Chattanooga's EPB Fiber defies tough telecom odds

Sean Buckley, FierceTelecomEPB Fiber, the municipal broadband arm of Chattanooga-based EPB Power, created a stir last year when it launched its 1 Gbps service, which includes broadband speeds that begin at 30 Mbps, video service and voice, for consumers and residents of the Tennessee city.

Flying in the face of the typical perception that both incumbent telcos and cable operators have cited about municipally run broadband networks, EPB reported this week that it's actually above pace with its subscriber and revenue projections.   

The service provider revealed it has 35,000 Fiber to the Premises (FTTP) customers, 9,000 more than its initial goal of 26,000 customers by the third year in operation. It is also ahead of its third year financial projections, reporting $57.3 million in revenue.

What this means is that the service provider could be out of debt by 2020 instead of its original target of 2027.

Craig Settles, a broadband strategist and community broadband advocate, said EPB's success is a product of plain old good planning and an aggressive community marketing plan.  

"With these latest numbers, EPB currently is breaking even on operating costs," he said. "Their level of success in the face of fierce incumbent marketing and other attacks speaks to the strength of the network."

Settles added that there are "a growing number of cities that own their own public Internet access infrastructure and services, Chattanooga is on track to become one of the most successful publicly-owned networks in the country."

While the municipal broadband segment has certainly seen its fair share of failures, including Burlington, Vt.'s network and the North Carolina cable network in Davidson and Mooresville, there are just as many success stories. Other municipalities to keep an eye on include Massachusetts' Open Cape middle mile initiative and Santa Monica, Calif.'s initiative.

What all municipal broadband service providers are facing is the ongoing protest from local incumbent telcos, cable operators and sympathetic congressional leaders that believe government-backed entities should not be allowed to compete with private companies.

Flanked with powerful lobbying money, a number of large service providers have been successful in helping drive legislation to either ban or limit the growth prospects of municipal service providers.

In Tennessee, a bill backed by area incumbent AT&T (NYSE: T) was passed that will prevent Chattanooga and fellow municipal provider Pulaski Electric from expanding its service outside of their respective utility footprint. What this means is nearby towns it could potentially serve will have to continue to suffer with slow dialup speeds.

The rage against municipal broadband is not just relegated to Tennessee, however. A similar sentiment has emerged in both Georgia and North Carolina.

Driven by incumbent telco CenturyLink (NYSE: CTL), a service provider whose top broadband speeds range from 20-40 Mbps in areas where it has built out its Fiber to the Node (FTTN) network and even less in legacy CenturyTel areas, North Carolina lawmakers passed an anti-municipal broadband bill last May. Beverly Perdue, North Carolina's governor, asked the legislature rework the bill but did not veto it.

More recently, the Georgia Senate introduced the Broadband Investment Equity Act, which would create barriers for communities that want to build and operate their own networks.

What's interesting is that the providers that are lobbying so hard to stop these networks from being built, are the same ones that have either refused to build or expand their respective broadband services.

And while it's easy to say that these municipal providers will be faced with challenges in creating a critical mass of subscribers, the networks they are building can be an attractive asset to a town or city in that they can also leverage the network to save on their own communications costs.

A community network can also be an attractive selling point for new businesses that are seeking to open new locations as buildings with fiber could be an attractive selling point for new tenants.

EPB Fiber will obviously never have the cash and muscle as an incumbent telco or cable MSO, but its success bolsters the idea that communities that want broadband can get it if they're willing to weather the storm of incumbent protest.--Sean

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