'Needless experiment': Cities weigh gov't-backed broadband, critics see tax $$ at risk

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A push by cities across the country to get into the business of the Internet is raising concerns that local governments, with Washington’s blessing, are meddling where they are not needed -- and wasting taxpayer dollars in the process.

The push was fueled earlier this year, when President Obama in January introduced a plan for municipal broadband projects which, according to the administration, would encourage “competition and choice” while offering a “level-playing field” for high-speed Internet access.

But critics say municipal broadband projects – or Internet services provided at least in part by local governments -- are an example of government overreach, and a bid to compete with private service providers that have successfully operated for years.

“This is a case of local bureaucrats saying that this is a high-tech ‘sexy’ project that will win voters, but it’s actually a needless experiment,” Kevin Glass, director of policy and outreach at the Franklin Center for Government and Public Integrity, told Fox News.

Earlier this year, the Federal Communications Commission issued an order aimed at laws that restricted community broadband in two states, North Carolina and Tennessee. The FCC overturned those laws, and in the process created a framework for 20 states to break down other barriers restricting community broadband services. President Obama urged the FCC action, which passed on a narrow 3-2 vote.

The FCC’s ruling and the president’s policy are now encouraging local governments to expand these projects. Newark, Del., is one of the cities tapping into the idea of creating its own broadband Internet service for residents

“We’re certainly not looking to take anything away from the private sector,” Ricky Nietubicz, community affairs officer for the city, told Fox News. “It’s a huge project, so we want to make sure we’re going into this with eyes wide open.”

Newark’s City Council has implemented a feasibility study to look at the potential costs and subscription rates for the community.

“Within the next four-to-six weeks, we’ll make a decision whether or not to proceed,” Nietubicz said.

But Glass said that Newark already has some of the fastest Internet speeds in the nation.

“This is a case on how politicians are not going to be dissuaded, even in a situation where there is no need at all,” Glass said. “The only thing this is going to do is be a waste of taxpayer money, and when they fail, it’s an absolute disaster.”

Watchdog.org reports that the local council in Georgia’s Peachtree City also could vote next week on a $3.2 million bond to pay for a local broadband system.

And according to Glass, Provo, Utah already implemented a municipal broadband program that reportedly cost the city $39 million, and ultimately was sold to Google for a whopping $1.

“They built this massive project for millions of dollars, but sold it to Google to get out,” Glass explained. “They’re still on the hook to pay, but were willing to cut their losses.”

FCC Commissioner Ajit Pai, who voted against the FCC plan earlier this year, told Fox News the projects are “expensive and difficult to maintain,” in reference to the attempt in Utah.

“From a federal level it is interesting, because we have a disagreement over whether or not the federal government can do anything one way or another,” he said.

Pai dissented on the FCC decision in February based on the rationale that there was no clear federal law allowing the agency to preempt state laws in this area.

The FCC order issued in February is currently being argued in the Sixth Circuit Court of Appeals. According to Pai, the Department of Justice typically signs onto FCC briefs – but not this time.

Pai provided a letter written by a Justice Department attorney to the court notifying them that they wouldn’t take a position on these cases. The letter is dated Nov. 5, 2015. The Justice Department has not responded to a request from Fox News for comment.

“It is exceptionally rare to have the Department of Justice refuse to sign onto an FCC brief, but this says that the DOJ doesn’t trust that this is legal,” Pai said. “President Obama’s own Department of Justice implicitly is questioning whether or not this is government overreach. “

Colorado is another state considering a municipal broadband project, and Kevin Fellman, a Colorado-based attorney whose practice focuses on communications and broadband utility issues, said most local governments just want better and more affordable broadband Internet -- and the governments have the access to promote just that.

“These communities want to use this as an economic development tool,” Fellman told Fox News. “Anyone that wants to be involved in creating more broadband infrastructure should be able to do that.”

But Pai also raised privacy concerns: “How and to what extent can you restrict what activity and communications go on in these internets if the government is in control?”

FCC Commissioner Michael O’Rielly, who also dissented on this year’s order, said it’s “dreadful public policy to encourage municipal governments to become communications carriers.”

“Municipal broadband networks have a track record of overpromising and under-delivering, wasting taxpayer money while also harming any current or potential private competitors,” he said in a statement to Fox News.