HispanicBusiness

A new controversy regarding the future of a nonprofit cooperative that provides high-speed Internet services to most public schools and libraries in Wisconsin stems from an old debate about the public and private sectors competing with each other.

While a recent state audit showed WiscNet offers Internet services to its public clients at a much lower cost than what is available from the private sector, critics contend that's only true because the tax-exempt cooperative benefits from public subsidies that give it a competitive edge.

State lawmakers passed a law in 2011 that restricts how the UW System provides Internet services -- and thus its involvement with WiscNet. Barring changes before the law takes effect July 1, WiscNet supporters maintain the unfortunate result will be higher costs for taxpayers.

"The big question is this: Should the public support the creation of low-cost Internet service to public entities or should all Internet services be private, even if it quadruples the costs?" said state Sen. Kathleen Vinehout, D-Alma. "I would argue the public wants the most efficient system and the lowest costs possible."

But regional Republican lawmakers Sen. Sheila Harsdorf of River Falls and Rep. Kathy Bernier of Lake Hallie say it's not that simple, and they expressed concern about an entity aided by public grants and a cozy relationship with the UW System having an unfair advantage over private companies.

Still, the GOP legislators acknowledged WiscNet provides an extremely popular service for schools, libraries, universities, technical colleges, local governments and nonprofit health care providers in their districts. The problem, Bernier said, is nobody knows how prices charged by WiscNet and private Internet providers would compare if allowed to compete on a level playing field.

Cost Questions

The telecommunications industry, which has lobbied heavily against what it calls the inappropriate relationship between the UW System and WiscNet, insists a changeover to private providers would not lead to sticker shock for public entities that subscribe to WiscNet.

"For the last year, my members have been working very hard at product offerings that will meet or beat WiscNet prices," said Bill Esbeck, executive director of the Wisconsin State Telecommunications Association, who claimed legislative changes made private companies feel confident they could compete fairly with the nonprofit.

Ross Wilson, chairman of WiscNet and education technology director for Chippewa Falls-based Cooperative Educational Service Agency 10, doesn't buy it and called it naive to compare the private sector offerings with WiscNet's end-to-end network services necessary for the next generation of applications.

"Make no mistake. We're saving the taxpayers big bucks," Wilson said, explaining that the lower rates are made possible by the "gigantic buying power" of a nonprofit system with 495 members.

The report released last month by the Legislative Audit Bureau indicated WiscNet members paid an average of about $500 a month for Internet services that would have cost nearly $1,200 if delivered by commercial providers, although Esbeck said "shoddy accounting practices" by the UW System make it impossible to know how much of that difference was the result of subsidies.

Slippery Slope