Chattanooga, Tennessee

Chattanooga, Tennessee, was once considered a bustling, industrial city with a prosperous manufacturing sector. Located in the southern end of Tennessee Valley, Chattanooga’s proximity to the Tennessee River allowed for efficient transportation of its manufactured products. In 1970, 30.4 percent of Chattanooga citizens were employed in the manufacturing sector. However, the composition of the nation’s labor market began to change with the emergence of technology. Between 1980 and 1990, Chattanooga experienced robust deindustrialization when its manufacturing sector declined 28 percent. This was significantly more than the country’s manufacturing decline of 7 percent during this decade. (Brookings)

Chattanooga had also begun to experience the first effects of suburbanization. Suburbanization occurs when adjacent locations of one’s city experience population increases at the expense of a declining city population. From 1950 to 1970, Chattanooga’s overall population decreased by 9 percent and its white population declined nearly 17 percent; meanwhile, the adjacent parts of Hamilton County saw their populations increase by 75 percent. The primary reasons for Chattanooga’s suburbanization issues were its declining manufacturing sector, lackluster environmental standards, racial tensions, and affordable housing. In fact, the federal government once declared that Chattanooga had the most polluted air of any city in the United States. During the daytime, Individuals had to drive with their headlights on because of the pollution. (Brookings)

Chattanooga government officials knew that change was necessary in order to combat the negative economic and population trends that occurred in the city for multiple decades. In 1984, a strategic plan known as Vision 2000 was one of the city’s successful initiatives to help restore its prosperity. Vision 2000 called for a downtown aquarium; advocated preserving the Walnut Street Bridge; and initiated the creation of more affordable housing and a family violence shelter. By 1992, the Tennessee Aquarium officially opened as the world’s largest freshwater aquarium, and the revitalization of downtown was underway. Subsequently, the Walnut Street Bridge reopened shortly after the Tennessee Aquarium, which created a direct link between the commercial strip along Frazier Avenue in north Chattanooga with downtown, the Aquarium, and the River Park. Continued investment helped create the Creative Discovery Museum, a children’s museum that opened two blocks from the aquarium, and a downtown movie theater a few years later. (Brookings)

Chattanooga’s strategic initiatives entailed extensive planning, citizen engagement, public-private partnerships, and smart investments in transformative projects. These initiatives came to be known as “the Chattanooga way,” which accurately depicts how Chattanooga was transformed from a deserted and polluted city to highly regarded tourist attraction. In addition, structural unemployment began to subside from the growth in employment that directly related to tourism, and the finance and insurance sector. During the 1990s, employment in leisure, hospitality, accommodations, and food services had increased by 26 percent in Hamilton County, which is where Chattanooga is located. Between 1990 and 2000, Chattanooga’s finance and insurance sector employment had increased by 13 percent. (Brookings)

Electric Power Board (EPB) deserves the credit for being the most influential in Chattanooga’s astonishing economic transformation. Owned by the city of Chattanooga, EPB serves 170,000 households and businesses in the Chattanooga metro area and surrounding communities and is one of the largest public power utilities in the nation. EPB began transforming Chattanooga after its initial investments in fiber optics in the late 1990s, and its approval from the Tennessee Regulatory Authority (TRA) to begin building telephone networks. Subsequently, EPB expanded into broadband services after its approval to do so in July of 2002.  In 2007, EPB then committed to a fiber-to-the-home network that would be powered by a “Mensa grid,” which would be more advanced than the traditional smart grid technology. The new grid would create fiber optic connections through a wireless mesh network, while ensuring the most reliable, fastest transmission of data. (3 CS)

A couple complications with building a municipality owned network were the funding and private sector lawsuits. EPB’s Electric division issued a bond in order to receive $162 million to build the fiber optic network, $39 million for electric equipment such as transformers, $26 million to cover the first three years of interest payments, and the remainder to cover the financing charges. In addition, EPB’s Electric division would provide a loan of no more than $60 million to finance the Fiber Optics division startup costs. As for private sector lawsuits, Tennessee Cable Telecommunications Association (TCTA) began strategically filing court claims alleging cross-subsidization between EPB divisions. Comcast would then begin filing lawsuits before public voting on aspects of the fiber optic network. It seemed as if both Comcast and TCTA had one goal in mind: disrupt and delay such voting by casting uncertainty on the project status. This only succeeded in stalling the network, but Comcast did have extra time to get small businesses locked into long-term contracts and to invest $15 million in order to launch its “Xfinity” services in Chattanooga. (3 CS)

On September 15, 2009, Chattanooga announced that it would officially start offering broadband internet connections. Shortly after, EPB received a $111 million grant from the Department of Energy, which would rapidly roll out its smart grid and eventually complete its 10-year deployment plan in less than three years. EPB initially offered plans at 100 Mbps, but soon increased its highest capacity package to 150 Mbps. Local cable companies were already advertising speeds of 100 Mbps, though they offered much slower upload speeds and did not have a 100 percent fiber optic network. One year after EPB’s initial Internet offering, it announced that Chattanooga would be the first community in the United States to have a gigabit of Internet. EPB would charge $350 a month for gigabit service; however, this was still inexpensive compared to many private broadband providers at that time. (3 CS)