Government Broadband Consultants - The Big Grift

Earlier this week, the Taxpayers Protection Alliance (TPA) released our newest report, “Government Broadband Consultants – The Big Grift.” With billions of federal and local taxpayer dollars being used for building high-speed internet infrastructure, broadband consulting is quickly becoming big business and a big grift. Nowhere does this grift manifest more obviously than in the proliferation of taxpayer-funded local government-owned networks (GONs). As TPA has pointed out in its recent reports “GON with the Wind: The Failed Promise of Government Owned Networks Across the Country” and “GON with the Wind II: Frankly, Taxpayers Do Care,” consultants on municipal broadband projects have the answer before local governments even ask the question whether or not to build a GON.  Despite often being touted as a silver-bullet solution to connect Americans to the internet in underserved areas, GONs have consistently failed to fulfill their promises. GONs have historically struggled to attract consumers, with a take rate below 40 percent. Despite their historic underperformance, the federal government has continuously poured taxpayer dollars, spending more than $413 billion in funding. Consultants have jumped on this gravy train and fleeced taxpayers for millions of dollars. Federal and local officials need to put a stop to this grift. Consultants rarely advocate anything other than building a GON because they have something to sell municipalities on the back end – from software to construction to overall management of the GON. TPA’s Director of Telecom, Johnny Kampis, put quite a bit of energy and work into this report.  I also want to thank Chip Baltimore, Nonresident Senior Fellow, for his contributions to the report. We will be updating the report as more consultants pop up. And you know they will. Below are two examples from the report.
 

Magellan Advisors

Magellan Advisors continues to be a national leader in broadband consulting, partnering with more than 400 utilities, cooperatives, and municipalities across 35 states. The company says it has connected more than 50 million U.S. residents to broadband. The company emphasizes its turnkey services, meaning it will both consult on a network and then build and help operate it. As TPA has pointed out, this provides a financial incentive for these companies to tell municipalities to build networks. Recent projects in which Magellan has double dipped include Mont Belvieu, Texas; Rancho Cucamonga, California; Palm Coast, Florida; and Newport, Tennessee. The company has recently consulted on projects from Marion County, Oregon, to Chesapeake, Virginia. Of about 40 recent engagements with local governments and other taxpayer-funded entities, none of the projects have seen long-term sustainable success, with four of them failing. Consultants often base proposed projects’ likely profitability on take rates that do not materialize, as TPA found in its research for the first GON with the Wind report. Lakeland, Florida, is one of the few communities to pay Magellan for consulting and not follow through with building a network. Mike Brossart, the city’s chief financial officer, expressed wariness at the consultant’s financial model and projected take rate. He said the city was “not in the business of being highly speculative with the citizens’ money.” In November 2021, Magellan bid on and was awarded a $2.5 million contract to design a GON fiber last mile system in Waterloo, Iowa. The company based its bid amount on 309 miles of fiber, which it estimated would be enough to connect every household in Waterloo. But, the following November, Magellan returned to the Waterloo City Council to ask for an additional $677,000 for the project because it had underestimated the fiber needed by 82 miles, or more than 26 percent. That funding request included more than $20,000 for higher-than-anticipated “travel costs.” From GONs to P3s, most of Magellan’s consultations suggest some form of government-run and taxpayer-funded broadband network.

SmartSource Consulting

Curtis Dean (the founder of SmartSource Consulting) is one of the biggest driving forces pushing cities to build and operate their own GONs in Iowa. Dean started his career with Spencer Municipal Utilities back around the genesis of the modern internet in the late 1990s. Dean has since embedded himself in Iowa’s telecommunications utilities industry, also co-founding Community Broadband Action Network and serving as broadband coordinator for the Iowa Association of Municipal Utilities. Dean frequently leverages these organizations’ contacts with cities throughout Iowa to tout his perception of the advantages of GONs. As he travels around Iowa consulting with communities, Dean makes promises of better internet service through GONs than the incumbent providers. SmartSource is frequently retained by cities to conduct “pre-feasibility studies” to help the cities determine whether a GON can and should be built. Dean promotes his pre-feasibility studies as a way for cities to gauge citizen support for GONs. In reality, the SmartSource pre-feasibility studies are little more than GON marketing materials and are fairly illustrative of the broadband consultant playbook as a whole generally begins with a description of the incumbent provider “landscape,” in which the consultant denigrates the incumbent providers’ technology and business models, often making unsubstantiated comments along the lines of incumbents being unwilling to invest in the community to provide “excellent internet service. ” Dean then creates a rather subjective community survey as the foundation for his findings. First, the surveys are generally small in sample size, much less than 10 percent of the available households. Second, the survey respondents are self-selected, meaning the respondents generally only respond if they have an interest in a different internet service alternative, resulting in a heavy response bias (a common tactic by other consultants, as well). Third, Dean utilizes a questionable “Net Promoter Score” (NPS) system for respondents to rate their existing internet service. The NPS leans heavily toward customer dissatisfaction, in that only those providers scoring 9 or 10 on a 1-10 scale are viewed favorably, scores of 7-8 are deemed neutral, and any score of 6 or less is deemed indicative of an “unhappy” customer likely to leave for a new and better provider. Dean’s pre-feasibility survey then follows up with a question about whether the responder would be willing to switch to a new provider who provides “superior service at a competitive price.” By defining “superior service” to include speeds and reliability, Dean’s survey is subject to significant bias in that it does not control or account for internet speeds based upon the level of speed package that the respondents purchase. The survey also does not account for the respondents’ own equipment selections or use. The survey also uses anecdotal estimations of the frequency of the respondents’ service “slowdowns.”

BLOGS

Monday: Cost Overruns Plague Taxpayer-Funded Broadband in Fort Dodge

Tuesday: How Europe Is Breaking the Internet

Wednesday: Taxpayer Watchdog Releases “Government Broadband Consultants – The Big Grift” Report

Thursday: Taxpayers Are Left on the Hook for the IRS’ Serious Prioritization Problem

MEDIA

July 12, 2024: The Washington Examiner (Washington, D.C.) ran TPA’s op-ed, “How foreign direct investment benefits American workers.”

July 12, 2024: Florida Daily (Fleming Island, FL) ran TPA’s op-ed, “Mail Carriers Have a Bone to Pick with the Postal Service.”

July 12, 2024: Don’t Mess With Taxes quoted TPA in their article, “Senate bill seeks expansion of Congressional whistleblower protections.”

July 13, 2024: WBFF Fox45 (Baltimore, MD) quoted me in their story on Baltimore’s Safe Streets program.

July 15, 2024: Inside Sources ran TPA’s op-ed, “The Postal Service’s War on Privacy."

July 15, 2024: WBFF Fox45 (Baltimore, MD) interviewed me for their story on the taxpayer and consumer items on Trump’s agenda.

July 15, 2024: WBFF Fox45 (Baltimore, MD) quoted me in their story on Baltimore’s Safe Streets program.

July 15, 2024: The Erick Erickson Show mentioned Patrick as a speaker for the August 9th date of their 2024 Gathering show.

July 16, 2024: WBFF Fox45 (Baltimore, MD) quoted me in their story on Baltimore’s Safe Streets program.

July 17, 2024: I appeared on WBOB 600 AM (Jacksonville, Fla.) to talk about the Republican National Convention.

July 17, 2024: Issues & Insights ran TPA’s op-ed, “New Chevron Decision Will Increase Postal Competition."

July 17, 2024: The Erick Erickson Show mentioned Patrick as a speaker for the August 9th date of their 2024 Gathering show.

July 18, 2024: WBOB (Jacksonville, FL) interviewed me to discuss the Republican platform.

July 18, 2024: WBFF Fox45 (Baltimore, MD) interviewed me for their story on Governor Moore’s spending cuts.

July 19, 2024: Delaware Valley Journal ran TPA’s op-ed, “KAMPIS: PA May Be Breaking the Law With Broadband Plan.”

July 19, 2024: The Baltimore Sun (Baltimore, Md.) quoted me in their article, “Baltimore County Council mostly silent on settlement paid to brother of county executive’s friend.”

July 19, 2024: The Carolina Journal Online (Raleigh, N.C.) quoted Patrick in their article, “Digital outage raises a red flag on technology policy.”

July 19, 2024: National Review ran TPA’s op-ed, “A Case of Misplaced Priorities at the IRS."

July 20, 2024: Real Clear Markets ran TPA’s op-ed, “FDA’s Tobacco and Vape Regulation is Still a Failure."

July 20, 2024: WBT 99.3 FM (Charlotte, N.C.) mentioned Patrick as a speaker for the August 9th 2024 Gathering conference.

July 21, 2024: WSBA 93.9 FM (Harrisburg, Pa.) interviewed me for their story on the 2024 GOP platform.

July 21, 2024: KNBS 101.9 FM (St. Louis, Mo.) interviewed me for their story on the 2024 GOP platform.

July 21, 2024: KVOI 1030 AM (Tucson, Ariz.) interviewed me for their story on the 2024 GOP platform.

July 21, 2024: KSSZ 93.9 FM (Columbia, Mo.) interviewed me for their story on the 2024 GOP platform.

July 21, 2024: KFXZ 105.9 (Lafayette, LA) interviewed me for their story on the 2024 GOP platform.

July 21, 2024: States News Service quoted me in their article, “BLUMENTHAL INTRODUCES LEGISLATION TO PROTECT FEDERAL WHISTLEBLOWERS FROM RETALIATION.”

July 21, 2024: KCMO 710 AM (Kansas City, Mo.) interviewed me for their story on the 2024 GOP platform.

July 22, 2024: Townhall ran TPA’s op-ed, “How Europe is Breaking the Internet."

July 22, 2024: The Jacksonville Journal-Courier (Jacksonville, Il.) ran TPA’s op-ed, “The postal service’s war on privacy — David Williams.”

July 22, 2024: WBFF Fox45 (Baltimore, Md.) interviewed me for their story on Biden’s presidency and political career, and his impact on taxpayers and consumers.

July 23, 2024: Xbiz quoted TPA in their article, “Conservative Taxpayers Group Criticizes KOSA's Overreach.”

July 23, 2024: The Jacksonville Journal-Courier (Jacksonville, Il.) ran TPA’s op-ed, “A postal service war on privacy.”

July 23, 2024: The Baltimore Sun (Baltimore, MD) quoted me in their article, “Council stays mum on payout, Balto. Co. members show concern about Olszewski's ties to Tirabassi.”

July 23, 2024: The Jacksonville Journal-Courier (Jacksonville, Il.) ran TPA’s op-ed, “IRS shouldn't be trusted with filing”

July 23, 2024: The Jacksonville Journal-Courier (Jacksonville, Il.) ran TPA’s op-ed, “Misguided neutrality rears ugly head.”

July 23, 2024: The Jacksonville Journal-Courier (Jacksonville, Il.) ran TPA’s op-ed, “Postal service asking for another bailout”

July 24, 2024: Reason quoted Patrick in the article, “Senate To Vote on Web Censorship Bill Disguised as Kids Safety.”

July 24, 2024: Yahoo.com quoted Patrick in the article, “Senate To Vote on Web Censorship Bill Disguised as Kids Safety.”

July 24, 2024: Freedom Bunker quoted Patrick in the article, “Senate To Vote on Web Censorship Bill Disguised as Kids Safety.”

July 24, 2024: Before It’s News quoted Patrick in the article, “Senate To Vote on Web Censorship Bill Disguised as Kids Safety.”

July 24, 2024: Inkl (Australia) quoted Patrick in the article, “Senate To Vote on Web Censorship Bill Disguised as Kids Safety.”

July 24, 2024: Latest quoted Patrick in the article, “Senate To Vote on Web Censorship Bill Disguised as Kids Safety.”

July 24, 2024: The Federal Newswire ran TPA’s op-ed, “FDA Should Learn from Alzheimer’s Drug Approval.”

July 24, 2024: Inside Sources ran TPA’s op-ed, “Localities Using Phony Trademark Claims to Grab Cash."

July 25, 2024: WBOB (Jacksonville, Fla.) interviewed me for their story on the fiscal policies of Harris and Trump.

July 25, 2024: WBFF Fox45 (Baltimore, Md.) interviewed me about Maryland Senate President Bill Ferguson’s new job with a renewable energy company. 

Have a great weekend!