As the Sixth Circuit Court of Appeals reviews the FCC's February decision to scale back state anti-muni laws in Tennessee, at least two munis in the Volunteer State are giving back by saving dollars. Networks are also contributing substantially to public coffers via Payment in Lieu of Taxes.
Clarksville, Tennessee, Network Becomes Revenue Positive in 2015
As of June 2015, the city’s utility provider CDE Lightband paid off all outstanding expenses related to their fiber optic network. General manager Brian Taylor described how the network has improved the city’s utility services and overall economic picture:
Our fiber project has proven to be an investment that benefits the electric system, the customers and the community. It has allowed us to enhance our distribution system and improve our system reliability; provide customer choice in video, Internet and telephone services and offer another tool in economic development. Every year access to high speed Internet becomes more critical in the recruitment of new business. We are proud to be an integral part of the growth and development of our community.
In a recent press release, CDE Lightband said their 1,200 mile fiber optic network saves the City of Clarksville a total of $4.5 million annually through technological upgrades that have improved the overall safety, reliability, and speed of electrical maintenance and service. The city has also seen 27% growth in broadband service customers over the past year. The network’s cost savings, along with direct revenues from electrical and broadband services, spell major dividends for CDE Lightband coupled with continued optimism for future growth.
Total revenues since the inception of CDE Lightband in the form of Payments in Lieu of Taxes (PILOT or PILT) exceed $37 million, with annual PILOT compensation payments of $5 million to continue indefinitely. PILOT compensation is a type of recurring payment that non-taxable organizations make to government entities for the use of government-owned property.
Chattanooga’s Unstoppable EPB
Chattanooga’s EPB network also continues to see remarkable evidence of success. PILOT compensation since Chattanooga built the EPB network six years ago is at $140.5 million with $19.2 million paid out this year alone. Today, EPB contributes more in PILOT compensation than any other taxpayer or PILOT contributor in all of Chattanooga and Hamilton County.
It Doesn't Stop with PILOT
Clarksville and Chattanooga are well-established networks that have served the community well in a number of ways. In addition to providing PILOT and more efficient electric services, benefits extend to better connected schools and anchor institutions, savings for public facilities, and economic development.
A new study from a University of Tennessee-Chattanooga economist reveals EPB’s fiber network has added an estimated $865.3 million to $1.3 billion to the local Chattanooga economy in the past 6 years. In addition, the study says Chattanooga’s fiber optic network has also generated at least 2,800 new jobs in the local economy. The same study estimates that job growth due to the network may be as high as 5,200 new jobs, depending on the parameters.
Chattanooga and Clarksville are two examples of what is possible when local communities have the ability to exercise their own authority. Those that will live with the results and reap the benefits are best suited to decide the strategy to improve local connectivity.