The city of Vienna, Maine, recently built out a fiber network to deliver affordable internet to its small community—despite already having internet service available. This was made possible by a $2.3 million grant from the Maine Connectivity Authority, which was itself funded by the American Rescue Plan in 2021. With reports estimating only 30 more households needed before the government-owned network (GON) becomes financially self-reliant, Vienna wants more subscribers.
But the city’s broadband ambitions were flawed from the start. Although many GONs initially appear successful, they consistently become money pits for cities and eventually need to be subsidized by other government agencies or else sold off at a loss, leaving consumers on the hook for a failed program. So much for self-sufficiency. And in a city where internet service was already amply supplied, better options for connecting consumers exist that don’t involve sinking taxpayer dollars into a doomed program.
It is no secret that GONs are inefficient and ineffective in connecting consumers to the internet. Last year, a Phoenix Center report examined several GONs and found a pattern of financial trouble. In one instance, a GON in Norway, Michigan, realized it would need to borrow money to upgrade or even maintain its cable network, and eventually admitted to not having the expertise needed to compete with the private sector. To its credit, the town sold its network to Charter Communications before it could accrue any further losses. Residents in San Bruno, California, however, were not so lucky, as their municipal network wasn’t sold off until it had reached $21.5 million in debt, or $3,600 per subscriber. As the study documents, GONs are all too often money drains.
That’s because GONs face a skewed incentives structure far different from the private sector. As government-run programs, GONs seek to use their whole budgets—an easy entry point for waste, fraud, and abuse. Meanwhile, in the private sector, firms face pressure from rivals and investors to offer better services at lower prices, while being as cost-efficient as possible. Analysis from the American Consumer Institute finds that insulation from harsh market realities means failed GONs typically persist longer than they otherwise would have as a private business, racking up debt and costing consumers by continually subsidizing the program and crowding out private firms that could operate more efficiently.
Despite the warning signs, towns like Vienna still choose to build and operate their own fiber network if none exists in their area. According to residents, Vienna was stuck on outdated digital subscriber line (DSL) connections that were never upgraded to coaxial cable technology, so they believed building their own fiber network was their only chance at modern internet speeds. But focusing only on wireline connectivity overlooks the fact that wireless technology has become a fierce competitor to cable and fiber providers—and Vienna is already well served by wireless providers. Wireless internet service providers (ISPs) cover as much as 99 percent of the town, offering speeds as fast as 498 Megabits per second, more than twice the national average of 214 Mbps in 2024 and nearly three times faster than Maine’s average of 173 Mbps. Vienna doesn’t need a GON to ditch DSL.
Perhaps affordability was the real concern. Prices for a Vienna Broadband Authority fiber plan reportedly start at $60, while estimates across all private providers that serve the town average around $160 per month. But the city had more cost-efficient options than building its own network. In establishing a GON, much of the $2.3 million grant from the Maine Connectivity Authority would have gone into construction and operational costs, and residents had to wait for fiber to pass their household before they could connect. If the local government must get involved at all—a questionable prospect as broadband prices have been declining over time—the town could have instead divided up its $2.3 million among the approximately 400 service areas and paid for each household’s average monthly price from a private ISP for nearly 3 years. The funding could likely have lasted even longer, as many providers offer promotional rates to attract first-time customers—or further still if grant money were distributed only to low-income households. But sinking the money into administrative costs, infrastructure buildout, and operational expenses for a GON that will ultimately cost consumers more than it’s worth is a poor and inefficient way to use taxpayer dollars.
In the end, broadband networks owned and operated by governments are a flawed solution that decision-makers nationwide can’t seem to give up. But where evidence shows they consistently lose money through skewed incentive structures, policymakers should seek out more efficient, impactful ways to promote connectivity.
Nate Karren is a policy analyst with the American Consumer Institute, a nonprofit education and research organization. Follow Nate on X @NateKarrenOnX.