Lawmakers in Maine are considering a number of bills relating to broadband expansion, including some that could impose a new tax on cellphones in order to expand ConnectME and use General Fund dollars to fund government-owned broadband networks, or GON. Not only would this $600,000 tax on Mainers be costly, these measures won’t achieve legislators’ goal of expanding broadband use.
The first problem is that supporters of this tax conflate broadband access with adoption. The vast majority of Mainers have access to broadband, meaning they could subscribe to the service if they wanted. Indeed, all urban residents, and 96.3 percent of rural residents, have access to broadband connections that offer at least 10 megabits-per-second, or mbps, download speeds. The problem is that only two-thirds of Mainers have adopted (or subscribe to) high-speed broadband service.
Supporters of the new cellphone tax also argue private sector companies haven’t invested in Maine or, if they have, the speeds are too slow. These two claims are also false. Private companies have invested billions of dollars here, including in rural areas. In the past four years alone, wireless, rural local exchange carriers and cable companies have invested more than $675 million in broadband infrastructure. As a result, broadband speeds continue to improve. Mainers have access to speeds up to 150 mbps for wired residential service and up to 70 mbps for wireless service.
One final falsehood GON proponents perpetuate: there’s no taxpayer risk in allowing the government into the broadband business. Wrong: it’s nearly impossible to find an example of a “successful” GON. Indeed, you don’t need to look very far to find a failed municipal network. Burlington, Vermont, is still $17 million in debt eight years after launching its GON; it’s also suffered multiple credit rating downgrades. Burlington’s problems aren’t isolated. Regardless of structure, nationwide nearly all GONs have ended up with long-term debt, fewer subscribers than anticipated and costs that vastly outweigh the benefits.
Government networks lose money because they’re often out of date before they’re functional. The private sector may have new technology online in the time it takes a municipality to study and build a network, and these out-of-date networks don’t attract subscribers. After meeting recently with the city of Waterville’s city manager and its IT manager, it became clear that the city’s means are limited; private sector companies simply have more resources and the expertise needed to install, maintain, troubleshoot and upgrade their networks — and they don’t put taxpayer resources at risk.
Ignoring these facts and statistics has led cellphone tax supporters to the wrong conclusion — that if we build a government-owned network, more Mainers will get online.
To get more people online, research shows we need to show them why it’s beneficial to them. A 2013 study by the Governor’s Broadband Capacity Building Task Force found the primary issue is not access to high-speed broadband; it’s that too few people and business see the benefits of being online. The report found 55 percent of business owners don’t even see the benefits of having a website. Additionally, 54 percent of individuals said they see no need to have broadband.
The proper conclusion to draw: we can get more Mainers online if we educate them about why it’s important.
Instead of investing in building GONs, government officials should invest in campaigns and programs that illustrate the benefits of broadband to business owners and individuals. These efforts will do more to bring residents into the 21st century than duplicating investments already undertaken successfully by the private sector.
But if it’s access officials want to improve, there are also options to move the needle in this regard, too — without raising taxes to support a GON. Officials can encourage and incentivize private investment by streamlining permitting statutes, providing tax credits for infrastructure investment and offering private-sector companies accurate, timely demographic information about their potential customer base.
The cellphone tax will hurt Mainers financially, and it will do nothing to achieve the full benefits of universal broadband deployment, such as improved educational and job opportunities, improved health care and economic growth, that policymakers want to achieve. If our leaders really want to help their communities benefit from broadband, they should focus on a policy mix of education and regulatory reform.
That will really help move our state’s broadband numbers.
Kimberly Nadeau Lindlof is president and CEO of the Mid-Maine Chamber of Commerce, which represents 18 communities and 675 members in greater Waterville.