The public energy utility Traverse City Light & Power is set to vote on and possibly approve a municipal broadband project. This project is expensive and unnecessary, and new information raises even more concerns about moving forward with it.
In March, the Mackinac Center sent a Freedom of Information Act request to TCL&P for records related to Fujitsu, the company it hired to work on the project. This is the same company that managed the state of Kentucky’s government-owned network project called KentuckyWired. ProPublica recently published an in-depth review it and the takeaway is simple: KentuckyWire is a disaster
Kentucky officials selected to work with Fujitsu for its statewide Government-Owned Network (GON), KentuckyWired, which was sold to taxpayers as a $350 million project that would be complete by the spring of 2016. Now, around three years past its intended date of completion, less than a third of the network has been installed, none of it is usable, and a recent report from the state auditor concludes that taxpayers will end up wasting around $1.5 billion on this redundant network over its 30-year life.
In addition, city officials should also note that proponents of Traverse City Light & Power’s GON plan cannot help but see the outcome through rose-colored glasses. It is in the best interest of Fujitsu – which has been chosen to determine the extent to which there is a business case for the network – if the city moves forward with a plan, as it would also be the equipment provider and eventual operator.
Our public records request to the Traverse City utility returned reams of data — hundreds of pages. Here’s some of what we found:
In emails, Fujitsu pushes hard for a nondisclosure agreement with Traverse City (which the city wisely rejects). But this raises a red flag: Why does the company feel this is necessary for the project, especially a publicly financed one?
Fujitsu pushes the city to apply for a federal grant program. The scope of grants from this program is clearly limited to rural communities with limited internet access — not those like Traverse City, where high-speed internet is already widely available.
At one point in the emails between a salesman with Fujitsu and the chief information officer for TCL&P in a discussion about the request to bid on the project, the company representative asks for a private email address to discuss the issue. This may be an attempt to avoid this information being available to the public. In any case, it raises some questions.
The company and TCL&P discuss hiring extra staff for project management, technology, marketing, customer support, maintenance and other activities. This appears to be an extra expense for the project and raises a question: What other extra expenses might get tacked on along the way if this project proceeds? This should be especially troubling for TCL&P, considering its fiscal vulnerabilities related to a costly and underfunded pension debt.
The latest proposal’s “most likely” scenario would cost $4.2 million to serve an estimated 503 residential customers. Considering most plans for government-owned broadband network rely on overly optimistic assumptions for their approval, this number represents a high cost for a small gain to an area already witnessing improved and expanded internet services options. At best, this project is of questionable value to citizens and ratepayers in Traverse City.
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