Government officials in Marquette have spent the last year exploring the creation of a publicly funded broadband network. It would be a mistake, with the city following a path that has hurt the finances of many others. But Marquette can still do a lot to extend high-speed internet to Upper Peninsula residents.
Most of the town of Marquette has high-speed coverage, with high-speed internet access, including high-speed internet. That’s according to federal government maps, private appraisal websites, and the city’s feasibility study commission. Marquette’s broadband coverage is equal to that of the city of Grand Rapids, despite being one-tenth the size.
But there are some problems. The highest internet speeds, some people say, are too expensive (although similar to prices in Traverse City and Midland). And some city residents, and many in surrounding communities, don’t have access to reliable high-speed internet.
To address this problem, the Marquette Municipal Commission approved $89,000 for a broadband feasibility study last January. To its credit, the commission was wise enough to study the matter closely before committing huge sums of money to a project like this. But in July, commissioners discussed the possibility of the electric utility building and operating a broadband network. It would be a mistake.
The vast majority of government-owned broadband systems across the country are failing financially. According to the University of Pennsylvania, only 10% of fiber internet projects generated enough revenue to cover their costs. A study by the Mercatus Center, a research institute at George Mason University, analyzed 80 projects and found minimal economic benefits for communities funding public broadband systems.
So why is the city exploring the government-run option? It’s hard to say, because even the feasibility study didn’t argue for a new government-owned network.
The report noted that its investigation revealed that the residents were “generally satisfied” with internet speed and prices and there is little willingness to change unless the prices are much lower. He also notes that gig-internet is already on offer and that the areas most in need of internet access are in rural communities, which are difficult and expensive to reach. In other words, a financially viable network is even less likely to stay there above water.
The city should not build its own network. There is little chance of success, and even then it puts taxpayers on the line. So, what can Marquette and its surroundings do? Here are some ideas, taken from the feasibility study as well as a Mackinac Center broadband report:
≤ Clear unnecessary local regulations
≤ Reduce barriers to additional private investment
≤ Promote competition between private providers
≤ Resist universal technological solutions
≤ Provide vouchers to low-income households to purchase broadband internet
Marquette, like many other cities, has already received an influx of federal stimulus money. The recently signed infrastructure bill earmarks $65 billion specifically for broadband, so more will flow. It is crucial that cities use this money appropriately, without burdening taxpayers with future expenses.
Editor’s note: Jarrett Skorup is director of marketing and communications at the Mackinac Center for Public Policy. In addition, Hugo Eyzaguirre, professor of economics and director of the Center for Economic Education and Entrepreneurship at Northern Michigan University, contributed to the writing of this article.