Study: Chattanooga partly responsible for rise in government-owned internet

Study: Chattanooga partly responsible for rise in government-owned internet

Bureau Chief’s Note: This is the second of a three-part series about municipal broadband in Tennessee. You may read Part One here. You may read Part Three here

Government officials nationwide have pondered the idea of installing their own municipal broadband projects, and Tennessee has had more of an impact than one may think.

The author of a new study, Christopher Yoo, a professor at the University of Pennsylvania law school, said widespread news coverage of Chattanooga’s EPB has influenced the thinking of several government officials throughout the country.

Christopher Yoo (photo courtesy of the University of Pennsylvania)

In 2010, as reported, EPB officials accepted $111 million of federal stimulus money — taxpayer dollars — to create their own municipal broadband network.

Chattanooga’s EPB, Yoo went on, was supposed to cost $162 million but ultimately cost $170 million. That network will take 412 years to turn cash-flow positive, he said.

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EPB spokesman John Pless said that’s incorrect.

“Contrary to the report’s conclusion that EPB will not be able to pay off its fiber optic debt for 412 years, we have already paid off the fiber optic debt,” Pless said in an email.

We do not agree with the conclusions of this report.”

In his study, Yoo said EPB’s fiber operations generated more than $2 million in positive cash flow between 2010 to 2014.

“Unfortunately, this number is dwarfed by the $162 million in bond indebtedness that EPB undertook to finance this venture,” Yoo wrote.

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EPB’s cash flow, he went on, was negative in 2012, 2013 and 2014.

“The instability of cash flows caused by major financing makes it difficult to determine whether this represents a broader trend that is likely to continue,” Yoo wrote.

But the people in charge of municipal broadband projects around the country are unlikely to duplicate whatever successes EPB has had. That’s because they’re not taking in any stimulus money, Yoo wrote.

Contact Christopher Butler at chris@tennesseewatchdog.org

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