Taxpayer Alert! Beware of Broadband Consultants

From coast to coast, leaders on both sides of the aisle have raised concerns about the “broadband consultants” who push failing government-owned internet networks (GONs). In communities big and small, taxpayers are being forced to foot the bill.

The truth: These consultants have left a trail of failed promises and wasted tax dollars in their wake. But don’t just take our word for it. Hear from policymakers across the country who hired these broadband consultants.

FLORIDA

Escambia County

(Consultant: Magellan)

“If something happens (to change the internet marketplace), after we kind of step off and take that financial risk, then whether it’s us sitting on the dais or very likely a new swath of folks in say 10 years, I don’t want to leave something in the ground that’s going to be a huge burden, or that we then have to try to fire sale. ”

– Steven Berry, County Commissioner

Lakeland

(Consultant: Magellan)

“The financial model produced by Magellan is very sensitive. There is very little room for price elasticity in this model, which lends to being a very high risk. Missing or changing any one of the three key components noted above, much less more than one, is problematic…It’s highly speculative and we’re not in the business of being highly speculative with the citizens’ money…”

– Michael Brossart, Finance Director (LINK)

Flagler County

“Too often, self-interested broadband consultants push their way into the local government decision-making process and guide our communities towards expensive, risky government-owned internet projects.”

– Joe Mullins, Former County Commissioner

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KENTUCKY

KentuckyWired

(Consultant: Macquarie)

“What we found in phase two was there were numerous changes made after the commonwealth signed a contract with the main contractor for the project (Macquarie) that ‘flipped the script’ to move the costs and risks from private investors, and placed it almost entirely on taxpayers… The differences from the contract awarded and the final project agreement is striking and troubling.”

– Mike Harmon, former State Auditor, Commonwealth of Kentucky

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MASSACHUSETTS

Williamstown

(Consultant: Design Nine)

“It’s a matter of people’s risk adversity. The survey responses are great, but when you ask people to pay their money, it’s a different game. It’s a risky business. Towns do it, but there’s also the risk that if you put in the system and don’t do it properly, you lose subscribers because (the existing internet service provider) is there.”

– Andy Hogeland, Select Board Member

Cambridge

(Consultant: CTC/Tilson)

“The city’s consultants identified four possible implementation scenarios. What they omitted was a fifth scenario. That would be to calculate what it would cost the city to get whatever broadband connections it thinks should be made available to the lowest-income households without resorting to a massive infrastructure project and creating a bureaucracy to run it.”

– Ben Compaine, City Manager’s Broadband Task Force, former member

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MINNESOTA

Monticello

Consultant: (CCG)

“That’s why last session’s broadband legislation, which stripped away the requirement to hold a referendum before a community starts a government-owned broadband project, was so misguided. In the city of Monticello, they used a broadband consultant that dramatically overestimated subscriber demand for its city-owned broadband network. ”

– Isaac Schultz, MN State Representative

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NEW YORK

Erie County

(Consultant: ECC Technologies)

“There are still many questions that need to be answered before we approve this proposal. $20 million just for the initial investment is a high price tag when we aren’t sure how feasible a large-scale project like this is, especially when we have to adapt to technology over time and it could require costly maintenance.”

– Edward Rath, former Erie County Legislator and New York State Senator

New York City

(Consultant: HR&A)

“Any plan that has a tangible item that’s supposed to be delivered within a two-year timeframe, but you get two years in, and there’s not a single contract issued – that’s not a plan, it’s an idea.”

“And I just find it interesting that almost two years later, we’re talking about a plan that doesn’t tangibly deliver a single connection to anyone as the great goal.”

– Matthew Fraser, Chief Technology Officer

New York City

(Consultant: HR&A)

“Rather than taking years to build a redundant infrastructure at more than $2 billion in cost before a single New Yorker got connected, the city devised a program that allowed NYCHA residents already connected to broadband through a provider to automatically opt-in to free service and partnered with providers to connect those who did not have service.”

– Kevin Reilly, New York City Councilmember

Lewis County

(Consultant: ECC Technologies)

“While this approach could have provided necessary service, it presented significant risks to our local taxpayers. The County would bear ongoing costs and potential liability if a private provider were to withdraw. To mitigate these risks and ensure long-term sustainability, we opted for a public-private partnership. This model eliminates taxpayer burden and leverages the expertise of established broadband providers.”

– Tim Hunt, County Manager

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NORTH CAROLINA

Davidson

(Consultant: Magellan)

“It was a money suck. We lost a combined $41 million over the last 12 ½ years. No matter how much profit it turns, we would never catch up on the loss. And then you’ve got to factor in the next big what-if, the next great technological jump.”

– Rusty Knox, Mayor

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OHIO

Solon

During Council discussion rejecting a feasibility study for a city-owned broadband project, “I look at this as a potential disaster. I think it’s a huge mistake for the city to undertake something like this. There are way, way too many alarm bells for me.”

– Councilwoman Nancy Meany, Finance Committee Chairperson

Hudson

(Consultant: Magellan)

The city’s broadband network “turned out to be a higher risk effort than council was led to believe by the Magellan consultant study that staff vetted and upon which council’s decision was made.”

– Former City Councilmember Dennis Hanink

Clermont County

(Consultant: Cobb Fendley / Insight)

“Our community’s leaders also made a smart decision to not pursue a duplicative, government owned broadband project, which presented far too much risk and would have left our taxpayers with an ongoing expense for years to come.”

– Jean Schmidt, OH State Representative

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TENNESSEE

Johnson City

(Consultant: Magellan)

“Because the Plan did not consider the impact of market competition to the population of customers that currently have service, we could not conclude the reasonableness of the uptake rate and therefore could not determine if the Plan as presented is feasible.”

– Sandra Thompson, Director of the Office of State and Local Finance, Comptroller of the Treasury, State of Tennessee

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TEXAS

Dayton

(Consultant: Magellan)

“This project simply cannot be successful as designed. The service needs to be taken into the county where there is a need. We only have 111 residents hooked up to DayNet; we need 1,400 hooked up just to pay the debt service note. These 1,400 wouldn’t include any staff, equipment supplies, or technicians for installations.”

– Steve Floyd, City Manager, Dayton, TX

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WISCONSIN

Superior

(Consultant: Magellan / EntryPoint)

“To date, not a single home has been connected to this network, and the city has already failed to uphold that promise, as millions of local tax dollars have already been required to sustain this project. We are jeopardizing the long-term financial health of our community in pursuit of faster internet speeds.”

– Brent Fennessey, City Councilmember

Dodge County

(Consultant: Design Nine)

“We approved a study to discover what is actually needed to increase broadband access in the county and four months after we were supposed to receive it we still have nothing. Now we’re taking $400,000 and we’re going to invest that to do some engineering for a project that’s clearly never going to address broadband needs. ”

– David Guckenberger, County Supervisor

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NATIONAL

National

(Consultant: Magellan / CTC / EntryPoint)

“Firms like CTC Technology & Energy and EntryPoint Networks have been involved in numerous GON projects nationwide, often playing ethically problematic dual roles as both advisers and potential service providers. Their business model is clear: recommend that cities build GONs, then reap the rewards when those same cities act on that advice.”

– Ryan Costello, Former Member of Congress, Pennsylvania

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