Voters approve $30M in debt for Holland broadband proposal
Past public internet projects have left taxpayers on the hook
Voters in the city of Holland decided on Tuesday, Aug. 1, to let local officials take on $30 million in debt to built a city-owned internet service, even though high-speed internet is readily available in the city.
If the experience of other municipalities is any indication, Holland residents could be on the hook for additional millions when subscription fees fail to cover the system’s costs.
Holland officials used a report that was published in 2008 to justify their estimate that 51% of residents will sign-up for a publicly backed service. The 14-year-old data shows municipal networks signing up 54% of potential customers. There are currently 16 companies offering internet service in Holland.
Michigan Capitol Confidential previously reported that Traverse City and Marshall implemented high-speed internet as a government-owned utility, with less-than-desirable results. Marshall officials installed a public broadband system in 2019, saying they would start repaying its debt in 2020. But the city delayed making payments until this year.
Traverse City officials predicted that half of their residents would pick up city-owned broadband. Projections fell short, and taxpayers are now on the hook to pay back the money the city borrowed.
Ted Bolema, an economics professor at Wichita State University and a Holland resident, said of the vote on Tuesday:
“The Holland government-run internet project was sold on unrealistic assumptions about how many people will sign on to the service, which is typical of how these projects are pushed by their supporters with rosy assumptions that are unlikely to be anywhere close to reality. A few years ago, the Traverse City project was pitched with a breakeven assumption of 40% of residents signing up for the service, but instead only about 20% of the city chose the government-run internet over private alternatives.
“In Holland, it could be even worse, since Holland’s project is based on the assumption that more than half of the city will sign up for the service.”
Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.