Lessons from Lawrenceburg Municipal Utilities: A Legal Analysis of the Lawrenceburg FTTH Network Failure

Lawrenceburg, Indiana, with a population of roughly 5,200, invested approximately $10 million to build a citywide fiber-to-the-home (FTTH) broadband network through Lawrenceburg Municipal Utilities (LMU). The project was intended to provide high-speed municipally owned internet service across the city, positioning Lawrenceburg as an early adopter of full-fiber residential broadband. Over time, however, the network failed to attract enough customers to generate sufficient revenue, leading to mounting financial strain, accounting problems, and eventually a below-cost sale to a private provider.

Background

Launched as a full FTTH system, the Lawrenceburg Municipal Utilities project represented one of Indiana’s first small-city fiber deployments. Despite significant capital investment, the network did not achieve a subscriber base large enough to offset operating and debt-service costs. Financial problems persisted for several years, and in 2020, the Indiana State Board of Accounts issued an audit finding that LMU had failed to account for losses associated with the fiber initiative, including misstated or unreported expenditures tied to the broadband project.

The audit revealed that the fiber network contributed to significant financial discrepancies within the utility, prompting increased scrutiny from both state auditors and local officials. These findings reinforced the city’s growing concern that the municipal broadband model was fiscally unsustainable for a system of Lawrenceburg’s size.

Failure and Transfer to Private Sector

Unable to resolve the ongoing financial issues or scale the network to profitability, Lawrenceburg eventually sought a private sector exit. In December 2022, the city announced it would sell its FTTH system to Altafiber (formerly Cincinnati Bell) for $3 million, transferring both ownership and operational responsibility to the private ISP.

The sale represented a substantial loss relative to the city’s original $10 million investment, underscoring the severity of the project’s financial underperformance. Altafiber noted that it would assume management and future expansion to the city’s fiber network, integrating it into the company’s regional infrastructure plans.

Takeaways

The Lawrenceburg network case illustrates several key challenges for municipal broadband:

1. Financial Instability – The project led to an accumulation of unrecoverable losses. The Indiana SBOA audit showed that broadband expenditures were not properly accounted for, revealing systemic fiscal management and highlighting the risk that small municipalities face when operating capital-intensive utilities without sufficient financial controls.
2. Insufficient Subscriber Base – Despite the high cost of deploying a citywide FTTH system, LMU failed to attract enough customers to cover operational expenses. As Local12 reported, the project was losing significant amounts of money even before the city explored a sale.
3. Below-Cost Divestiture – The ultimate sale of the system for $3 million, compared to the $10 million invested, demonstrates how much municipal broadband projects can expose taxpayers to long-term financial losses when adoption and revenue targets are not met.

Arianna is a 3L at New York Law School.