Policy Reports Salisbury’s Fiber-Optic Cable System: Another corporate welfare project paid for by average taxpayers
May 07, 2009
Quick facts:
The City of Salisbury recently decided to build a $30 million fiber-optic cable system that will offer Internet, phone, and television service to Salisbury residents and businesses. The city is paying for this system with 20-year bonds.
City officials promised subscription fees from 28 percent of city residents would cover the entire cost of the system.
While fiber systems offer high speeds, many computer users favor laptop computers and are willing to trade lower speeds for the mobility of wireless Internet connections. Thus currently available wireless technology such as mobile broadband cards, Wi-Fi, and the rapidly growing WiMAX wireless technology could make it very difficult for the city to live up to its “paid by subscribers” promise, leaving property taxpayers to foot the bill.
WiMAX technology works similarly to WiFi but can reach faster speeds, currently up to 10 mbps (million bits per second), and cover a greater distance, up to 30 miles. One WiMAX installation could cover the entire city of Salisbury.
If the system cannot attract enough subscribers, city officials have stated that they will use an increase in property taxes of 9.5 cents per $100 valuation to fund the project.
The average residential customer gains little from this system. Television and phone quality will not be appreciably better than private sector competitors, and the highest speeds available through fiber technology will come with a price tag too high for most residential subscribers.
Who benefits? From the start, city officials have justified the investment by touting its economic development prospects. They hope it will bring in a younger, professional class as well as new businesses that require this type of service. If the city fails to attract the necessary number of subscribers, property taxpayers, many of whom cannot afford or do not need the system, will be left footing the bill for businesses.
