Chattanooga public fiber network generates $2.69B

By KATE COIL

TML Communications Specialist

The city of Chattanooga’s public fiber optic network has generated $2.69 billion in community benefit during its first decade, according to a newly-released research project.

Chattanooga’s EPB, formerly known as the Chattanooga Electric Power Board, launched America’s first gig-speed community-wide network in 2010, establishing the nation’s most advanced smart grid power distribution system.

Since then, a new study has found the fiber optic network has increased funds for public services and local schools, helped grow the local economy and attract new business, and helped entrepreneurs get their businesses off the ground. The new study was conducted by Dr. Bento Lobo, head of the Department of Finance and Economics at the Rollins College of Business at the University of Tennessee at Chattanooga.

“The true economic value of the fiber optic infrastructure for EPB’s customers is much greater than the cost of installing and maintaining the infrastructure,” Dr. Lobo said. “Our latest research findings show that Chattanooga’s fiber optic network provides additional value because it provides high speeds, with symmetrical uploads and downloads, and a high degree of network responsiveness which are necessary for the smart grid and other cutting-edge business, educational, and research applications.”

Jim Ingraham, vice president of strategic research, said EPB commissioned the study as part of their business plan to see what the economic payback from job creation, generated commerce, and other added value their fiber optic network would bring to the area. The results were far beyond what EPB projected back in 2006.

“We originally did the forecast that said we could expect about 2,500 new jobs and about $600 million in economic benefit,” Ingraham said. “This was very attractive to a community that had been seeing 1% economic growth for a very long time. It was the first time the in-plan study model had been used to look at modernizing an electric system or building a fiber optic communications system. I think the big surprise was the difference in the forecast versus the actual value. We have documented almost $2.75 billion in value, and we are pretty sure we haven’t documented all the value.”

EPB has a 600-square-mile service area providing electric and fiber optic service to seven counties: three in North Georgia and four in Tennessee. Ingraham said the study has shown that municipal utility services can be among the best and provide added value to their communities.

“EPB is a municipal electric distribution company and a broadband company,” Ingraham said. “We are publicly owned by the community. The other thing we have seen is that you can focus on people – our customers, our community – to make a capital investment and the benefits derive to the community and the people we serve as opposed to investors who may not even live here. Since 1996, we have been consistently ranked by JD Power ad Consumer Reports as among the country’s very best distributors of electricity and internet service. We have been able to show that a public entity can be a success for the people we serve, and we take a lot of pride in that success.”

The COVID-19 pandemic has further demonstrated the value of municipal fiber optic networks and how they serve their communities. Ingraham said EPB has seen its service usage rise 40% since last March when many Chattanoogans began working from home.

“We actually built the EPB public network with a capacity to serve 8 million people, which is about the size of New York City,” he said. “We overbuilt it on purpose so it would be future proof and it would have the capacity to handle growth. When a lot of people needed to start working from home, we were able to support them with internet service just like they would get at their businesses. The good news for our community is that we have good, solid, affordable internet service that was available to everyone and everyone could keep working.

J.Ed. Marston, vice president of marketing for EPB, said the municipal utility was able to quickly make upgrades and changes for companies who had to change their services to better accommodate remote work because they already had this network in place.

“One of our major employers called us and said they needed to go to a 3-gig circuit because they were sending their workers home and those workers would need to access their server at their site,” Marston said. “We were able to make that change in their gig service within a few hours that same day. That is pretty extraordinary in most parts of the country. That is just one example.”

With more students going online to learn, Ingraham said EPB worked with Hamilton County Schools as well as public and private partners to provide free 100-mega-bit-per-second fiber optic internet service to all free-and-reduced lunch students. At present, 8,000 households and a little more than 12,000 students who now have access to high-quality internet service to do their school work.

“We don’t want to do something that will solve this issue for the next six months,” Ingraham said. “This service will be in place for at least the next 10 years, and we are doing fundraising to make it permanent. Before the pandemic, we made sure all our schools were connected with state-of-the-art internet. We have done some pretty innovative things in the internet world. I think it helps give Chattanooga the moniker of Gig City. We have gained a lot of community energy from that.”

Ingraham said the study showcases a lot of the ways EPB has changed.

“I think 20 years ago, people here would have told you our goal was to do things as cheap as possible while keeping the lights on,” Ingraham said. “It was a least cost kind of business model, and it worked, but it didn’t set us apart. We have had some pretty visionary and courageous leadership not only here at EPB but on our board of directors and among our local elected leaders who have supported the idea that this community deserves to have modern infrastructure. We had to change our culture. I think the thing we have really learned is that when you pay attention to people and give them something that is a better value, it creates a new energy in the community.”

The result has been investment by a new start-up community, new venture capital operations, and the investment by major corporations like Volkswagen, Amazon, and McKee Foods. The convergence of fiber optic internet and smart city infrastructure has increased opportunities in the community. Marston said what Chattanooga has demonstrated is that public internet service can be sustainable and beneficial to all involved.

“There is an absolute ability to operate for community benefit and still have a very successful and sustainable business model,” Marston said. “One of the big things we have done at EPB is be very open to partnerships with our university, our public sector, our entrepreneurs, and our nonprofits. As a result of that, we have been able to use this infrastructure as a platform for innovation. We ended up creating a platform where people can collaborate and use our infrastructure in a variety of different ways that has a multiplier effect beyond what we have been able to do with it.”