Study Finds Chattanooga Fiber Network 10-Year ROI: $2.69 Billion

For communities across the country considering whether to invest in building a municipal broadband network, a new study published last week on the economic value of the EPB fiber network in America’s first “gig city” is a must-read.

The independent study, conducted by Bento Lobo, Ph.D., head of the Department of Finance and Economics at the Rollins College of Business at the University of Tennessee at Chattanooga, found that the celebrated city-owned fiber network has delivered Chattanoogans a $2.69 billion return on investment in its first decade.

In 2010, EPB Fiber, a division of Chattanooga’s city-owned electric and telecommunications utility formerly known as the Electric Power Board of Chattanooga, became the first city in the United States to build a Fiber-To-The-Home (FTTH) network offering up to 1 Gig upload and download speeds. In 2015, EPB began offering up to 10 Gig speeds.

It cost approximately $220 million to build the network, however, “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,” 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.”

Among the study’s key findings:

  • Job creation and retention: The fiber optic infrastructure directly supported the creation and retention of 9,516 jobs which is about 40% of all jobs created in Hamilton County during the study period.
  • Lower unemployment rate: According to the study, since Chattanooga’s fiber optic network was deployed, it has helped keep the local unemployment rate lower. This effect has been magnified since the outset of the COVID crisis when fiber optics helped many businesses transition their employees to remote work very quickly. According to the latest available numbers from the U.S. Bureau of Labor Statistics, Hamilton County’s unemployment rate was 4.7% in November which is significantly lower than Tennessee’s rate (5.3%) and two percentage points lower than the U.S. unemployment rate (6.7%) for the same period. (Even prior to the COVID crisis, Chattanooga’s unemployment rate was lower than the state and national rate. In November 2018, the unemployment rate in Hamilton County was 3% while the state and national unemployment rate was 3.4% and 3.8% respectively).
  • Bridging the digital divide for education: Having Chattanooga’s fiber optic network in place allowed EPB to join with Hamilton County Schools and other local and state partners in launching HCS EdConnect, a fiber optic broadband Internet service provided at no charge to economically challenged families with K-12 students. Designed to continue providing the service for at least 10 years, HCS EdConnect represents a lasting solution for bridging the digital divide among students. Currently more than 12,000 students have Internet access to continue their studies from home through HCS EdConnect.
  • Reduced power outages: Related to the smart grid’s ability to quickly re-route power around storm damage and other problems, the study documents a 40-55% annual decrease in outage minutes providing EPB customers with an average of $26.6 million in savings each year by helping them avoid spoilage, lost productivity, and other negative impacts.
  • Decreased environmental damage: The smart grid has helped EPB decrease carbon emissions by 7,900 tons through demand management and reduced truck-miles.
  • $110 million in Smart City research: In 2014, the U.S. Department of Energy designated Chattanooga as a Smart Grid Living Laboratory. Since then, EPB has partnered with Oak Ridge National Laboratory and a range of other national and local research partners, like the University of Tennessee at Chattanooga Center for Urban Informatics and Progress, to play a significant role in more than $110 million in Smart City Research.
  • Entrepreneurial activity: Hamilton County entrepreneurs raised $1.2 billion in equity investment and crowdfunding with the study attributing $244 million of that investment to support from the fiber optic infrastructure. In addition, information from Kickstarter shows that Chattanooga has produced about 10% of the site’s crowd funded projects during the study period, a higher percentage than any other Southeastern city.
  • Increased funding for public services: Because of the extensiveness of the fiber optics infrastructure, EPB is the largest contributor to local tax coffers having paid $59.9 million to local governments from 2011-2020 in support of local schools and other public services.

Debra Socia, President and CEO of the Chattanooga-based The Enterprise Center, said the study “illustrates what happens when communities invest for the long-term, in forward-thinking, future-ready infrastructure.” Socia noted that when EPB transformed Chattanooga into the nation’s first gig city, it meant something more than being the first: “Our community has been more resilient in the face of adversity, and better poised to reap the benefits of the 21st century’s rapidly evolving landscape.”

The most exciting aspect of the network, she said, is the HCS EdConnect program that provides free high-speed Internet access to every low-income child in the county and also hailed the fiber-powered smart grid as having a tangible impact on improving the quality of life for all city residents.

The network, she said, “has opened educational opportunities, reduced the cost of power and the frequency of outages, and added jobs. The smart grid has also allowed us to start addressing some of our biggest challenges — such as energy use, roadway safety, and health outcomes — in new and advanced ways.

Read the full study here [pdf], or below.