RESEARCH

Internet access, especially fast and reliable broadband, continues to be an ever growing need for workers, students, and everyday Americans. Shifts in remote work due to the pandemic and most recently, the need for internet communications following Hurricane Helene, continue to show how important internet access is for the majority of people. Though recent years have given a spotlight to the need for broadband, calls for internet access to be treated like utilities have been happening for years. Most recently, the outgoing administration’s Infrastructure package set aside $65 billion to expand broadband access. But should government owned networks (GONs) get into the broadband business? 

Despite federal data showing over 95 percent of Tennesseans have access to wired or fixed wireless broadband and over 93 percent have access to high speed broadband, local governments have sought to create their own broadband networks. With billions going towards expanding wired broadband to the most rural parts of the nation, Beacon looked at the performance and viability of currently active GONs.

Beacon’s latest report, “Going, Going, GONs! Broadband Access and Adoption in Tennessee and the Financial Performance of Government-Owned Networks,” provides a detailed analysis of the GONs in the state, and highlights the financial assumptions and real positions of these providers. Some key findings in the report include the following:

• Internet access is nearly universal in Tennessee. Over 95 percent of Tennesseans have access to broadband, and 93 percent can access highspeed broadband through wired or fixed wireless technologies.
• Not all Tennesseans are online of course, but the reasons why they aren’t center around adoption of service. Of those not online, 64 percent say they don’t need to be, and another 15 percent opt out of internet service because it’s too expensive. Less than one percent of Tennesseans say they aren’t online because of lack of access.
• Government-Owned Networks (GONs) in Tennessee have been historically slow to attract subscribers. Data show GONs overestimated the number of customers they would acquire for roughly their first four years.
• Tennessee GONs have underestimated their expenses by nearly $367.9 million, constituting a 98 percent cost overrun, despite collecting $284.6 million more in revenue than they projected. This highlights their inability to adequately estimate the costs of operating broadband networks and underscores the financial risks in building and operating broadband networks.
• In light of some GONs’ underperformance, Tennessee law should be amended to strengthen existing statutory review of GON business proposals to more accurately assess their feasibility.