BusinessTN

A March 2009 New York Times article by Saul Hansell titled, "The Broadband Gap: Why Do They Have More Fiber?" cited "heavy government involvement" in Japan, South Korea and Sweden as among the primary catalysts for those nations becoming leaders in high-speed fiber deployment. By comparison, the United States lags behind much of the rest of the world in broadband deployment. However, increasing involvement stateside by both large telecom providers and government entities is ramping up connectivity.

In Chattanooga, the promise of such will soon be realized as public utility EPB rolls out its $230 million Fiber to the Home (FTTH) network, offering potential customers access to such high-speed products as Fi TV, Fi-Seed Internet and Fi Phone. It has many in the local business community excited about the potential that fiber optics offers.

Josiah Roe of Medium, formerly Coptix, a Web graphic design company, cites the ability to upload and transfer large files with the "comprehensibly better product" as an advantage for his company. "When I go to Chicago or larger cities and they hear we have [FTTH], they're just amazed to see a city of our size doing something like that," Roe says. He adds that, "Chattanooga is very progressive and forward-thinking" in its fiber initiative.

Such anecdotes can only be music to the ears of Chattanooga Mayor Ron Littlefield. "[FTTH] gives us the edge and the image of a place that is aware of a changing world and the resolve to stay ahead of that changing world," he says.

Connection Problems
EPB already represents a major energy source for Chattanooga, Hamilton County and surrounding counties, including parts of northern Georgia. The utility supplies more than 168,000 energy customers in a 600 square mile area. EPB began EPB Telecom with fiber optic capabilities offered to downtown Chattanooga businesses back in November of 2003. Currently, EPB Fiber Optics, a rebranding of EPB Telecom, offers telephone, Internet and video capabilities to roughly 2,340 business customers, including 20,000 lines to the likes of McKee Foods and Blue Cross Blue Shield of Tennessee.

As FTTH moves beyond downtown Chattanooga and into residential neighborhoods and commercial districts, though, not all Chattanoogans are embracing the decision. One argument is that every ratepayer, regardless of whether they subscribe to EPB's service, will in fact be paying for the service as a result of the inherent costs associated with EPB's decision to go into the cable/broadband business in the first place. Others see the quasi-public, quasi-private EPB's push into the cable/broadband space as government inappropriately competing head to head with private business and blurring the lines between government services and private sector services.

Christopher Mitchell of the Institute of Local Self-Reliance in Minnesota says municipalities nationwide are increasingly entering the fiber world because most large communication providers are not seeking to create fiber optics networks. FTTH greatly exceeds conventional copper wiring, which is the standard for a large majority of the country. EPB's downtown fiber network for businesses offers 500 mbps (mega bites of data per second), which is 300 times faster than DSL, cable or a T1 connection. Residential users will be offered a similar model. As a result, Mitchell says competition from utilities like EPB will "likely encourage Comcast and AT&T to invest more. On the whole, everyone will benefit."

Clearly, the large telecoms are paying attention. Since announcing its FTTH intentions, EPB has survived several legal challenges, first from the Tennessee Cable and Telecommunications Association (TCTA) in 2007 and then Comcast in 2008. Each group argued that EPB violated the law by using electricity revenue to prop up a telecommunications business. Each case was dismissed. At press time, one of those cases remained on appeal.

Bob Corney, Tennessee public affairs spokesperson for AT&T, which was not a party to any lawsuit against EPB, says AT&T actually supports competition because it is "confident in its products and services." He adds that as long as a level playing field exists for all, "competition leads to benefits for the consumers as well as increased investment and better technology."

Proof in the Pudding
For opponents of municipal fiber networks, there's another compelling argument against such practices that goes beyond questions of fair competition; they also point to the numbers. Several municipally owned Tennessee telecommunications companies are cast as failures, most notably Memphis Light, Gas and Water's Networx, which sold at a loss of over $16 million, and, more recently, Jackson Energy Authority, which moved to reissue $94.5 million in revenue bonds at a junk rating.

Advocates counter that the success of municipal plans cannot be measured solely in numbers. Katie Espeseth, spokesperson for EPB Fiber Optics, says, "Every community deserves this opportunity." She points to the fact that in Tennessee, residential broadband usage since July 2007 has increased by 26%--or nine points higher than the national growth--in part because of progressive municipal initiatives for better Internet connectivity in places like Pulaski.

Improved economic development is also cited as a reason for EPB's municipal broadband push. In the spring of 2006, Bento Lobo and Andrew Novobilski of the University of Chattanooga and Soumen Gosh of Tennessee State University published an impact study that cited not only the significant economic impact and job creation that FTTH would provide for the city but also the social benefits in education, medicine and telecommuting for Chattanoogans. Espeseth says EPB estimates 2,600 new jobs will be created in the Greater Chattanooga area as a result of FTTH providing city residents with the tools, resources and technology it needs to better compete in today's global marketplace. Based on the size of its investment, EPB clearly sees FTTH as a critical community infrastructure comparable to electric power in the 1930s or the Interstate system in the 1950s.

If such numbers hold true to form, EPB and Chattanooga backers of the FTTH proposal will have plenty of evidence to show that the expense was worthwhile.