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Chattanooga’s Internet Rise

Chattanooga, Tenn., has leapt to the forefront of cities with ultra high-speed broadband and has accomplished the feat in a surprisingly old-fashioned way.

Chattanooga, Tenn. (pop 167,000), has leapt to the forefront of American cities with ultra high-speed broadband service and has accomplished the feat in a surprisingly old-fashioned way: the city’s municipally-owned electric utility provides the service. Tennessee’s fourth-largest city is now a member of a small, but elite group of world-class cities that can offer residents and businesses Internet service of up to one gigabit per second, 200 times faster than the average broadband speed in America, according to The New York Times.

What makes Chattanooga’s situation even more unique is that it stands virtually alone among U.S. cities with a population of 100,000 or greater that has municipally-owned broadband. There are only 122 cities and towns that have municipal broadband in their community, according to Broadband Communities Magazine. But nearly all are small jurisdictions.

So, what’s the big deal, you ask. Broadband is available just about everywhere in America through private providers, such as Verizon, Times-Warner and Comcast. But as the Economist pointed out, Chattanooga didn’t install fiber broadband just to make consumers happy, but as an effort to reinvent itself as a city with first class infrastructure that will further enable economic development while giving the government innovative capabilities in delivering better services for public safety, traffic and transit, public works and education.

That would be enough for some cities to consider providing muni broadband, while offering residents a more robust service (Chattanooga’s subscribers have 50 Mbps connections while the average connectivity speed in the U.S. is 6.7 mps).  But don’t expect to see a blossoming of muni broadband projects. A big reason is the opposition from the telecom giants who dominate the business and their amazing success at convincing states to block it from happening. To date, 19 states have passed laws that block local governments from setting up publicly-owned broadband services.

In 2011, North Carolina passed legislation prohibiting local governments from using tax dollars to build their own broadband systems, despite the fact that the state ranks last in the nation in consumer access to minimum broadband speeds, according to an FCC report.

Why are states preventing local governments, dissatisfied with existing Internet service, from providing that service themselves? In North Carolina, proponents of the law cited concerns with municipal governments racking up deficits without voter input on new broadband schemes. Others cited potential public debt problems with installing the infrastructure.

But in Chattanooga, the business case for publicly-built broadband is quite sound. The CEO of EPB, the municipal utility that installed the broadband, last year told the Economist that its Internet division will become profitable in 2013. While Chattanooga is just one city, the global trend is clearly heading towards for ultra high-speed Internet service, particularly in cities where economic development and population growth is most concentrated. In Europe, government policies have led to robust competition that has driven down the cost of Internet service that is significantly faster than what is generally available in the U.S.

The question that a growing number of academics and policy makers now ask is whether broadband Internet service in America should be a public utility, similar to electricity, water and traditional phone service. Their argument is that current policies have stifled competition, leaving much of the country with expensive service that is slow, relative to what is offered elsewhere in the world.

Bolstering the argument for Internet service as a public utility is Susan Crawford, a technology policy expert, law professor and author of Captive Audience: The Telecom Industry and Monopoly in the New Gilded Age.  Crawford believes federal policy makers have little interest in changing the current climate that favors the telecom giants, nor will states stop making it difficult for cities to build their own networks.

Her solution: set up an “infrastructure bank to help cities obtain affordable financing to help build high-speed fiber networks” for citizens and businesses. “We treated the telephone industry like a utility and people don’t seem to be surprised by that,” Crawford told, when asked if Internet service should be a public utility. “High-speed Internet access plays the same role in American life. It’s just that those guys [telecom giants] have succeeded in making us think that it’s a luxury.”

Chattanooga realized that building a fiber network, far from being a luxury, is a necessity and should be a public utility, as important as electricity was a century ago.  Will other cities follow Chattanooga’s example?

Correction: An earlier version of this article incorrectly stated Chattanooga's Internet speed as 30 Mbps. It was upraded to 50 Mbps in September 2012.

Former deputy associate director of the Office of Management and Budget
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