Going, Going, GONs

A common argument for government-owned municipal broadband networks (GONs) is that they will bring much-needed competition to incumbent providers. Yet broadband is an expensive business, and an increasingly competitive one as new technologies emerge. Municipal entry into fixed broadband services requires significant investments and sustained losses, and for a GON these losses must be covered involuntarily—in most cases, by constituents rather than investors. Crosssubsidizing GONs from government programs and captive municipal utility ratepayers is nearly universal, but even so there is no guarantee of financial success. In many cases, the captive constituents are left holding the bag when GONs fail. Credit is due, therefore, to those city managers who have recognized these basic economics—including the rise in new broadband technologies that increase competition—and sold off their GONs before the financial damage to their constituents became too great. There are several recent examples of such sales, including Bardstown (KY), Norway (MI), Ruston (LA), and San Bruno (CA).