Courtesy of EPB

As Internet behemoths rise, Chattanooga highlights a different path

Chattanooga’s municipally run Internet is faster than most connections in the world and could be a sign of the future

CHATTANOOGA, Tenn. — Clay Posey is in the middle of developing a 3-D printing business out of the premier local startup incubator Co.Lab. He works on his laptop in Co.Lab’s downtown Chattanooga storefront space, where he shares tables, a fridge and a support network with dozens of others who are looking to raise capital and test their tech ideas.

Posey’s idea is to make precise models of hospital patients’ organs so doctors can plan their surgeries before cutting into the real thing. The company is called 3DOps, and Posey says it couldn’t exist anywhere other than Chattanooga.

“There are companies that do what we do, but we can do it in hours, and they can take weeks,” said Posey. “Anywhere else, it would take a lot more time and a lot more money ... Chattanooga is essential to our business model.”

That’s because Chattanooga is one of the only places on Earth where residents and businesses can access Internet at speeds as fast as 1 gigabit per second — about 50 times faster than the U.S. average. And because the government-regulated power utility runs the gigabit Internet here, the high speeds come at a price affordable to people like Posey.

Chattanooga’s Internet, named the Gig, has won the small, postindustrial city a host of accolades and attention from the tech industry, entrepreneurs and the press since it was started as part of a project to modernize the area’s electric grid by local power company EPB in 2009.

Politicians have credited the Gig with creating upward of 1,000 jobs in Chattanooga, and some have even wondered if Chattanooga could be the country’s next Silicon Valley.

Those claims and aspirations may be a bit bloated, but tech experts and Internet advocates say the Gig is nonetheless important. In an age of consolidation among Internet providers and coming changes to Net neutrality that could let big cable corporations like Comcast charge more to reach certain parts of the Internet, supporters of the Gig say municipally run broadband can provide a counterbalance to increased corporate dominance.

Systems like the Gig might not be practical everywhere in the United States, but its backers say it can at least set the bar for what Internet access could look like in America for decades to come.

“Whenever a corporation like Comcast wants to do something like raise prices, we can point at Chattanooga and say, ‘Why can’t we have something like that?’” said Christopher Mitchell, head of the community broadband networks initiative at the nonprofit Institute for Local Self-Reliance. “It establishes a baseline or at least an aspirational standard.”

On the ground in Chattanooga, the effects of the Gig are visible at nearly every corner. The city, once considered one of the most polluted and dangerous small cities in the nation, is now home to dozens of tech startups, venture capital firms, branding agencies and incubators as well as the kinds of restaurants, coffee shops and bars that usually follow the young and monied.

“We're not going to be New York or be the tastemakers of the world in Chattanooga. That's a ridiculous thing to even say out loud,” said Jack Studer, a founder of and partner at Chattanooga-based venture capital firm Lamp Post Group. “But in areas where the Internet has leveled the playing field, we now have the same chance to innovate and dominate markets as anyone else does.”

Studer and other supporters of the Gig say Chattanooga provides an example of what can be accomplished when a government is serious about the idea of the Internet as a public good.

Internet speeds across the U.S. lag behind other developed nations’. A recent study put the United States at 31st place for average Internet speeds, behind countries like Denmark, Spain and Moldova. Many blame those slow speeds on a lack of competition in markets dominated by one company and say municipal Internet service can help remedy the situation.

“Having public or quasi-public Internet service providers is a good solution to consolidation because they most likely won’t be sold,” said Daniel Ryan, a local Web developer who helped run the digital operation of Barack Obama’s 2012 presidential campaign. “Do I think if every city did this, Comcast would go out of business? No. But it means there will always be competition.”

Lucy Beard and Nigel Beard, co-developers of Feetz, a 3-D shoe-printing company, work in Co.Lab’s space in Chattanooga in May 2014.
Peter Moskowitz

But supporters of public or quasi-public Internet service are quick to point out that Chattanooga’s success might not be so easily replicable.

The Gig, which serves over 60,000 customers, was built because EPB decided to upgrade its power grid. The company’s main mission was to wire their customers’ homes with fiber optic cables that could communicate meter readings and manage power at a lower cost than the outdated systems used elsewhere. The fiber optic network also allowed EPB to reroute power during storms, helping the company prevent or quickly fix outages without the help of large crews.  

The fast Internet, along with TV and phone service, essentially piggybacked on EPB’s new electrical grid.

Upgrading an electrical grid and providing fast Internet at the same time might work for some smaller cities, but for bigger ones, the idea of ripping up hundreds of miles of roads and rewiring huge apartment buildings and office towers is a nonstarter. A citywide, government-run broadband network in a place like New York City could be prohibitively expensive.

But perhaps the biggest challenge to the future of municipally owned broadband access is getting the idea past legislators and corporations used to the status quo.

Comcast has attempted to block EPB’s expansion twice, suing the company by saying EPB illegally subsidized its Internet service with money obtained through its electricity service. Those suits have been dismissed, but EPB is still facing an uphill battle from state lawmakers in its quest to expand service to customers just outside the Chattanooga city limits.

The company also faced a PR blitz when Comcast ran hundreds of ads in Chattanooga trying to persuade its customers to stay with the company or switch back from EPB.

The challenges faced by EPB might be a sign of things to come for other small local Internet providers: By some counts, as many as 20 states already have restrictions on municipalities’ stepping into the broadband game.

Still, dozens of smaller communities, from Springfield, Missouri, to Burlington, Vermont, have started offering municipally run broadband.

Municipal Internet supporters say providers like EPB can prevent the Internet market from becoming less competitive, which could cause speeds to decrease and prices to increase for many consumers. 

“Chattanooga isn’t going to disrupt the whole business model, but the established players do have to look out,” said Co.Lab’s executive director, Mike Bradshaw. “They are going to have to rise to the challenge. And I think if you give the incumbents a higher bar, they’re going to reach for it.”

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