Michigan Broadband Cooperative Calls Report Saying Municipal Broadband Has an Unfair Advantage ‘Laughable’

June 30, 2020 — The Michigan Broadband Cooperative is hitting back at a report from the Free State Foundation that claims that local governments in Michigan frequently abuse broadband restrictions placed on them.

Theodore Bolema, professor of economics at Wichita State University, wrote that the governments’ unfair treatment allowed them to take advantage of regulatory privileges.

“Local governments’ purported compliance with the law was achieved by tilting the playing field to give municipal networks advantages over private market providers through subsidies, self-dealing, or privileged regulatory treatment,” he wrote.

He also claimed that a new bill under consideration by the Michigan Congress would exacerbate the alleged abuses.

“This preferential treatment of municipal networks deters entry and investment by private providers to the detriment of competition and, therefore, consumers,” he said.

But Ben Fineman of the Michigan Broadband Cooperative called the writing a hit piece and said that government broadband providers stepped in to fill a need not met by private industry.

“What alternative is the author suggesting?” he asked. “Should Lyndon residents have continued waiting patiently for more decades until a private provider stops ‘considering’ expanding and actually does something?”

Despite the report’s claims, Fineman said, there is in fact a private provider in the concerned area.

According to Bolema, government providers in Holland, Michigan have been unfairly enabled to compete with incumbent providers.

“Holland helped undercut private companies by subsidizing its broadband systems with a transfer from other city funds to help with start-up costs,” he said.

Fineman dismissed Bolema’s assertions as “laughable.”

“The townships who would leverage special assessment districts for broadband are those with significant populations without broadband access,” he said.

Bolema’s ten-page memo details other alleged abuses of the Michigan public broadband networks, but Fineman denied them, saying that because of the number of refutations, he “simply [did not] have time to address them all.”

Since the coronavirus pandemic, government agencies like the U.S. Department of Agriculture and the Federal Communications Commission have given millions of dollars to public infrastructure development and auctions for increased private service.