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Anti-Tax Group Rails Against Publicly Owned Fiber Networks

Traverse City, Mich.’s plan to build its own fiber-optic broadband network is prompting criticism from Americans for Tax Reform President Grover Norquist, who says municipal undertakings are “really stupid ideas.”

(TNS) — Americans for Tax Reform President Grover Norquist said he wants Traverse City and any other local government considering a government-owned fiber-optic data network to steer clear.

Norquist said he's not aware of one that has succeeded without bailouts or hidden taxes or fees. These networks are one of two "really stupid ideas" that sound great to city leaders nationwide but ultimately snooker them into money-losers that would be better run by private enterprise, he said.

"Don't walk down this alley, trying to run a government-owned network," he said. "We have seen this movie, it ends poorly."

But city Commissioner Amy Shamroe said there are success stories, and that most feedback she hears isn't from people opposing the project but from locals asking what's taking so long. She and other city commissioners got emails from Americans for Tax Reform asking them to ax Traverse City Light & Power's fiber-to-the-premises project, she said — it's up to TCL&P board members and not city commissioners now, of which Shamroe is both.

Others are hearing from the group and other anti-tax organizations asking them to oppose the project. City resident T. Michael Jackson said he got a large postcard in the mail urging as much.

Shamroe fielded a question about the fiber-optic network project from city resident Larry Gerschbacher at a neighborhood association meeting, she said.

Gerschbacher said someone from an organization called him asking about his thoughts on the project. He told them he wasn't aware of it and they thanked him and hung up, he said. He got a postcard listing reasons to oppose the project about a week later.

So Gerschbacher raised questions about it at the association meeting, he said. He credited Shamroe with addressing his concerns.

"I guess I was not following the progression of the discussions that were going on and the processes that were going on, and I was just kind of blindsided as to what this was all about," he said.

The utility wants to expand its fiber-optic network to provide its electrical customers with a high-speed Internet option. Customers could connect at 1 gigabit-per-second speeds, down to 50-megabit-per-second upload and download rates. A cellphone using 4G LTE service downloads at 12 megabits per second, according to Verizon Wireless.

Tim Arends, TCL&P executive director, said the utility board on Tuesday will decide on a vendor to design and run the network. He's recommending Fujitsu and also will ask the board to spend up to $25,000 so the company can draw up engineering designs.

It'll be up to the board at a future meeting to decide whether to go ahead with building out the project's first phase, Arends said.

That phase would give around 2,200 customers in most of the city's downtown, along Eighth Street and down Woodmere Avenue, the option to connect. Those in Boardman and Central neighborhood homes could as well. Previous cost estimates put building the first phase at $3.6 million, and construction could begin this year if the utility board pursues it.

Pat McGuire, the utility board's president, said that's still an open question. Plans are still in the works, including a business plan and how to finance the construction, he said. That makes it hard to draw conclusions or argue about who will or won't bear the cost.

"We're just on the cusp of having a business plan that we can evaluate but that the community can evaluate, not only just the directors, but the community," he said, adding concerned ratepayers may surface once the plan is drafted.

Arends said he anticipated outside groups opposing the project. He disputed the emails' terminology, noting that residents wouldn't pay more in property taxes to fund the project, nor would TCL&P customers see a rate hike.

"The electric ratepayers will not be subsidizing it," he said.

Norquist said he's seen how plenty of utilities stick customers with fees to pay for fiber-optic networks that perform poorly business-wise. And although those fees are not technically taxes, he fails to see the difference since it's a government-owned monopoly taking money from its ratepayers, he said.

Plus, the money for the projects at some point comes from electricity bills, Norquist said.

"If the city has extra money coming in from its billing of citizens, then they're overcharging you and they should give you the money back," he said.

Suspicion abounds that telecom companies afraid of competition are behind the calls and mailings — Jackson said his son posited as much and Gerschbacher suspected it as well, although he said he couldn't prove it. Shamroe said an emailer said it appears one of the companies is spreading "propaganda."

Norquist said Americans for Tax Reform doesn't report its donors and that the question is moot anyway. The organization opposes any tax increases and has come out against municipally-owned broadband networks elsewhere.

Shamroe said she has heard from locals who oppose the idea on the grounds that government should stay out of private enterprise's domain. But they also told TCL&P board members that they understood why they wanted to boost broadband speeds and availability in the area, she said.

She told city commissioners at a recent study session about the emails and calls, including one she and other commissioners got from "Firstnametest Lastnametest" that appeared to be a form letter.

"I encourage dissenting opinions, but I like them to come from real people," she said.

©2019 The Record-Eagle (Traverse City, Mich.). Distributed by Tribune Content Agency, LLC.