As if we needed another reminder that the free market is no place for big government, along comes another government loan failure—Open Range. This Greenville, Colorado company received $267 million in federal loan guarantees from the Department of Agriculture in an effort to bring broadband service to unserved or underserved rural areas. Along the same vein as Solyndra, Open Range was purported to provide cutting-edge technology, but worked under an extremely questionable business model. In early October, Open Range declared bankruptcy, leaving taxpayers to foot a $74 million bill for unpaid loans.
The government picking winners and losers in the broadband market through federal loan guarantees is nothing new. The USDA’s Rural Utilities Service program (RUS) has long been extremely duplicative and inefficient. In a recent study, researchers at Navigant Economics found that 85% of homes serviced through the RUS already had access to three or more broadband services. In one region of Montana, expanding broadband to unserved households through the RUS cost $7 million…per house.
It should be evident to the government that gambling with taxpayer dollars on risky endeavors is not a fruitful venture. Allowing the free market to sort out winners and losers is not only more cost-efficient, but it provides better results. After the fiascoes of Open Range and Solyndra, it would be prudent of the government to step back from growing industries and allow them to develop organically.