In an effort to make it easier to distribute federal broadband funds, Colorado recently implemented a law that will likely increase the spread of government-owned networks.
In early May, Democratic Colorado Gov. Jared Polis signed Senate Bill 183, which revised a 2005 law designed to combat the growth of GONs by requiring voters’ approval before local governments could enter the broadband market.
Colorado leaders were concerned that the language of the 2005 law could hamper the ability of the state to distribute money from the Broadband Equity, Access and Deployment program, which will spread $42.5 billion in taxpayer dollars across the U.S. to help close the digital divide. Colorado expects to receive between $400 million and $700 million from the program, Broadband Breakfast reported.
In that report, Broadband Breakfast pointed out that BEAD applications require grantors to demonstrate how they prioritized grants to nontraditional providers. According to the language of BEAD, these include utilities, nonprofits, tribes, electric cooperatives and local governments.
Now, all of those nontraditional providers can enter the broadband market without voter approval.
In announcing the bill signing, Colorado Broadband Office Executive Director Brandy Reitter said that “each local government is in a unique position or different phase of connecting residents to high-speed internet, and this bill allows them to establish broadband plans that meet the needs of their communities.”
But, as the Taxpayers Protection Alliance has extensively reported, including in its most recent report “GON with the Wind II: Frankly, Taxpayers Do Care,” government networks tend to be a bad bet for taxpayers and electric ratepayers.
Between 2008 and 2022, 122 communities voted to authorize their elected leaders to make local decisions regarding broadband (including creating GONs), according to the Colorado Municipal League. As the TPA pointed out in an op-ed last year, this demonstrates that the law was working by letting local residents decide what worked best for them rather than allowing bureaucrats to make those choices.
Sometimes that democracy has been thrown into question, however. Loveland City Council members decided to move forward with plans for the city’s Pulse broadband network in 2018 despite objections from many residents and Mayor Jackie Marsh. Councilor John Fogle told TPA that voters approved the measure by opting out of the 1995 law SB 152 in 2015 by 82% to 18%. But, Marsh, one of the “yes” votes, said residents weren’t voting on actually building a broadband network, and didn’t give approval to take on nearly $100 million in debt.
Not surprisingly, the Loveland City Council has already authorized an additional $15 million loan from Loveland Water & Power, the city’s utility, to Pulse. City officials said the extra money is needed due to factors they couldn’t anticipate – the effects of the pandemic, inflation, skyrocketing growth in the community – and the funds were placed in a line of credit, moved over from Loveland Water & Power to Pulse as needed.
Such loans from electric divisions of utilities to the broadband divisions aren’t uncommon in Colorado or the rest of the U.S., but they put ratepayers at risk. Another Centennial State example: Longmont Power & Communication used $7 million from its electric division to help fund expansion of its broadband division, NextLight, in 2017. As TPA noted in its 2020 report “GON with the Wind: The Failed Promise of Government Owned Networks Across the Country,” while in theory the loan from the electric division will be paid back, power customers would likely see an increase in rates if the broadband division were to fail. And that has happened in many other communities, as detailed in the report.
It’s unfortunate that the priorities of the Biden administration pushing for more government-controlled internet forced the hand of Colorado lawmakers in repealing a law that has worked in that state for nearly two decades.
