that illustrates this point. With almost two decades of a track record, UTOPIA continues to dig itself into an even deeper debt hole that taxpayers could possibly have to reckon with someday in the near future. 

UTOPIA once again ballooned its negative net worth to an astonishing number as of its latest financial report for 2020. According to that report, UTOPIA ended its fiscal year 2020 with a negative net worth of -$282,506,075. That is $22 million worse than the previous year (-$260,911,266 in 2019). 

To be clear, that means that if UTOPIA were to sell all of its assets and pay off all of its debts, they would still be short by more than $282 million. You can place a safe bet as to who they will look to when the day of reckoning comes- the taxpayers.

A close look at the financials for UTOPIA shows that the problem will only get worse no matter what they try and do. Operating revenue only amounts to $12 million right now, while their administrative costs total $9.8 million, network costs at $2.8 million and interest on debt is over $16 million. So, total expenses total more than $33 million per year against revenue of only $12 million- that is a sinking ship even if they were to double their revenues overnight.

Just as Congressman Curtis pointed out in his op-ed, these projects can get buried in debt as they struggle to keep up with the technology curve. After promising participating cities that they would never call on their sales tax revenues to fund the system, they did exactly that in 2011 when they issued a massive amount of debt to keep the lights on. Now, taxpayers in 11 member cities are having to pay over $14 million per year out of their sales tax revenues to make additional debt payments on that debt (page 31 of the 2020 financial statement). The trouble doesn’t end there- that $14.7 million paid to UTOPIA is an additional debt that is owed back to the member cities by UTOPIA, further burying UTOPIA under a mountain of debt.

For example, West Valley City now pays out over $4 million per year to UTOPIA that could otherwise be used for law enforcement, roads or many other critical needs. 

Private broadband companies spend tens of billions of dollars per year maintaining and upgrading their networks to remain competitive. They and their shareholders take on the risk that they could possibly fall behind and incur losses. That is exactly how the free market is supposed to work. The slow motion train wreck known as UTOPIA in Utah is a prime example of why the government does not belong in the business of business- especially when it comes to broadband.