Chattanooga Mayor Andy Berke
Chattanooga Mayor Andy Berke doesn’t mince words. "We can't have digital gated communities,” he said in a recent CNN report about the East Tennessee city’s plan to make high speed internet available to its poorest public school students. “The power of the web should be an equalizer,” he continued, “not something that creates greater inequity."
Chattanooga’s no longer the grubby little factory town that CBS news anchorman Walter Cronkite called out for having the worst air quality in America. The air and water is clean again. The vistas are green and its free public Wi-Fi service has been described as a model for American cities. The dirtiest city in America has been rechristened the “Gig City” and a “playground for pioneers” because it offers residents and businesses access to one of the fastest and most fully developed fiber and internet services in the world, installed and administered by its publicly owned electric power system, EPB.
How fast are Chattanooga’s 10 gigabits-per-second internet connections? To put things in perspective: 10 gigabits equals 10,000 megabits. Memphis’ current internet speeds top out at between 70-75 megabits-per-second for downloads and significantly less for uploads. In practical, home-use terms, with Chattanooga’s 10 gigabits-per-second system internet users can fully download an entire HD movie in about 3 seconds. When it comes to business applications, the sky’s the limit, and venture capital is paying attention.
There was a time when Memphis imagined itself to be a digital leader. A public/private partnership was formed at the turn of the century and Memphis Networx entered the market in 2002 as a wholesale carrier, operating in the dark with no clear connection to the average Memphian. Promises to bring connectivity to under-served communities never meshed well with the company’s common carrier business model and were pegged to profits that never arrived.
Networx was dysfunctional from the start. Its private side operated with little or no public oversight and even less interest in public input and engagement. City officials, on the other hand, weren’t prepared for the realities of the telecom’s investment and consumption growth model, and MLGW ratepayers, who once owned 80 percent of Networx, watched their share slip below 50 percent in 2006, when private investors operating under the umbrella of Memphis Broadband, LLC guaranteed a $7 million loan after the Memphis City Council denied additional funding. Shortly thereafter, the new majority owners instructed Networx management to search for a buyer. In 2007, after investing more than $30 million in Memphis Networx, MLGW sold the property for $11.5 million. That was just enough to pay off the company’s debts with $2 million left over to split between private investors.
Days after MLGW announced the impending sale, Business Week published a cover story slugged: “Telecom: Back From the Dead!” Demand for fiber was exploding and data caps were on the horizon for major providers. Communications Infrastructure Investments, the company that purchased Memphis Networx for a fraction of the buildout price, recognized bandwidth as a hot commodity. Now known as Zayo, it has built a nationwide network out of isolated properties and “fiber orphans.”
While Memphis Networx was connected to MLGW, it remained, primarily, a wholesale business, dabbling in data storage and security. Chattanooga’s high speed fiber net was created specifically to improve the city’s power grid and make city services faster and more efficient. With a smart grid, outages could be identified and fixed in minutes if not seconds. According to EPB’s calculations, the automation process would save millions annually. Of course, what resonated most with residents, wasn’t the promise of savings on public services. It was the promise of super fast (and super reliable) phone, TV, and internet access. So, in 2007, at about the same time Memphis was getting out of the telecom business, EPB was charting a 10-year investment in Chattanooga’s future. That plan got a $111 million boost two years later when, in 2009, president Barack Obama’s Recovery and Reinvestment Act included provisions to aid in the development of digital infrastructure. In addition to Federal money, Chattanooga issued $220 million in bonds to finance the project — $30 million less than the amount Memphis issued to create FedExForum. The high speed internet service went online in 2010.
Is Chattanooga positioned to be the next Silicon Valley? Probably not that, exactly. But in an increasingly automated world, it’s well ahead of the game, and attracting more international attention. The former dirtiest city in America has rewritten its story. Outdoors Magazine identified it as “the Best Town Ever” twice, and public amenities include free public Wi-Fi zones and a library that offers coding classes and access to 3D printers. Now, in addition to all that, Chattanooga is leveling the playing field in public education with programs targeting under-served students and their families.
Now, for the hard question? Could what happened in Chattanooga have happened in Memphis? The answer is maybe, but probably no. Maybe, because the urge was correct. The loop was in place and ready at the moment social media and video streaming technology exploded. But these kinds of municipal projects have worked best in places where there has been a high degree of public engagement, and that was never Networx’s style. The business model made little sense to the average layperson, and it was never made clear how an expensive-to-operate wholesale business might improve public life. In terms of generating civic pride and public support, Networx couldn’t have been worse. On the other hand, Memphis’ telecom venture was always underfunded. Fifty-year public planning windows didn’t align with interests of investors looking for a five-year payoff. Negative press generated by municipal funding squabbles didn’t help, nor did a 2005 study showing that the company was overstaffed, overpaid, and overvalued.
Chattanooga’s path to becoming a technological leader wasn’t easy either. Like MLGW and Networx, EPB faced legal challenges from big cable and internet providers. It’s been hampered by ordinances designed to limit expansion and prevent the public utilities from pricing legacy providers out of the market. There has been criticism. There has been complaint. There have been obstacles to overcome and problems to solve. But six years on, The Gig is coming into its own, and Mayor Andy Berke has been summoned to Memphis to talk about the future.
Memphis magazine's popular luncheon series, "A Summons to Memphis," welcomes guest speaker Mayor Andy Berke of Chattanooga, Tennessee. Under his leadership Chattanooga has seen dramatic decreases in property crime, violent crime, unemployment, and foreclosures. The event is Thursday, June 2nd, 11am-1pm at Holiday Inn, University of Memphis. Purchase tickets at summonstomemphis.com.
