The essence of the objection to municipal involved in communications is that public intervention will undermine the private sector due to the cost advantages uniquely available to governmental entities, thus creating a barrier to public entry. As we have shown, however, this objection fails in two ways: First, municipalities tend not to become involved in communications in markets characterized by effective competition; and second, where municipalities do become communications providers, private entry into the market tends to be stimulated rather than suppressed.
Chattanooga Fiber Network Reduces Cost of Electricity to All Customers
The Chattanooga Gig continues to benefit the community. We have covered some of the jobs that it has created, how it has lowered City expenditures and improved street lighting, and the recently announced speed increase without hiking rates. Now, EPB can also boast about how the network has significantly cut power costs.
Dave Flessner from the TimesFreePress.com reports that, thanks to fiber enabled smart grid technology, Chattanooga's electricity rates are 5 percent less than they would be without the network. From the article:
“The savings from the smart grid and the payments from the telecom division to our electric system are exceeding our costs and that is helping save money for every customer of EPB, whether you are signed up for any of our telecom services or not,” [EPB President Harold] DePriest told EPB directors Friday. “If we hadn’t made this investment, your electric bills would be higher.”
In addition to savings for every electric consumer, the network has been wildly successful for its video, phone, and Internet offerings. There are 40,000 users to EPB and its telecom division generates more profit than its 73-year old electricity utility. Chattanooga is ahead of the game:
EPB Chairman Joe Ferguson said the [American Reinvestment and Recvery Act] stimulus funds helped speed the installation of the smart grid network from the original plan of 10 years down to less than two years.
“We’re exceeding the goals we set in our business plan,” Ferguson said. “We’ve stayed ahead of schedule; we’ve stayed on budget, and the number of customers who have signed up is better than we expected. The acceptance has been huge and that’s where the revenue comes from that we can plow back into our business and help keep our electric rates down.”
Chattnooga is regularly visited by community leaders from around the country interested in finding out more about their network and how they created it. Obviously, word has gotten out about the many advantages to owning such valuable infrasctructure. From the article:
With its extra $200 million-plus investment in its fiber optic network, EPB also is paying more than $4 million extra a year in local taxes and is attracting utility visitors from around the globe interested in seeing how the smart grid is working here.
The biggest advantage, DePriest said, is the potential to recruit businesses eager for the first citywide gigabit-per-second Internet service or the improved power reliability of the smart grid.
“This is going to end up being another competitive advantage for our city either as new plants are looking at Chattanooga or existing plants make their case for investment here rather than at other company locations,” DePriest said.
The best place to learn more about Chattanooga's fiber network is by reading our case study: Broadband at the Speed of Light.