|For printer friendly version of Report Highlights|
|To view full report 12-18|
UW Systemís Role in WiscNet
and Grant-Funded Networks
WiscNet is a private, membership-based nonprofit association of public
and private organizations that provides internet service and other services
to its members for research and educational purposes. As of
Some have questioned whether UW Systemís involvement in WiscNet
and the grant-funded networks resulted in financial subsidies or other
benefits that provided WiscNet with a competitive advantage over
commercial providers. 2011 Wisconsin Act 32, the
WiscNet is funded primarily by
fees charged to its members. These
fees accounted for
UW System Administration makes
payments to WiscNet to cover a
portion of the fees WiscNet charges
to UW System institutions. In June
of three consecutive fiscal years,
UW System Administration made
a total of
WiscNet offers internet service
at prices that are generally lower
than commercial providers. Based
on estimates provided to us by
32 WiscNet members, they would
have paid commercial providers
an average of
We identified several factors that likely contribute to WiscNetís ability to charge lower fees. For example, WiscNet does not incur all of the operating costs that many commercial providers do, including fees paid to transmit data across other networks and advertising expenses. As a nonprofit entity, WiscNet also does not need to generate a profit and is exempt from paying income taxes.
In addition, the lack of sufficient written agreements between UW-Madison and WiscNet for the provision of goods and services and imprecise estimates of the actual costs of those goods and services lead us to question the adequacy of reimbursements.
For example, a 1999 agreement did not specify the amount UW-Madison would charge WiscNet for network engineering services, and the costs UW-Madison incurred in providing additional network engineering services to WiscNet under a 2007 agreement, which continues to guide the provision of these services, consistently exceeded the amount specified under the agreement. UW-Madison officials stated that they have not attempted to renegotiate the price of engineering services under the 2007 agreement because they believe that the amount WiscNet paid for the use of UW Systemís network infrastructure was sufficient to offset UW-Madisonís unreimbursed costs.
Providing Connections to the Internet
In order to obtain internet service,
WiscNetís members must obtain
their own connections to its network.
Most UW System institutions and
other WiscNet members obtain these
connections through BadgerNet, a
state-supported network operated
by a consortium of private telecommunications
most UW System institutions have
historically used BadgerNet in connecting
to the internet, UW System
has determined that it is less costly
to lease infrastructure to develop its
own network. Since
In 2010, UW-Madison and
UW-Extension were awarded
federal grants totaling
Prices anticipated to be charged for internet connections from these networks are lower than the prices charged by BadgerNet or other providers. This is possible, in part, because significant network costs, such as equipment and construction, will be paid with federal grant funds.
UW System institutions are overseeing the construction of the grant-funded networks and also plan to participate in their governance. Plans for UW System to own a portion of the network infrastructure, and for UW System institutions to provide technical support to grant-funded networks, are viewed by officials as extensions of UW Systemís mission. However, those roles may be viewed by some as conflicting with a statutory prohibition on UW System providing telecommunications services.
UW Systemís Future Role
Act 32 made statutory changes
affecting the involvement of
UW System in WiscNet and the
grant-funded networks, some of
which first take effect on
One such arrangement, which would achieve compliance with statutory prohibitions on offering, reselling, or providing telecommunications services to entities outside of UW System, is for UW System to provide internet services directly and exclusively to its own institutions. However, UW System officials do not view this as a preferred option, in part because they believe it would likely result in increased costs for UW System institutions and may adversely affect their connections with other research and education networks.
Alternatively, UW System could contract with a vendor to provide internet services to its institutions. UW System officials indicate they may consider issuing a request for proposals to serve its institutions that also assesses the vendorís willingness to provide services to all WiscNet members at comparable prices. However, if a vendor provides services to all WiscNet members and if UW System allows a vendor to access UW Systemís infrastructure and network monitoring services, the resulting arrangement could be comparable to the existing relationship between UW System and WiscNet.
Because UW Systemís future plans for obtaining internet services and its future role in the grant-funded networks have not been finalized, we could not assess its compliance with Act 32 at the present time. Therefore, continued monitoring will be necessary.
We recommend UW System Administration:
We also recommend UW System Administration: