Gigabit boondoggle unwinds in Chicago

[Commentary] The state of Illinois gave $2 million to Gigabit Squared to wire the Chicago South Side for ultra-high speed broadband, and now they want their money back. This story is more common than you might think, and Gigabit Squared isn’t the only offender.

From Burlington (VT) to Provo, Utah, it doesn’t matter whether a city is large or small, or if it goes it alone or bands together with neighbors: designing, building, and operating a broadband network is harder than running a water system. Very few municipalities have the expertise to do these things successfully, and those who leap before they look are likely to end up wishing they’d examined all possible outcomes before committing their cash. Mooresville (NC) had to lay off police, fire fighters, and teachers to cover their broadband debt. This is more likely to happen than not.

The main reason we can expect municipal networks to fail is revealed in their goal-setting exercise. It’s perfectly reasonable for some form of subsidized broadband program in an unserved or severely underserved area: people can gain great benefits from using a smartphone, an iPad, or a laptop to access the Internet, explore educational opportunities, or read the news. But you don’t need the world’s fastest network to do these things; all you really need is a garden-variety DSL, cable, or mobile network. And given those choices, most people will adopt mobile first. As history shows, the speed and capacity of broadband networks generally improves to meet and exceed customer demands.

[Bennett is a visiting fellow at AEI]