Johnson City’s Struggling Broadband Program Should Be A Warning To Tennessee [Op-Ed]

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By Dakota Gordon –

There’s a new trend sweeping across Tennessee, and it’s not a new dance high schoolers have learned on social media. In fact it’s an even bigger waste of time and could negatively affect you and your neighbors. I’m talking, of course, about government-owned internet.

To some, it sounds nice on paper. Who doesn’t want more internet offerings? Isn’t increasing internet access critical in an increasingly online society? Yes, but like any government project, the devil is in the details, and the details have been grim for consumers. That’s not conjecture, it’s fact: just look at the numbers in Johnson City.

Johnson City’s government and public power utility BrightRidge approved building their government-owned internet network in 2018. They submitted a business plan to the Tennessee Comptroller that detailed their projections for revenue, operating expenditures, and take-rate (the percentage of customers that would choose to buy the service). In each category, BrightRidge has fallen well short of projections.

According to BrightRidge’s audited financial statements for 2021, they predicted $6,559,846 in revenue, but brought in only $3,791,938 – only 58% of what they thought.

BrightRidge predicted their operating expenditures for 2021 would be $6,996,729, but were actually $9,276,678 – a full 33% more.

BrightRidge didn’t predict they’d be in the black, thinking their net income would be -$436,883. But they instead lost a whopping $5,484,740 – more than 11 times what they thought.

If you ran a company like this in the private sector, you’d be bankrupt and out of business. Yet local governments simply can’t help themselves and think they’ll be the first ones to make their internet cost-effective and worthwhile. As Beacon Center fellow Patrick Gleason recently noted, some government-owned networks in Tennessee will take hundreds of years before they will ever break even.

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The Beacon Center predicted these shortcomings when BrightRidge first proposed its internet system in 2018. It’s small comfort to be proven right when the cost of these inefficient networks is being borne by the hardworking ratepayers in BrightRidge’s service areas.

BrightRidge’s failures should offer a cautionary tale to other municipalities in Tennessee looking to build their own public internet service. Local governments from Elizabethton, to Greeneville, to Dickson, to Lexington could all burden their customers with costly internet projects that do little to increase access while only raising individuals’ taxes and electric rates.

There’s a simple solution: have the local governments partner with private sector providers to expand services to truly unserved areas that still need access to the internet. Governments can use the grant money allotted to them while relying on the expertise of private companies that know how to build out internet services quickly and efficiently. Further, the state legislature could look at strengthening the Comptroller’s powers when signing off on local government’s business plans, so other communities are not bamboozled like those in BrightRidge’s service area. 

Even with federal grants from the Biden Administration, local governments can’t escape the time-tested reality that government remains less efficient and more costly than the private sector. While a new municipal internet service may sound nice to elected officials, it’s their constituents who will ultimately pay the price. 

About the Author: Dakota Gordon is the executive director of Better Tomorrow in Tennessee.