The small town of Arrowsic, Maine, couldn’t attract any fiber optic internet service, so they built their own government-owned and controlled network (GON). That broadband service covers most of the town at the affordable price of $50 a month. But now, Fidium, a private sector ISP whose parent company owns the town’s telephone poles, is moving in and offering consumers an even better deal: $30 per month for the first year before rising to match the GON’s price. Now, the community-led solution might be more trouble than it’s worth.
The Arrowsic Broadband Authority (ABA) is rightly anxious about losing customers to private sector competition. Government-owned and controlled broadband networks have a well-documented history of falling short of the savings, service, and benefits that private sector competitors offer. However, when governments stand aside and let market forces work, consumers hold the power. ABA is urging residents not to switch, but it should instead use this as an opportunity to sunset the service before it becomes a burden.
Connecting residents means improving their quality of life, so it’s common for cities to try their hand at the ISP business. GONs pop up when cities turn their attention to their offline populations who are missing out on the economic, social, and health opportunities the internet offers.
But GONs often fail. Since they tend to provide low-cost alternatives to private sector ISPs, GONs set their prices below what’s sustainable. Rarely do they set their prices in line with the market—in this, Arrowsic is the exception. In a 2024 report, the Information Technology & Innovation Foundation (ITIF) found that many GONs get by on subsidies from elsewhere in a city government, like utility revenues, and are often veiled in a lack of transparency. This means even residents who switch to private sector alternatives are still paying into a service they no longer want.
GONs’ captive revenue channels remove the business incentive to innovate and be thrifty, making it prone to wastefulness and difficult to profit when faced with the expensive up-front infrastructure costs. The Competitive Enterprise Institute has found that 73 percent of GONs regularly lose money, trapping them in debt. When these are ultimately sold off, taxpayers are left holding the bag. Exposing unprofitable firms to actual market competition sinks them quickly, and consumers leave to find better options.
This exact scenario played out in Bardstown, Kentucky, last year. As internet competition grew fiercer in the city, consumers left the municipally-owned Bardstown Connect for better deals and services elsewhere, triggering a vote to sell the GON to Spectrum, a subsidiary of Charter Communications. With the sale finalized in March 2025, Spectrum is planning to upgrade the existing fiber optics, replace old copper lines, expand coverage to Bardstown’s rural neighbors, and even bring former Bardstown Connect employees into its workforce. These are all good prospects that would not have happened if Bardstown had voted down the sale. Trading GONs for competitive ISPs is a win for consumers.
Arrowsic’s story is a little different, but it shows similarly troubling signs. As a small town with only around 500 service locations, it could not attract private sector ISPs, leaving them without fiber internet. When funds arrived from the American Rescue Plan Act, Arrowsic seized the chance to build out a debt-free network and connect its residents to the internet, many for the first time. Unlike other GONs that price their service below market value, the ABA charges $50, a comparable price to most internet plans on the market today. This likely helps it run smoother than many other failed GONs, but ABA Commissioner Vince Capone estimates that a 20 percent reduction in subscribers—just 100 people—could make the difference between profitability and unsustainable loss. Now, with Fidium offering comparable service at nearly half the price for a year, consumers who switch will save $240 over the next 12 months, which frees up money for consumers to invest, spend, or save. Fidium can make such an offer because Arrowsic is not its only source of revenue. It has 60,000 miles of fiber spanning 8 states, and can leverage its economy of scale to offer deals to new customers.
The ABA cannot compete with Fidium’s deal without resorting to cross-subsidizing their internet service with taxes, utility revenues, and other non-transparent practices that towns use to prop up GONs. The town should instead use emerging market competition to phase out its government-owned network. By encouraging residents to switch rather than clinging to as many as it can, the ABA can hand off its subscribers and close its doors before it becomes a financial sink.
The recent events in Arrowsic, Maine, are an illustrative case of two well-documented facts: 1) Government-owned networks seldom hold their own against private sector ISPs; and 2) consumers benefit from economies of scale. A good deal from a private competitor may not please the Arrowsic Broadband Authority—but it does benefit consumers. The ABA was started to connect offline residents when no other provider would. But if the ABA fails to pass the torch now that its mission is complete, it will become gradually more burdensome to the residents it was built to serve.
Nate Karren is a policy analyst with the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, follow us on X @ConsumerPal.