Chattanooga’s municipal broadband pays off with $2.69 billion in benefits

Chattanooga’s high-speed, community-wide fibre optic network has delivered economic and social benefits worth over US$2.69 billion in its first decade, according to new, independent research.

The network, launched in 2010, was built by the city-owned utility EPB to support an advanced smart grid power distribution system. There are several other municipal broadband networks in the country but EPB was the first to offer gigabit speeds city-wide – at 1,000 Mbps and later 10,000 Mbps.

The new study, conducted by Bento Lobo, PhD, head of the Department of Finance and Economics at the Rollins College of Business at the University of Tennessee at Chattanooga, finds that the infrastructure has helped to bridge the digital divide and supported job creation, reduced carbon emissions and more.

The value realised exceeds the costs of the project by over US$2.20 billion, or a factor of 4.42, the report says.

“The true economic value of the fibre optic infrastructure for EPB’s customers is much greater than the cost of installing and maintaining the infrastructure,” Dr Lobo said. “Our latest research findings show that Chattanooga’s fibre 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.”

ROI

According to the report, the network directly supported the creation and retention of 9,516 jobs, which is about 40 percent of all jobs created in Hamilton County during the study period.

It is also credited with keeping the local unemployment rate lower, particularly during the COVID crisis when broadband has helped many businesses transition to remote working. According to data from the U.S. Bureau of Labor Statistics, Hamilton County’s unemployment rate was 4.7 percent in November, compared to Tennessee’s at 5.3 per cent and the US’ overall at 6.7 percent.

As many cities grapple with ensuring children can access education during the pandemic, Chattanooga has been able to narrow its connectivity divide, the report notes. In July, EPB, Hamilton County Schools and other local and state partners launched the HCS EdConnect fibre-optic broadband service, provided at no charge to economically challenged K-12 families. The service will be provided for at least ten years, and more than 12,000 students are using it.

Additional benefits are attributed to EPB’s smart grid, which can quickly re-route power around storm damage and other problems. The study documents a 40-55 percent annual decrease in outage minutes giving EPB customers an average of US$26.6 million in savings each year by helping them avoid spoilage and lost productivity, etc. The smart grid is also calculated to have helped EPB decrease carbon emissions by 7,900 tons through demand management and reduced truck-miles.

COVID demand

Chattanooga’s fibre optic network has withstood more intensive usage during the pandemic as more people have worked, studied and spent more time at home. During COVID, EPB has seen a 75 percent increase in the total volume of internet bandwidth usage over a typical day, as well as a 64 percent increase in peak bandwidth usage in the evenings when many people are streaming video.

“At the outset of the COVID crisis, Chattanooga’s fibre optic network had ample capacity for us to upgrade services as companies rapidly transitioned to remote work,” J. Ed. Marston, a spokesperson for EPB, told Cities Today. “Because Chattanooga’s community-wide fibre optic network was already in place, we were able to respond to company needs ranging from adding more telephone call paths to upgrading them from a gig-speed internet circuit to a multi-gig service within hours of receiving their request.”

The network has also been linked with boosting entrepreneurial activity. Hamilton County entrepreneurs raised US$1.2 billion in equity investment and crowdfunding and the study attributes US$244 million of that to support from the fibre optic infrastructure.

Other benefits identified include US$59.9 million in payments in-lieu of taxes to local governments and participation in smart city research projects worth US$110 million.

Lessons for other cities

EPB’s deployment has faced obstacles along the way, including legal challenges from both the telecom industry and the state of Tennessee.

“Deploying a fibre optic network and launching new services entails all of the complications and challenges one would expect from a large-scale project but EPB has developed a proven business model along with a range of services to make it easier for other communities to deploy,” Marston commented.

“Each city has unique assets. In Chattanooga, we have succeeded by building a collaborative community culture around every large project we do. Any effort of this kind must start by identifying and engaging key community partners including elected leaders at the local, state, and federal level who set policy,” he said. “It’s also very important to get the community involved. It’s critical to be sure that the project reflects the local priorities and needs while ensuring that there is a broad-based understanding of how community members will benefit.”

The infrastructure will also be key to supporting 5G networks, which rely on fibre optics for backhaul, Marston added.