Why North Kansas City pays its residents’ internet bills, and your city doesn’t pay yours

JJ Gouin via Getty Images

 

Connecting state and local government leaders

North Kansas City built a fiber network almost two decades ago that it now uses to provide its residents with gigabit internet. Here’s how it happened and why other cities in the country are, or aren’t, trying to do the same.

This story was originally published by The Beacon, an online news outlet focused on local, in-depth journalism in the public interest. 

Free internet?

It sounds like a nice dream. We’d all love to ditch the $80 a month we pay for the ability to stream movies, do doctor’s appointments from home or check in on our cousin’s latest Facebook post.

But in North Kansas City, residents get a steady online connection with no monthly bill.

Anyone there who signs up for KC Fiber can get internet service with no monthly bill. And not just a janky dial-up connection — it’s high-speed gigabit internet, at speeds comparable to Google Fiber, AT&T or Spectrum.

It took $10 million from the city’s hefty gambling tax revenue and eight years of troubleshooting, while dodging a legal challenge from a telecom provider and dodging a state legislature restricting city-run broadband.

North Kansas City is one of few cities in the country that give away high-speed fiber internet service to residents as a basic city service.

The City Council “saw it as a city utility, very similar to water and wastewater,” said Kim Nakahodo, North Kansas City’s deputy city administrator. 

She said the council members hoped free internet would seduce businesses and residents to North Kansas City. 

It’s a part of a growing movement nationally to treat broadband as public necessity — like mail service, roads and sewers — rather than a luxury. Cities like North Kansas City spend tax dollars to build broadband networks, rather than relying on the free market to provide an essential service.

But municipal broadband programs like North Kansas City’s KC Fiber are tricky. For eight years, the city spent more money on its fiber network than it planned for — about $1 million between 2009 and 2010 — and it took years for North Kansas City to get its program out of the red.

And now that fiber-optic internet is available in most parts of the Kansas City area, it’s becoming less likely that cities or suburbs will compete with private businesses already selling high-speed service.

The Bumpy Road to Free Internet

North Kansas City kicked off its $10 million fiber network plan in 2006, hoping to install high-speed internet hookups to all 2,500 residences and 900 businesses by the end of that year. 

It was an ambitious plan. It didn’t go so smoothly.

The first hiccup came in the courts. Time Warner Cable, now known as Spectrum, sued North Kansas City, arguing that it could not go through with its plans without a citywide vote under Missouri law. A federal judge ruled in North Kansas City’s favor, and the city charged ahead with its plan.

Then came financial problems.

North Kansas City was spending a lot of money to run its fiber program, and the money it charged customers (before it made service free for residents) wasn’t covering the cost of running it. A state audit found that operating losses ate up $1 million of the city’s gambling fund in 2009 and 2010.

So in 2014, the City Council changed course and signed a deal with a local business called DataShack (now called Nocix).

The city would continue to own the fiber network, but DataShack would run the operation under the name KC Fiber. They split revenue and expenses 50/50, and the city could not be responsible for more than $150,000 per year.

As part of that deal, DataShack said it would provide free gigabit internet service to all residents who signed up and paid a $300 installation fee. Businesses still pay a monthly bill, which generates some revenue for the city.

Now, North Kansas City residents like Jill Toyoshiba get online without that pesky monthly bill.

She enrolled in the program before the transition to DataShack, and she hasn’t looked back.

“It’s a real asset,” she said. “If you call up, there’s somebody to pick up the phone and answer … A municipal service that is attentive to residents is really appealing.”

But at the same time, not all residents have been able to get free internet.

Some apartment complexes in North Kansas City have effectively prohibited their tenants from signing up for KC Fiber because they have exclusive deals with providers like AT&T or Spectrum. 

It can also be expensive to wire a large apartment building for a new internet provider. When landlords don’t have to pay the internet bill — or in some cases, when they get a cut of their tenants’ bills in exchange for exclusivity — they don’t have much incentive to install KC Fiber.

“It’s easier to do those things when you’re building from the ground up,” Nakahodo said.

North Kansas City is instead trying to get developers of new apartments to agree to install KC Fiber if they’re receiving tax incentives like property tax breaks.

Why Cities Are Pursuing Their Own Broadband Networks

North Kansas City is one of 57 city-owned broadband networks across the country.

They have a variety of models. Some of them, like KC Fiber, own the network and contract with a private business to operate it. Others own and operate the utility themselves, similar to how KC Water provides services in Kansas City, Missouri. 

But they share a common philosophy: that internet service is no longer an amenity. Much like how tax dollars build roads and bridges, these local governments build broadband to keep their residents connected to telehealth, emergency notifications and city services.

Aaron Deacon, the managing director of KC Digital Drive, said that initiatives like municipal broadband are especially beneficial in filling a market gap where private businesses don’t smell profits in providing internet. KC Digital Drive pushes for broadband equity and digital innovation in Kansas City.

In filling a market gap, they can play a role in closing the digital divide between households with reliable internet and those without. 

But it’s not always the right tool in the toolbox.

Municipal broadband is cost-effective in small, dense communities like North Kansas City, with a population just shy of 5,000 people and a land area of less than five square miles. Houses are closer together, so it’s cheaper to install a fiber connection for every resident.

But the places that desperately need broadband tend to be rural and sparsely populated. That’s where broadband is the most expensive to install and the least profitable for internet companies.

“You can find people who … find three examples and be like, ‘It’s done so much for these communities, and it’s amazing,’” Deacon said. “And you can have a paper that says, ‘Look at these three examples where it’s been a complete boondoggle.’” 

Broadly speaking, Deacon said, municipal broadband is most effective in places without other internet providers. Recent examples include Utah’s Utopia network serving 20 cities in the Salt Lake area, or Burlington Telecom in Vermont.

The cities that are best equipped to start a city-owned broadband network already have public utility boards overseeing electricity. That puts Wyandotte County and Independence at the top of the list in the Kansas City area.

But from a business standpoint, Deacon said decision-makers should look at the causes of digital inequities — whether they’re cost issues, service issues or something else — before jumping to the conclusion that municipal broadband would actually fix those problems. 

“If you’ve got another network provider that is providing quality service,” Deacon said, “I don’t know that it makes any sense for a city to get into that business.”

State Laws Restrict Municipal Broadband in 18 States, Including Missouri

Meanwhile, state governments have made it more difficult for cities to get into the internet business.

In Missouri, cities are allowed to offer internet service, but they’re prohibited from including cable TV packages or telephone service. That’s the law that Time Warner used when it unsuccessfully tried to sue North Kansas City over its city-run fiber in 2006.

Another law proposed in 2022 would have prohibited cities from taking federal funding to provide broadband unless it’s an “underserved” area — and it would have given other internet companies the opportunity to challenge any proposal first.

Kansas does not keep cities from running their own broadband, but other states are more restrictive. Nebraska bans city-run internet completely. Nevada only allows it in its least populated cities or counties.

The United States Telecom Association opposes municipal broadband because it says cities don’t have the technical expertise to effectively run their own internet services. 

“While government-provided broadband might appear ‘free’ to residents,” spokesperson Mariah Wollweber told The Beacon in an email, “the reality is that taxpayers ultimately foot the bill.”

A representative from AT&T said the company encourages local governments to work with private companies with a “proven track record” of efficient and effective internet services.

For what it’s worth, Toyoshiba is happy with the free internet she receives from KC Fiber.

She hasn’t had to pay for her internet since 2015, and she can’t remember the last time she had any outages lasting longer than a few minutes.

“I’ve mentioned it before (to friends), and it’s almost like bragging in a way,” she said. “It’s something I don’t have to think about.”

Correction (Aug. 1, 2024): This story originally misstated how North Kansas City provides internet service to residents without charging them. The ongoing cost is not supported by taxes. Rather, in return for the ability to sell internet service to businesses and some residents who pay for faster speeds, KC Fiber provides free gigabit service to any resident who pays the $300 setup fee.

X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.