Wave of the future?
Like some of Chattanooga’s other online entrepreneurs, Dr. Busch appreciates the fact that the service provided by the city’s utility, EPB, is “symmetrical,” which means that it allows subscribers to send files as quickly as they receive them. The utility assumes that “everyone’s download is someone else’s upload,” Katie Espeseth, EPB’s vice president of fiber-optics, explained in a phone interview.
Public or private?
Graham Richard, the former mayor of Fort Wayne, Indiana, is an outspoken champion of broadband — public and private — as an economic-development tool. Richard persuaded Verizon to make Fort Wayne a pilot city for the rollout of its highly touted FiOS service. More recently, Google chose Kansas City as a site for its one-gigabyte project. By and large, however, private providers have concentrated on places with relatively high densities of affluent households. When the population is sparser or less well-off, these companies acknowledge that they don’t get a big or quick enough return to satisfy their investors.
When public agencies and nonprofits get into the broadband market, it is usually only after they have failed to persuade phone or cable companies to do the job, according to Wes Rosenbalm of BVU in Bristol, Virginia. Echoing the pattern of rural electrification in the 1930s and ‘40s, government has stepped in after figuring out that some parts of the country hold little appeal for investor-owned companies. The big cable and phone companies will invest in Los Angeles or New York City, but not in “your second and third-tier communities,” Rosenbalm observed.
Going with your gut
It is not easy to measure the economic value of broadband, Rosenbalm and others agree.
A 2010 study, conducted by the Public Policy Institute of California, found a causal link between the arrival of broadband and employment growth, with the most striking effects seen in the least populated areas. Another analysis (commissioned by a trade association known as the Fiber to the Home Council) found an increase in home-based businesses, a trend also noted by many of the local agencies and utilities behind these initiatives.
In Reedsburg, Wisconsin, public broadband service has allowed Lands End to develop a kind of virtual call center, with many of its customer service representatives working out of their homes. In Powell, Wyoming, a company called Eleutian is teaching conversational English to students in South Korea; some of its faculty members are local schoolteachers working from home after hours, thanks to a videoconferencing link that reaches over the Rockies and across the Pacific.
Fiber-to-the-home is a “wonderful, wonderful benefit for your community,” Rosenbalm said. Besides its recruiting value, the service has been a big plus for southwestern Virginia’s banks, hospitals, and schools, according to Rosenbalm. Although “I don’t know that you can fully quantify the benefits for most organizations,” he said, “I have no doubt that we have improved the quality of life drastically.”
“From the point of view of retaining and gaining jobs, I can give you example after example,” Graham Richard of Fort Wayne said. “What I don’t have is a long-term double-blind study that says it was just broadband.” But “as a leader, sometimes you go with your gut,” Richard said, adding that his gut tells him infrastructure investments are “probably the most long-lasting and important decisions that local leaders make.”
Time to go national?
Richard and others have called for a national initiative modeled on the Rural Electrification program of the New Deal era. Such an effort would not require a huge amount of federal money, according to Christopher Mitchell, who oversees a public-broadband initiative at the Institute for Local Self-Reliance, a nonprofit research and advocacy organization based in Minneapolis.
“If the public sector is involved,” people assume that “the federal government is going to have to spend a lot of money,” Mitchell said. But because broadband roll-outs tend to be self-supporting after the first three to five years, they can be financed with long-term loans, in contrast to what he says is the industry’s (and much of Washington’s) favored approach of “shoveling money” to commercial providers with the money to “hire lots of lobbyists.”
Public broadband can be an efficiency booster for the utilities that provide it, Mitchell pointed out. In Chattanooga, EPB is using its fiber network to install 1,500 smart electrical switches, which are expected to reduce power outages by 40 percent, translating into a $40 million savings for customers. At present, when a tree falls on a power line, the utility often has to have a truck driver cruise the neighborhood searching for the trouble spot. The new system will make it possible to pinpoint the source immediately and restore power in “milliseconds as opposed to hours,” according to Espeseth, the EPB spokesperson.