The following news report suggests that some in Knoxville, Tennessee, are starting to get a little jealous of the incredible FTTH network built by Chattanooga's publicly owned electric company. A number of Knoxville businesses are finding it more convenient to expand and add jobs in Chattanooga, where access to the Internet is faster and more affordable due to public investments.
Knoxville is located 100 miles northeast of Chattanooga. And 100 miles to the northeast of Knoxville is Bristol, Virginia, which has also been seeing significant job gains as a result of its publicly owned fiber-optic network that stretches into most of southwestern Virginia. In short, Knoxville should start worrying about its future and broadband competitiveness.
The Chattanooga Times Free Press discusses the state of the economy in Hamilton County. They have seen impressive new jobs (credit to the EPB Fiber network) but some existing companies have had to continue downsizing in the weak economy. From the article:
Chattanooga’s high-speed Internet service already is showing some promise. The Knoxville-based Claris Networks, a cloud-based IT provider, recently acquired two Chattanooga IT companies — SRC Technology and Allied IT — and has expanded the staff in its Freight Depot office downtown to eight employees.
“Connectivity for us is about eight to 10 times cheaper in Chattanooga than it is in Knoxville and other cities,” said Dan Thompson, manager of advanced infrastructure service and product development for Claris. “We see a great potential for growth in Chattanooga.”
Interestingly, Knoxville's public power utility had previously considered a public investment in a fiber network but decided against it. Not every publicly owned utility can duplicate EPB's success in Chattanooga, but most could if they gave it the effort demanded of perhaps the most important piece of the future economy: fast, affordable, and reliable access to the Internet.
Chattanooga and other similar pioneers are incredibly open when others look to them for lessons. So places like Knoxville have a choice: sit back and watch as innovative industries move to innovative cities or invest in yourself.
In the case of muni systems, which are not-for-profit enterprises, one measure of “success” is defined as the level of their “take rate” – that is, the percentage of potential subscribers who are offered the service that actually do subscribe. Nationwide, the take rates for retail municipal systems after one to four years of operation averages 54 percent. This is much higher than larger incumbent service provider take rates, and is also well above the typical FTTH business plan usually requiring a 30-40 percent take rate to “break even” with payback periods.