Longmont's Saga - The Failure of Referendum

As we have noted previously, Longmont, Colorado, has seen a number of private companies attempt to offer Wi-Fi broadband and then go out of business. As Colorado preempts local authority by requiring a referendum by the city before it can offer services itself, Longmont recently had a vote to authorize telecommunications services. Voters defeated the option. As is common in these referendums, voters were blanketed with reasons to vote against it as incumbents (Qwest and Comcast) spent $200,000 opposing competition whereas the city is prevented by law from advocating for a ballot measure. Now the Wi-Fi network will be auctioned off in pieces because it cannot pay taxes.
Ohio-based DHB Networks owes the Boulder County treasurer’s office $87,000 in unpaid business personal property tax, and the county demanded the company cease operations unless it pays those taxes. DHB also owes the city of Longmont. Longmont-based RidgeviewTel is running the network, at least until the Wi-Fi equipment is auctioned off Thursday — at which point, 400 to 600 customers will be without Internet access, RidgeviewTel CEO Vince Jordan said.
Though the city already has fiber assets that could be used for backhaul as well as other expertise it could use in continuing to run the network, it cannot step in to run a network that would be useful to the community:
While the city can step in and operate the system, it would be only for municipal needs — such as police, fire and utility services — and not to provide Wi-Fi to customers. “Our hands were always tied,” Roiniotis said. “We could buy the system and operate it, but only for our own purposes. We can’t provide the retail part of it.” The city’s hands also were tied when it came to campaigning. State law bans governments from spending public money to campaign for or against local ballot questions.
Though 400-600 people may not seem like a lot of people to leave stranded, many of those on the network were the ones that needed a low cost alternative. This is one of the reason some hoped for a last minute resolution to the impending auction.
The city doesn’t plan to bid on the Wi-Fi equipment because owning the equipment doesn’t make sense if the city can’t operate an wireless service — or even partner with a private company to provide it, director of Longmont Power & Communications Tom Roiniotis said after the council meeting Tuesday night. Several residents told the council Tuesday night that they rely on wireless Internet service as a less-expensive alternative to Qwest’s DSL or Comcast’s cable broadband.
Some may believe a required referendum to offer retail telecommunications services is a good idea or at least a relatively harmless barrier as local officials should be able to demonstrate public support for such a significant investment (and Colorado's majority-support referendum is certainly less onerous than Minnesota's 65% super majority requirement). While it is true that local officials should be able to demonstrate strong community support, the reality is also that a referendum allows absentee opponents a great opportunity to dump a lot of money into the community to confuse and obfuscate the issue while supporters are outspent (often on the order of between 10:1 to 25:1) and City Hall is prevented by law from supporting the referendum. For this reason, we oppose such referendum requirement -- remember that these decisions remain accountable to the public via the democratic process. Additionally, many communities already place requirements for referendum on communities when they are financing the network, providing an additional check once they have developed a plan. UPDATE: As for Longmont, the wireless network has found a new private buyer that will be investing in WiMAX apparently.