From Launch to Letdown: The Collapse of Houston’s City-Owned Network

In 2019, the City of Houston, Missouri took on the challenge of developing a municipal broadband service, launching Houston Fiber, a fiber-to-the-home (FTTH) network, the first municipally-owned fiber optic ISP network in Texas County, Missouri. This initiative followed a citywide survey showing strong theoretical demand for faster, more reliable internet service. Construction of the 18-mile fiber network began in 2020 and wrapped up in early 2021, with the city investing approximately $3 million of its own funds to cover 95% of the community with gigabit-speed connectivity, encompassing 1,200 premises. The network was framed not only as an infrastructure upgrade for the city but also as an economic development tool, aimed at attracting remote workers and small businesses seeking modern digital services in a rural environment.

Even though Houston had several advantages, including owning its municipal electric utility and the utility poles, which are critical to support network deployment, the project soon encountered operational challenges. Launched during the pandemic, Houston Fiber faced supply chain disruptions and material shortages that affected the network’s construction. Although it successfully attracted 272 subscribers, Houston Fiber struggled to maintain momentum. A major setback occurred during the planned Phase IV expansion into the Remington Circle and Cleveland Drive area. Rocky terrain and construction obstacles drove the estimated cost of this final segment to over $300,000-—a steep price for a city operating on a tight budget and relying solely on local funding. Without the funds to complete the buildout, growth stalled, and the city never reached the subscription volume needed to break even.

The internal strain also was compounded by external factors. The fiber department operated with limited staff and relied heavily on outside contractors for installs and maintenance, a structure that proved unsustainable. City leaders began to question whether running a telecom utility was feasible without scaling up investment or seeking outside help. But the issue wasn’t just staffing or subscriber numbers – it was also market competition. Houston Fiber was competing head-to-head with incumbent ISPs like Sparklight and Brightspeed, as well as fixed wireless providers such as Whisper, Sho-Me Technologies, and Wave Internet. These companies had deeper pockets, more experience, and were able to adapt quickly to evolving customer expectations.

By early 2025, Houston decided it was time to exit the broadband business. In March, the city council approved the sale of Houston Fiber’s infrastructure and operations to Steelville Telephone Exchange Inc. (STE) for $2.15 million. Under the terms of the agreement, STE committed to upgrading all current customers to gigabit-speed service within six months and completing the remaining construction work. The city will continue paying STE a flat monthly fee of $500 for internet access at municipal buildings through 2035. Meanwhile, the fiber department will be dissolved, and the proceeds from the sale are being held in a high-yield account until the new city council decides how to allocate the funds. STE looks to complete the buildout of the fiber network in Houston and will eventually move all fiber cables underground, removing them from the current utility poles.

Houston Fiber’s experience offers essential lessons for cities exploring municipal broadband. First, sustainability requires scale. At its peak, Houston Fiber served just 272 subscribers, far below the numbers needed to justify its $3 million infrastructure investment and support ongoing maintenance and expansion. While community interest appeared to be strong, the city’s limited staffing and financial capacity created structural disadvantages that small municipalities often face when attempting to operate telecom infrastructure independently. In addition, competitive pressure is real, even in areas considered underserved. Houston Fiber was up against incumbents like Sparklight and Brightspeed, as well as regional wireless providers such as Sho-Me Technologies, Whisper, and Wave Internet—all of which had more experience, broader networks, and the resources to compete aggressively on both price and performance. For a public system with limited reach and slow growth, holding market share in that environment proved difficult.

Finally, cities must set clear metrics for success before addressing broadband challenges. Whether the goal is universal access, economic development, or revenue generation, Houston’s case shows that a lack of defined benchmarks makes it difficult to evaluate outcomes and identify potentially more efficient solutions, like partnering with an established ISP to address evident challenges.