MYTH: If an utility is approved by voters, city officials will build a municipal system even if it doesn't make sense.

FACT: City officials will build a system only if it makes sense for the community.

One of the scare tactics employed by the mega-communications providers is to claim that city officials are willing to risk public money on unproven ventures. They will charge forward and build a municipal communications utility even if it doesn’t make sense. Experience tells us that these scare tactics are simply NOT true.

Since 1994, a total of 54 cities in Iowa (not counting those voting this November) have held referendums on the creation of a municipal communications utility. Of those 54 towns, the referenda were approved in all but 3 (Greenfield in 1997, Lake Park in 2003, and Vinton in 1997).

Of the 51 cities that approved a municipal communications utility at the polls, only 25 (or less than half) actually moved forward with the construction of a system. Why didn’t these communities moved forward? Here are some of their stories:

In Milford, voters gave a municipal communications system an overwhelming yes vote of 94% in 1999. Yet six years later, there is no municipal system in Milford. Milford Municipal Utilities operates the city’s electric and water systems, but did not move forward with communications. Bob Sewell, manager of Milford Municipal Utilities, says the primary reason they did not build a system was because the privately-owned system in their community made significant improvements after the vote. “In the end, the system was improved to the point where the citizen’s demand for better services was met by the private provider.” Sewell says those demands included affordable broadband Internet and enhanced cable TV services.

Storm Lake voters approved a municipal communications referendum in 1998 with a yes vote of 67%. While no municipal system was constructed, the vote did show the demand for better services in the northwest Iowa community of 10,000. That demand was enough to entice a private provider to overbuild the existing communications provider in that town. PrairieWave Communications, which now owns and operates that private provider, competes directly with Mediacom and Qwest for customers, and has had great success.

In 2000, approximately 86% of the electorate in Waverly said YES to a municipal communications utility. However, after careful consideration, Waverly Light and Power (WP&L), the community’s municipal utility for electricity and water, decided not to build a system. GM Glenn Cannon says it was a simple matter of economics. The system they wanted to build would not have been economically feasible for their community. Despite that, Cannon says the city has still benefited from the referendum because it caused the private cable company to do the upgrades necessary to provide the advanced services that people wanted. Short of a new telecom utility, WP&L extended its own utility fiber network to key businesses and industries to provide a level of service that was not otherwise available – service they needed to stay and grow in Waverly.

Carroll, Iowa is a vibrant community of about 12,000 in west central Iowa. Despite 83% voter approval of a referendum in 1998, the city has never built a municipal communications utility. City officials closely examined the costs of a municipal system, and decided not to move forward. Instead, they negotiated a new franchise agreement with the existing cable provider that addressed many of their concerns. And the existence of a municipal utility, on paper if not actually built, helps maintain pressure on that private provider to do a good job.

As you can see, the reasons for NOT choosing to move forward with a municipal communications utility vary from town to town. One thing each of these communities have in common with each other and with towns that did build a system is the fact that they each started with a referendum. Approval of the referendum started a community conversation in those towns about whether or not such a system was feasible or needed. Some chose to move forward, others did not.

While the IAMU takes no stand on how any community should vote on November 8th, we do believe that the referendum is just part of a process. When casting ballots, voters in those towns should separate fact from fiction.