The city of Morristown, Tennessee received more positive economic news recently when Sykes Enterprises, a global company that operates in more than 20 countries, announced plans to open a call center in an abandoned big-box store and connect to the city’s municipal network, FiberNet. Sykes estimates that the call center will employ up to 500 workers over the next three years, the large majority of which will come from the Morristown community.
According to the president of the Morristown Chamber of Commerce, Marshall Ramsey, the existence of FiberNet played a role in attracting the 50,000-plus employee firm to Tennessee:
For Morristown to be able to have a local provider and a secondary provider in AT&T with a gig gives us that redundancy that most companies can’t get elsewhere in the country.
FiberNet is operated by Morristown Utility Systems, the publicly owned electric and water utility. It began offering gigabit Internet speeds in 2012, though it has served local businesses since 2006.
This is the second time in two months WBIR – Morristown’s NBC network – has run a story about FiberNet. In May, the station covered the way in which the municipal fiber network has stimulated economic development by increasing competition between service providers. When FiberNet upgraded its network to provide gigabit speeds, the incumbent telephone company in Morristown, AT&T, responded with some upgrades of its own. Morristown is one of a select few cities to have multiple gigabit-offerings, along with neighboring Chattanooga, Tennessee.
Chris interviewed General Manager and CEO of FiberNet, Jody Wigington, in 2013 to discuss the municipal network’s deployment. You can find the interview here.
When a community invests in a municipal broadband network, it often does so because it hopes to reap economic benefits from the network. Much has been written about the positive relationship between municipal Internet networks and economic development, including a White House report published in January 2015. Municipal networks create jobs by serving existing businesses and attracting new businesses to local communities, increase productivity by allowing individuals to telecommute and work from home, support advanced healthcare and security systems, strengthen local housing markets, and represent long term social investments in the form of better-connected schools and libraries. They also create millions of dollars in savings that can be reinvested into local communities.
When municipalities choose to deploy fiber networks, they introduce Internet services into the community that are not only significantly faster than Digital Subscriber Lines (DSL) and cable, but more reliable. With fiber connections, businesses and individuals are far less likely to experience temporary blackouts that can harm their ability to provide services to customers. And because these networks are locally-owned and operated, business owners do not have to spend hours on the phone with an absentee Internet Service Provider like AT&T in the (albeit unlikely) event of a problem.
Community Broadband Networks and the Institute for Local Self-Reliance have catalogued numerous examples of economic development achievements that have occurred as a result of cities and counties deploying a municipal broadband network. Below, you can find a wide range of articles, studies, blog posts, and other resources that speak to the economic successes enabled by municipal networks, organized by topic:
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.
Even though there are several publicly owned networks in Tennessee, existing state statutes create barriers discouraging investment. This year, there is a movement at the state Capitol that may change the environment.
The Jolt Digest and CivSource recently reported that four bills aimed at expanding municipal networks in Tennessee have strong support in Nashville. These Tennessee bills are a refreshing change from bills that are pushed by the cable and telephone companies to limit investment in next-generation networks.
However, these bills are often killed quickly in committee or subcommittee due to the tremendous lobbying power of the big cable and telephone companies.
According to the Jolt Digest, two bills are location specific. From the article:
S.B. 2005 and H.B. 1974 would expand the municipal electric system’s provision of broadband service in Clarksville, Tennessee’s fifth largest city, while S.B. 2140 and H.B. 2242 would allow Trousdale County to contract with a rural electric cooperative to provide broadband services.
As the rules stands, municipal electric utilities that offer broadband cannot expand beyond their electric service territory. Clarksville would like to reach out further to offer services to schools, hospitals, and industrial parks. CDE Lightband now provides a gig product that community anchors need. According to Christy Batts at CDE Lightband, the network recently upgraded residential customers without raising rates. The lowest Internet access speed available to new customers is now 50 Mbps for $44.95 per month.
The Jolt Digest describes the remaining bills as intended to redefine the state's current definition of "telecommunications." The change would allow electric cooperatives to use their existing dark fiber to reach customers that are not served by rural telephone cooperatives. The goal is to encourage economic development, education and health care.
As we so often find, these bills have bipartisan support. Though Republicans at the state and federal level tend to support big cable and telephone company positions more often than Democrats, both Republicans and Democrats at the local level overwhelmingly support the decision being made at a local level rather than state or federal preemption.
PDFs of the full text of the bills are available online:
Located in the northeast corner of Tennessee, Morristown Utility Systems (MUS) offers gigabit broadband throughout a region that covers 30,000 residents and businesses. I recently spoke with MUS General Manager and CEO, Jody Wigington, about FiberNET’s progress and he had much to report, starting with over $5 million in cost savings for local businesses, residents, and the local government itself.
Asked about cost savings to Morristown’s city government, Wigington pointed to $840,000 in total savings from a smart meter program - a combination of lower annual power consumption and operational efficiencies. Another $20,000 in annual savings is due to the county not having to pay out-of-town IT contractors to maintain its network because the required expertise can now be found locally thanks to MUS’s dedicated network specialists.
Morristown businesses and residents are also saving, to the tune of $3.4-million annually thanks to FiberNET’s introduction of lower prices in the local broadband market. That’s $3.4-million, every year, which can be spent locally rather than being siphoned out of the community to corporate shareholders.
In terms of revenue, FiberNET generated $8.6-million during the most recent fiscal year and is projected to generate $8.8-million during the current one. FiberNET's solid financials have translated into increases in MUS’s payments in lieu of taxes (PILOT) to the city, which now amount to $350,000 per year, up from $150,000 in 2010. FiberNET’s strong financial performance resulted in MUS becoming cash flow positive just two years after launch, and net income positive after five years. Both of these key milestones were reached significantly quicker than initially projected.
MUS FiberNET’s impact on economic development is also notable. Oddello Industries, a contract furniture manufacturer that relies on FiberNET for its communications, recently announced a $4-million expansion in Morristown, resulting in 228 new jobs. Oddello CEO, Tom Roberts, cited “reliable utilities” among the reasons for investing in Morristown. This growth is part of a larger trend for Oddello, which has grown its Morristown presence from 35 to 415 employees in just the past year.
Another sign of FiberNET’s impact on economic development is the recent decision by Molecular Pathology Laboratory Network (MPLN), a global leader in personalized laboratory medicine, to locate its primary backup facility in Morristown. As a global provider of diagnostics to hospitals, medical labs and physician groups, MPLN requires ultra-reliable data replication and disaster recovery services, which FiberNET enables.
Morristown, Tennessee, is one of very few communities where anyone in town can immediately get a gigabit delivered to their home and business. General Manager and CEO Jody Wigington of the municipal electric utility, Morristown Utility Systems, joins me to discuss why they built their network and how it is has benefited the community.
The network has also attracted businesses that otherwise might not consider the community for an investment. Competing providers have kept their prices lower than they do in communities with less competition, a tremendous benefit. MUS Fiber keeps more than $3 million in the community each year. Just think of that -- distributing $3 million among the residents of a community each year. That is real money that helps boost the local businesses.
We also talk about the origin of the system, how it has benefited the electric utility, and advice for other communities that are considering their own network investments. Read our additional coverage of MUS Fiber.
Located in the northeast corner of the state of Tennessee, Morristown Utility Systems offers FiberNET to Morristown's 30,000 residents and businesses. MUSFiberNET is another community that decided to take control of its destiny and invest in a municipal broadband network.
And by offering 1 Gbps anywhere in the community, Morristown is in the ultra-elite category of broadband in America.
We featured Morristown in one of the Muni FTTH Snapshots way back in June of 2009. They were doing well at the time but this great news shows how Morristown has brought next-gen, affordable, and reliable capabilities to anyone who wants it.
Morristown's Gig announcement never received the attention given to Chattanooga or Google's roll-out in Kansas City, which is unfortunate.
For commercial users, the Gig runs $849.00 per month, a ridiculously inexpensive price point compared to what large carriers commonly charge for the service. Morristown Schools are also taking advantage of the network, including making full use of the gig service. Residential prices vary from 6 Mbps/4 Mbps, download and upload speeds, for $34.95 to 20 Mbps/10 Mbps for $74.95 and MUS FiberNET also offers a variety of triple-play bundles.
Like many other communities in Tennessee, Morristown has few choices for service from private providers. After promising the state legislature major investments in Tennessee in return for favorable legislation, AT&T decided to only served high end, dense neighborhoods, as we have seen just about everywhere else.
Communities that are satisfied with last generation connections and having no control over the networks on which they depend can make do with AT&T and cable companies. But those who want universal access to fast, affordable, and reliable services should consider building a community fiber network.
Another snapshot, mostly containing technical data on the Morristown FTTH network - FiberNET. Like many networks in Tennessee, this network is run by the municipal utility. They started signing up customers in May 2006 and by late 2008 already had a take rate of 33%.
Perhaps the most significant sign of success is that neighboring communities want service as well.
Opponents of municipal broadband initiatives contend that public broadband projects are “failures” if they do generate “profits” in the amounts, and within the short time periods, that investors and the financial community expect of private corporations. To define success this way is to miss two fundamental points: (1) public entities have fundamentally different ways of creating economic benefits for the community than the private sector; and (2) municipalities often undertake a public communications initiative precisely because the project would not be profitable enough for a private company.