More than half of municipal broadband projects are unprofitable, University of Pennsylvania study says

Comcast Center
Comcast has deep ties to the University of Pennsylvania Law School, which just released a study declaring municipal broadband services largely unprofitable.

Eleven out of 20 municipal broadband networks closely observed in a University of Pennsylvania Law School study are cash-flow negative. 

The report, generated by U of Penn law professor Christopher Yoo and co-authored by student Timothy Pfenninger, found that of the nine municipal broadband projects that are making any money, the cash flow is so small that it would take more than a century to recover project costs.

In fact, only two of the 20 projects studied generated enough money to cover project cost over a 61-to-65-year period. 

In throwing cold water on the trend of local governments competing with cable operators and other telecom companies to deliver broadband services to consumers and business, the Penn Law School study quoted former Pennsylvania Governor Ed Rendell.

“We have so much work to do on infrastructure in this country—with limited funds available for overwhelming needs,” Rendell said in a statement. “This new report is an incredibly valuable tool for decision makers deciding what projects to fund where they can get the most return on their infrastructure investment. It offers the best of practical, useful scholarship – a ‘must read’ for anyone community considering building broadband networks of their own.”

It’s worth mentioning that from 2003-2011, Rendell presided over a state whose largest company and employer is Comcast, which controls the most U.S. residential broadband customer relationships and perhaps has the most to lose in terms of competing with municipally-backed services. 

As about Comcast's deep ties to both the state and the University of Pennsylvania, Steven Barnes, Dean of Communications for U of Penn Law School told FierceCable, "Comcast was not involved with this study, nor was any other company."

Reps for Comcast, meanwhile, didn't immediately respond to inquires for comment. 

It's worth nothing that Comcast’s top regulatory executive, David L. Cohen, received his J.D. from U of Penn Law in 1977 and currently serves as chairman of the Trustees for the school’s executive committee. Cohen also serves a member of the trustee board and executive committee of Penn Medicine. 

For his part, Comcast CEO Brian Roberts is a U of Penn Wharton School graduate.

Updated: This story was updated to include comments from the University of Pennsylvania Law School.