On the border of Tennessee and Kentucky, an electric cooperative looks to a more connected future. The Tri-County Electric Cooperative that operates across state lines is preparing to build a state-of-the-art network for high-speed Internet service throughout Trousdale County, Tennessee. This will be the first year of construction for the cooperative after several years of planning.

Tri-County Electric plans to soon begin services to Trousdale County, the smallest county in Tennessee. Many of the county's 8,000 residents' choice is limited to Comcast and AT&T, and Tri-County Electric's Vice-President and General Manager Paul Thompson noted that people in the county often only subscribe to about 6 Mbps download and 1 Mbps upload. With a steady membership base of 50,000 spread across two states and a close relationship with the county, the electric co-op is in a good position to move forward with the Fiber-to-the-Home (FTTH) project. The cooperative intends to offer an affordable base package that provides faster, more reliable connectivity than what the incumbents are willing to offer the rural communities.

Funding From The Feds

Since 2014, Tri-County Electric Cooperative has actively pursued financing for a FTTH network in the county. The co-op applied for a grant through the Rural Broadband Experiments program managed by the Federal Communications Commission. They did not receive any funding, but the process resulted in a tangible plan.

The process of applying for the grant built up community support for the project and enabled the co-op to identify key assets. As part of the grant application, they noted which census blocks they expected to connect and what community anchor institutions, such as schools, libraries, and government buildings, could be included. The Trousdale County government even passed a resolution giving explicit permission for Tri-County Electric to build and operate a FTTH network. 

One Touch Make Ready (OTMR) policies are recognized as a way to cut down on the expense and the time it takes to deploy fiber optic networks. At least three sizable urban communities have adopted OTMR practices to streamline fiber optic construction and ensure consistent standards. For other communities looking at ways to encourage brisk fiber optic investment, it pays to study the language of OTMR resolutions and policies.

OTMR allows a pre-approved contractor to move cables belonging to more than one entity on one visit to the pole to make room for the new fiber optic cable. This is a departure from the old method, in which each entity takes turns visiting the pole in question to move only their wires. The old approach is time consuming because each entity must take turns in the order in which their wires are installed on the poles. If one entity causes a delay, every other entity that needs to work after them must also wait. What follows is a snowball effect and an entire project can fall far behind schedule.

San Antonio, Texas

San Antonio’s municipal utility, CPS Energy, adopted a broad set of pole attachment standards that include specific requirements for OTMR, including what needs to happen before, during, and after the process.

The standards lay out administrative procedures, technical provisions, and specific provisions for both wired and wireless attachments. It incorporates recommendations from the FCC on how best to expand broadband while also weaving in safety standards from the Occupational Safety and Health Administration (OSHA). In the introduction, CPS Energy writes:

From a holistic perspective, the Standards seek to balance the competing needs and interests of multiple communications providers to access and utilize CPS Energy Poles, while at the same time recognizing that the core purpose and function of these Poles is for CPS Energy’s safe and reliable distribution and delivery of electric services to CPS Energy customers. Hence, any use of CPS Energy’s Poles must at all times ensure the continued operational integrity, safety and reliability of CPS Energy’s Facilities, electric services, personnel and the general public.

This is the transcript for Episode 257 of the Community Broadband Bits Podcast. Christopher Mitchell and Colman Keane discuss Chattanooga, Tennessee. The city's network has community support with a high number of subscribers. Listen to this episode here.

Colman Keane: When you look at Chattanooga, it was really the perfect time, and really a good place to launch this. When you're able to bring something like this to an engaged community, then you can get the benefits that Chattanooga sees.

Lisa Gonzalez: This is episode 257 of the Community Broadband Bits Podcast from the Institute for Local Self Reliance. I'm Lisa Gonzalez. Colman Keane is back on the show for an update on the situation in Chattanooga, Tennessee. In addition to surpassing expectations for subscribers, the municipal utility is doing very well financially. Electric rates have been kept in check for everyone in the EPB service area, regardless of whether or not they use the fiber to the home Internet service, and the infrastructure smart grid has kept expensive outages to a minimum. Colman and Christopher also talk about the Chattanooga community, and how it's culture has contributed to the success of the network, which has in turn provided multiple benefits.

First, we want to urge you to take a moment to help us out, by contributing at Muninetworks.org, or ILSR.org. Shows like this don't have commercial interruptions, and we like it that way. But they still cost money to produce. If you're already a donor, we want to thank you. Your contributions help spread the facts about municipal networks, so kudos to you for participating. Now, here's Christopher with Colman Keane from Chattanooga's EPB.

Christopher Mitchell: Welcome to another edition of the Community Broadband Bits Podcasts. I'm Chris Mitchell. Again, coming at you from Mountain Connect in Keystone, Colorado, a wonderful regional conference, one of the best in the nation. I'm here today with Colman Keane, the Director of Fiber Technology for EPB Chattanooga. Welcome back to the show.

Colman Keane: Thank you very much.

As Newport Utilities (NU) in Tennessee moves forward with a plan to offer Fiber-to-the-Home (FTTH) connectivity, they are holding public informational meetings. At a recent meeting, locals received the plan positively, reinforcing that idea that NU is on the right track.

The network will be funded by a $3.5 million interdepartmental loan from the utility’s electric system in addition to a USDA loan. The first phase of the build out will connect just under 6,800 residential and approximately 1,200 business premises. It will also bring electric substations, the city of Newport, emergency services, and local schools on to the new infrastructure. The second phase will continue to connect remaining NU’s service area.

Why Are THEY Here Anyway?

In recent weeks, anti-muni groups from Knoxville and other areas have targeted the project, raising questions among the community; NU officials wanted to address the misinformation directly. Chair of the board Roland Dykes said:

“There has been alot of publicity, negative and positive in the community and we wanted to do this to make sure everybody understood what we are trying to do, and what broadband will mean for our community.” 

WNPC reported that “virtually all of the attendees were positive about the plan, because many areas of Cocke County are without Internet service.” WNPC also noted that the only unfavorable opinion was from an attendee who refused to answer when asked if he was backed by the cable industry. That individual doesn’t live in Cocke County.

Raising Speeds, Holding Down Rates...A Muni Tradition

In addition to studying how and where local communities examine the potential for publicly owned Internet networks, we’ve looked at rates over time in select areas of the country. We recently put together a comparison of historical rates for municipal networks in Tennessee. Our findings are consistent with what we’ve seen all over the country - publicly owned networks don't hesitate to raise speeds while keeping rates affordable. We've documented the data on our fact sheet: Municipal Networks: Speed Increases & Affordable Prices.

Not Like The Big Guys

National providers make it a habit to periodically raise rates and over time those increases add up. They’ve done it so often, subscribers have come to expect it on a regular basis. Price increases don’t usually include a speed increase. With no need to appease shareholders, officials in charge of publicly owned networks can set rates at a level that allow a network to be sustainable rather than rates that maximize profits.

Publicly owned networks have increased speeds for subscribers, often with little or no fanfare other than quietly alerting subscribers to their improved service. Places Chattanooga’s EPB, Morristown’s FiberNET, and BET in Bristol are in a much different habit than Comcast or AT&T - they increase speeds with no increase in price. Other Tennessee communities have increased speeds significantly with only slight price increases over years of service.

Speeds, Rates Then And Now

On our fact sheet, we include prices for the basic tiers now and when the network began offering services. We also compare the basic speeds when the network began serving the community and today. The results reflect how publicly owned networks focus on providing fast, affordable connectivity to subscribers rather than collecting profit from customers.

Some results may surprise you:

For the second week in row, our staff has felt compelled to address a misleading report about municipal networks. In order to correct the errors and incorrect assumptions in yet another anti-muni publication, we’ve worked with Next Century Cities to publish Correcting Community Fiber Fallacies: Yoo Discredits U Penn, Not Municipal Networks.

Skewed Data = Skewed Results

Professor Christopher S. Yoo and Timothy Pfenninger from the Center for Technology, Innovation and Competition (CTIC) at the University of Pennsylvania Law School recently released "Municipal Fiber in the United States: An Empirical Assessment of Financial Performance." The report attempts to analyze the financial future of several citywide Fiber-to-the-Home (FTTH) municipal networks in the U.S. by applying a Net Present Value (NPV) calculation approach. They applied their method to some well-known networks, including Chattanooga's EPB Fiber Optics; Greenlight in Wilson, North Carolina; and Lafayette, Louisiana's LUS Fiber. Unfortunately, their initial data was flawed and incomplete, which yielded a report fraught with credibility issues.

So Many Problems 

In addition to compromising data validity, the authors of the study didn’t consider the wider context of municipal networks, which goes beyond the purpose of NPV, which is determining the promise of a financial investment.

Some of the more expansive problems with this report (from our Executive Summary):

S&P Global Market Intelligence - May 26, 2017

Hard Data on Municipal Broadband Networks

Written by Sarah Barry James

There is a dearth of good data around municipal broadband networks, and the data that is available raises some tough questions.

A new study from University of Pennsylvania Law School Professor Christopher Yoo and co-author Timothy Pfenninger, a law student, identified 88 municipal fiber projects across the country, 20 of which report the financial results of their broadband operations separately from the results of their electric power operations. Municipal broadband networks are owned and operated by localities, often in connection with the local utility.

...

Yet Christopher Mitchell, director of the Community Broadband Networks Initiative at the Institute for Local Self-Reliance, argued that Yoo's study did not present an entirely accurate or up-to-date picture of U.S. municipal networks.

"When I looked at the 20 communities that he studied — and his methodology for picking those is totally reasonable and he did not cherry pick them — I was not surprised at his results because many of those networks are either in very small communities … and the others were often in the early years of a buildout during a period of deep recession," Mitchell said.

As an example, Mitchell pointed to Electric Power Board's municipal broadband network in Chattanooga, Tenn. — one of the five networks Yoo identified as having positive cash flow but at such a low level that it would take more than 100 years to recover project costs.

...

In fact, without the revenue generated by the fiber-optics business, EPB estimated it would have had to raise electric rates by 7% this year.

According to Mitchell, Yoo's study captured the Chattanooga network when it was still "small and growing," but misses "what's going to happen for the rest of the life of the network, which I think is the more important part."

...

Telecompetitor - May 25, 2017

Municipal broadband networks do not have a strong financial track record, according to an analysis conducted by the University of Pennsylvania’s Center for Technology, Innovation and Competition. The municipal broadband financial analysis, which looked at 20 municipal fiber projects, found that only nine were cash-flow positive and that of those, seven would need more than 60 years to break even.

...

An Opposing View

Municipal network advocate Christopher Mitchell, director of the Community Broadband Networks Initiative at the Institute for Local Self-Reliance, pointed to several flaws in the Penn Law municipal broadband financial analysis.

He noted, for example that a substantial portion of the 20 networks studied were “early in the process and very small.” He also argued that the 2010-2014 study period may have biased the results, as that period included a recession and subscribership for some of the networks has increased substantially since 2014. He noted, for example, that EPB’s broadband network in Chattanooga had about 50,000 to 55,000 subscribers in 2014 but has now hit the 90,000 mark.

The Penn Law authors’ approach was “not the proper way to measure these networks,” said Mitchell in a phone call with Telecompetitor. The analysis “doesn’t take into account jobs created or the impact on the municipal budget,” he said.

He argued, for example, that a municipality that previously paid $1 million annually for connectivity might instead pay itself $500,000 for connectivity on the municipal network.

...

Read the full story here.

Congratulations to Chattanooga’s EPB Fiber, which in April exceeded 90,000 subscribers and contributed to lower power rates for all EPB customers.

Savings For Everyone

While the increased subscribership is cause for celebration, an equally important chapter in the story is that EPB lowered power rates by 7 percent as a result of upgrading to a “smart grid.” All EPB customers may not subscribe to EPB Fiber's Internet access, but all electric customers benefit from lower electric rates. Chattanooga’s fiber network operates as the main mode of communications for the grid, while also providing Internet services to businesses and residents.

The grid and fiber combination includes sensors, meters, and switches that enable EPB to track energy use and manage power outages. During one storm in 2013, the grid’s switches reduced outage times by 55 percent, saving EPB $1.4 million. In late April, the area endured severe storms, but network officials estimate the smart grid prevented power outages to 17,800 customers.

In an interview with Christopher last November, EPB’s former President and CEO Harold DePriest detailed how Chattanooga’s fiber network helps bring down costs:

“We built a smart grid on the back of that fiber, and that has very literally cut the number of outages and the length of outages here in Chattanooga by 50 to 60 percent... that one thing is saving our community's businesses somewhere in the neighborhood of 50 to 60 million dollars a year. That's pretty substantial.”

J. Ed. Marston, EPB’s vice president of marketing and communications, said: