Opinion: How the Sunk Cost Fallacy permeates Vermont politics

This commentary is by Joe Gervais, of Arlington. He was a 2022 candidate for state representative.

The Sunk Cost Fallacy is the notion that once an entity invests in something, it becomes harder to walk away from it. When I worked in Tech as a business line manager I was trained to fail early and fail often. The earlier you could determine a program wasn’t meeting its objectives and kill it, the better off you were, and the sooner you could move on to the next opportunity with more time and money available. Unfortunately, our state government doesn’t operate that way, consistently failing to be good stewards of their constituent’s resources.

In 2021, the Vermont State Legislature passed Act 71 and over the past two years allocated $245 million dollars to the buildout of rural broadband using wired systems. Around the world, many developing nations deployed telephone systems that entirely bypassed the landline telephone systems used widely in the US. This was due to infrastructure costs to deploy to rural villages being much more expensive than wireless cellular systems. At the time of ACT 71, there was discussion of wireless satellite alternatives to meet the rural broadband need, but Starlink, the primary offering in 2021 was thought to be too new. A year later, when Ukraine found their internet destroyed by war, Starlink immediately provided replacement service. Vermonters that have deployed Starlink on their own have robust broadband service today.

The Vermont State Auditor recently published a report on the risks associated with ACT 71, and suggests it could eventually cost between $600 and $800 million to complete this broadband rollout. Furthermore, the deployment is still years away for many homes. Rob Roper recently wrote that a Starlink solution could be provided to 50,000 rural homes for just over $100 million including a five year full subsidy on monthly service. Why not scrap the existing plan, save millions, and be done this year? The Vermont Legislature will never do this because we are too far down the road with the current plan (that pesky sunk cost fallacy), even though staying the course means years of additional delays and an ultimate system that is vulnerable to failure from winter storms and falling trees.

The Vermont Legislature continues to throw good money after bad. Which is more wasteful: the $245 million in sunk costs, or another $250 to $450 million of further spending to complete the project over the cost of a more economical and resilient alternative? I’d contend it is the latter, but rather than changing direction now, my representative is telling her constituents we’re making progress on providing rural broadband, and we’re getting free federal money to do it. Unfortunately, she fails to realize or chooses to ignore that every “free” federal dollar costs us in the hidden tax of inflation.

Image courtesy of Wikimedia Commons/JP Valery

5 thoughts on “Opinion: How the Sunk Cost Fallacy permeates Vermont politics

  1. Insane, but nothing new with Progressive oversight. Starlink works pretty well I understand….but the real answer is wireless internet. A key there is the fast 5G capability, which is at hand and already in many States. With 5G you get it off existing cellphone towers (easy to add more if rural areas need) and you can get internet & phone from same provider. It is INSANE to spend appox $700 million to lay OLD TECHNOLOGY of “dedicated” lines ..even if fiber. Look what happed to COPPER wires! Fiber, in a decade will be the same – outdated technology, but works. Look no further than the entities that benefit the most $$$$ from laying $700 million of cable (along with $$$ subsidies)…and who has the lobbyists and groups pounding the legislative tables for fiber.

    • Agreed, however, there are still swaths of the state with no cellular service. Starlink is working to address that as well with a partnership with Verizon. We both agree that solving this with a wired solution just enriches the lobbyists and those behind them when there are multiple cost effective alternatives readily available.

        • I have Starlink. It is pretty much all the good things that are said about it. Extremely fast compared to all the other satellite companies and rural options (100+ Mbps v. 25 Mbps), very stable even in the midst of one of torrential rain or whiteout snow. ( it even has a built in heater to keep the dish clear).
          As far as providing cell phone coverage, It is currently limited by the range of the router. You can have VOIP but it would only be available within that range.

    • 5G does not work well in varied terrain or around obstacles like mountains or buildings. It is used in urban areas because the repeaters can be hung off the existing infrastructure. In rural areas you still have to build out the infrastructure. Hilly terrain,even more. This is why it is is not in place here already.

      Starlink makes much more sense, even when you use it to rebroadcast connections over local terrain.

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