Thursday, May 25, 2017

New Paper Shows Economic Consequences of Municipal Fiber Projects

Christopher Yoo, a member of FSF’s Board of Academic Advisers, and Timothy Pfenninger, both professors at University of Pennsylvania Law School, coauthored a recent paper entitled “Municipal Fiber in the United States: An Empirical Assessment of Financial Performance.” The paper analyzes the financial viability of twenty municipal fiber networks, finding that eleven of them are cash-flow negative. 

It also finds that five of the nine cash-flow positive projects are generating such small returns that it would take over 100 years to recover the projects’ costs. Additionally, two of the nine cash-flow positive projects have a recovery period of 61-65 years, which is beyond the expected useful life of a fiber network. Professor Yoo and Professor Pfenninger’s paper is an important piece of economic literature for understanding the negative consequences that often occur from implementing unnecessary municipal broadband projects.