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Op-ed: Next-Generation Networks Needed

The Knoxville News Sentinel published this op-ed about Tennessee's restrictive broadband law on January 9, 2016.

Christopher Mitchell: Next-Generation Networks Needed

Four words in Tennessee law are denying an important element of Tennessee's proud heritage and restricting choices for Internet access across the state.

When private firms would not electrify Tennessee, public power came to the rescue. In the same spirit, some local governments have built their own next-generation Internet access networks because companies like AT&T refused to invest in modern technology. These municipal networks have created competition, dramatic consumer savings and a better business climate in each of their communities.

The four words at issue prevent municipal electric utilities from expanding their successful fiber optic Internet networks to their neighbors, a rejection of the public investment that built the modern economy Tennessee relies upon.

Current law allows a municipal utility to offer telephone service anywhere in the state, but Internet access is available only "within its service area." This limit on local authority protects big firms like AT&T and Comcast from needed competition, and they have long lobbied to protect their de facto monopolies. To thrive, Tennessee should encourage both public and private investment in needed infrastructure.

These municipal systems have already shown they can bring the highest-quality Internet services to their communities. Chattanooga's utility agency, EPB, built one of the best Internet networks in the nation. Municipal fiber networks in Tullahoma, Morristown and more have delivered benefits far in excess of their costs while giving residents and local businesses a real choice in providers.

Many of these networks are willing to connect their neighbors — people and businesses living just outside the electric utility boundary. If Chattanooga wants to expand its incredible EPB Fiber into Bradley County with the consent of all parties, why should the state get in the way?

Consider that Tennessee metro areas almost always have at least one high-speed Internet option. Those with municipal networks have a real choice in providers. Nashville is slated for Google Fiber. But there is no such hope on the horizon in rural areas, despite the billions of dollars that have been spent on subsidies to providers like AT&T.

While AT&T's lobbyists scheme to prevent competition, the federal government subsidizes AT&T operations with more than $500,000 per month in Tennessee alone. So much for the "private" sector.

When it comes to municipal networks, taxpayer dollars are rarely used. Private investors often finance municipal networks by purchasing long-term bonds and are repaid by the revenues from the network. The Tennessee Valley Authority strictly oversees municipal utilities to ensure they are not cross-subsidizing telecom services with electrical ratepayer revenues.

To the extent municipal networks affect taxpayers, the taxpayers benefit. EPB just announced that in 2015 alone, its payments in lieu of taxes exceeded $19 million to the 17 jurisdictions in which it operates.

When local businesses connect to municipal fiber, more of their money stays in the community. Compare that to how much communities without a real choice send to AT&T and Comcast headquarters in distant states. And thanks to the competition, residents and businesses pay less. Morristown estimates a $3.4 million annual aggregate savings from lower bills.

The state should encourage communities to be more self-reliant and to build resilient regions rather than taking the side of distantly-owned monopolies. The state should be focused on how to encourage investment in next-generation Internet networks, not limit it.


Christopher Mitchell is the director of the Community Broadband Networks Initiative at the Institute for Local Self-Reliance. He is on Twitter: @CommunityNets.

Morristown FiberNET in the Spotlight

In a recent report, WBIR Knoxville shined the spotlight on Morristown. The article and video discuss how FiberNET has improved its telecommunications landscape by inspiring competition, offered better connectivity to the region, and how state law prevents other towns from reaping similar benefits. We encourage you to watch both of the videos below.

Morristown's utility head describes how it considers high-speed Internet access to be a necessary utility:

"You had railroads, you had interstates, and this is the new infrastructure cities need to have," said Jody Wigington, CEO of Morristown Utility Systems (MUS). "To us, this really is as essential to economic development as having electricity or water."

Morristown began offering gigabit service via its FTTH network in 2012. It began serving residents and businesses in 2006 because the community was fed up with poor service from incumbents. Since then, FiberNET has stimulated economic development, saved public dollars, and boosted competition from private providers. 

Prices for Internet access are considerably lower in Morristown than similar communities. From the article:

Morristown's Internet service is more expensive than Chattanooga, but much faster than the rest of the region at a comparable price. A 100 Mbps synchronous connection is $75 per month. Advertised rates for Comcast in Knoxville show a price of almost $80 per month for a 50 Mbps connection with much slower upload speeds. A 50 Mbps connection in Morristown costs $40 per month. The cable Internet option in Morristown is Charter, with an advertised price of 35 Mbps for $40 a month.

As we have seen time and again, the presence of a municipal network (nay, just the rumor of one!) inspires private providers to improve their services. AT&T offers gigabit service in Morristown and Comcast has announced it plans on offering 2 gigabit service in Chattanooga.

"Without a major disruptor like we've seen in Chattanooga and in Morristown, there's really no reason for these guys [private companies] to go out of their way to make a big spend to make bandwidth faster. It just simply doesn't make good business sense," said [Dan] Thompson, [senior analyst for Claris Networks].

Thompson said he does not believe there should be any concern that municipal Internet would result in a monopoly akin to other utilities.

"If you go to Chattanooga, Comcast advertises like crazy on billboards down there. You don't see that here [in Knoxville] at all. Comcast is still there. AT&T is still there. They're still viable options."

Beyond offering better service to residents, FiberNET also attracts more employers. In 2013, we reported on 228 new jobs in the community, attracted here in part because of FiberNET's reliability. Most recently:

"There is a new call center that is looking at relocating to Morristown. They told us the local provider can get them fiber in the building for around $1,000. The guy from our utility company told him we've already got fiber to your front door and we'll put it in the building for free because you're going to be helping our economy and jobs. Their jaws drop. Businesses really are shocked by what we have here," said [President of the Morristown Chamber of Commerce Marshall] Ramsey. "They looked at Blount County and looked at Knoxville, but the confidence in the networks just isn't there right now."

Even though the FCC struck down state restrictions on municipal networks in Tennessee, local communities are not rushing to deploy their own networks. The state is challenging the federal action, and no local community has announced an expansion due to the uncertainty around the appeal. With this appeal, the state of Tennessee is wasting taxpayer dollars to deliberately slow the deployment of essential infrastructure in rural communities.

As Wigington acknowledges in the story, a municipal fiber network is no small endeavor. Nevertheless, only a local community can know if it has the ability, drive, and need to venture into Internet access as a utility.

Wigington said the decision of whether to compete with private industry should ultimately be made by the cities, not made for them by the legislature or the cable companies.

"Cities need to be able to make this decision."

Knoxville Downtown Wondering 'Where Is All the Broadband?'

Knoxville Metro Pulse reporter Paige Hunton published a story last month about a common complaint from downtown residents and businesses - "Downtown Knoxville's Internet Access Kinda Sucks. Can It Be Fixed?" The problem worked its way from local talk to twitter and city leaders have met with residents and business owners to publicly discuss options.

This is a perfect example of what happens to a community that refuses to take responsibility for ensuring local businesses and residents have access to the essential infrastructure they need. Knoxville's approach to improving its Internet access is akin to crossing one's fingers and hoping really hard for the best.

Hunton' describes modern day disaster in the downtown area comprised of an inconsistent patchwork of AT&T DSL, Comcast, and a very limited amount of private provider fiber optics. Some areas have no access, others have no choices. While the city tries to encourage downtown commerce with tax credits for developers and a new entrepreneur center critical high-speed connections are missing.

City officials say the downtown area has a limited amount of aging conduit, discouraging private providers and cost prohibitive to expand. Likewise, old buildings with substandard internal wiring discourage investment from private companies.

Hunton tells the story of Ian Blackburn, a former colleague that now works for a downtown employer impacted by the lack of high-speed broadband downtown. After outgrowing its T1, the company went with 6 Mbps through AT&T DSL. AC Entertainment soon outgrew DSL:

"On one occasion in our DSL days, we had to download a video spot from an artist management site, make a few edits, burn it to disc, and get it to FedEx that day. The browser was estimating over an hour remaining for the download, which would miss the FedEx cutoff point. I remotely logged into a server in my living room, started the download, jumped on my bike, pedaled home, burned the file to a DVD, and was back in the office inside of 20 minutes,” he says. “The problem got solved, but that’s a ridiculous way for a company to have to operate. You can’t do business if you can outrun your Internet on a bicycle.”

AC Entertainment Logo

The building that houses AC Entertainment is now served by Windstream via AT&T fiber optic cables, but many other businesses must contend with pokey DSL as the best option. City and business leaders are considering wireless for the short term:

“It’s not a perfect solution. You always want physical wiring wherever you can get it. But if you can’t get it, wireless Internet is a great option,” Blackburn says. “[Knoxville doesn’t] need fiber-to-the-door like Chattanooga has. A WISP [Wireless Internet Service Provider] will do, and it’s something we can do now while we’re looking to the future for more substantial infrastructure improvements.”

Hunton also talked with Eric Ogle, a researcher at the University of Tennessee's Hoawrd J. Baker Jr. Center for Public Policy. Ogle studies Internet access and community development. Ogle did not rave about Knoxville's tepid approach to ensuring broadband downtown:

“Additional broadband options in Knoxville at a lower cost would force Comcast and others to lower their costs to become more competitive. We see it all the time, when an incumbent provider enjoys a local monopoly and they suddenly get new competition, their pricing drops,” Ogle says. “So it would be no surprise if Knoxville started talking seriously about deploying a city-wide network, companies like AT&T and Comcast would increase their efforts here.”

For the time being, though, [Knoxville’s Chief Policy Officer Bill] Lyons and [Knoxville Downtown Coordinator Rick] Emmett do not sound keen on serious city involvement in the private broadband market.

“I don’t think we missed any economic activities,” Emmett says, compared to Chattanooga’s network build-out. “That’s the point of this [strategy] is trying to draw in some business.”

That attitude, Ogle says, could be a major mistake in the future.

“I’m a believer that the best way to undermine investment in the future is to fail to provide the needed infrastructure of today,” he says.

Knoxville officials don't think they missed any economic activities? Perhaps they should visit the WBIR archives for examples of companies that deliberately chose to expand in Chattanooga rather than Knoxville specifically because of Internet access. Knoxville may not want to build its own network due to the dirty tricks commonly employed by carriers like Comcast and AT&T, but they had better come up with some sort of a plan.

Chattanooga's Network On Knoxville News

We recently came across a news report from Knoxville's WBIR.

The video touches on how the city has gone from a town that used to rely on the choo-choo to a metropolitan wonder that flies over fiber optic cables. Walter Cronkite called Chattanooga the "dirtiest city in America" but the network is transforming it into a technology capitol. Reporter Eleanor Beck focuses on the network's many customers and how they use their connections. Among those customers are an increasing number of businesses who seek the 1 gig service.

Beck spoke with Jack Studer, one of the founders of Lamp Post Group, a downtown incubator. Studer raved about the 1 gig network as a selling point to new businesses. Chattanooga's investment continues to fuel economic development and bring fresh entrepreneurs to town.

The story is a little under four minutes.

Knoxville News Station Envious of Chattanooga Fiber Network

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.

The text version of the above video is available here.

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.

Map of Chattanooga and Knoxville

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.