THE BLOG

How a Mid-Sized Tennessee Town Took on Comcast, Revived Its Economy, and Did It With Socialism

03/06/2015 03:36 pm ET | Updated May 06, 2015
Wesley Hitt via Getty Images

Chattanooga, Tennessee, has provided a model for all American towns who want to see their economies and populations grow quickly. And that model is simple: give sub-par internet providers like Comcast some legitimate competition with publicly-owned municipal broadband networks.

"People understand that high-speed Internet access is quickly becoming a national infrastructure issue just like the highways were in the 1950s," Chattanooga mayor Andy Berke told CNN Money. "If the private sector is unable to provide that kind of bandwidth because of the steep infrastructure investment, then just like highways in the 1950s, the government has to consider providing that support."

If you're sick of having only one cable/internet company in your town and have horror stories about dealing with a global corporation that has a monopoly and doesn't care about you, you aren't the only one. According to a 2011 survey by the FCC, 61 percent of Americans have only one cable and internet provider to choose from. And in 2012, Comcast and Time Warner both ranked in the top ten most hated companies. Comcast even took home Consumerist's grand prize of Worst Company in America in 2010 and 2014. This call between an exasperated Comcast customer just trying to cancel his service and a Comcast rep insisting that he keep the service he doesn't want captures how a lot of Americans feel about monopoly cable providers like Comcast.

Even after the FCC voted to uphold net neutrality and classify internet as a public utility, it's still expected that Comcast's proposed merger with Time Warner will be approved by the end of this month, with "company-specific" regulations. This would likely mean that most Americans, who either only have Comcast or Time Warner cable in their area, will be stuck dealing with the same company that treats them like dirt. 74 percent of Americans surveyed by the Consumer Reports National Research Center feared higher prices, and 66 percent feared poorer customer service. And as the potential Comcast-Time Warner megacorporation is allowed to grow larger, expect it to gobble up the smaller remaining cable providers to become the only game in town for the rest of America.

However, by providing municipal broadband internet to residents, Chattanooga, Tennessee, has shown America the best way to beat back Comcast, even if the merger goes through.

In 2008, Chattanooga formed the Electric Power Board, which is a public utility company owned by the city's taxpayers. The EPB got right to work building a "smart grid" to better service the city's power needs in the event of outages, and to provide super-fast, fiber-optic internet to everyone in the city, which launched in September of 2009. Since its launch, the EPB's network has proven to be 50 times faster than the average American's internet connection, delivering 1 gigabit of information per second. A 2-hour video that normally takes 25 minutes to download on a regular broadband network would only take 33 seconds to download on Chattanooga's network. And like other cable providers, EPB offers TV, internet, and phone service as a bundle, and for less than Comcast charges.

Naturally, Comcast and other privately-owned cable companies tried to sue Chattanooga for daring to compete with them. But with the help of a $111 million grant from President Obama's federal stimulus package, The EPB was formed out of necessity -- city officials figured that if Comcast was the only game in town, they would have little incentive to invest money in beefing up its infrastructure to provide reliable service and faster internet to customers. In fact, Verizon FiOs already said it would stop building out its network in 2013.

"It just didn't look like the private sector was going to bring true, high-speed connectivity to this market," EPB spokeswoman Danna Bailey told CNN Money.

Now, Chattanooga's investment in fast internet infrastructure is paying big economic dividends. NerdWallet rated Chattanooga the 6th best city for economic growth for 2009 to 2012, the years immediately following its decision to invest in high-speed public broadband network. In that same time frame, median household income in Chattanooga grew by 13.5 percent and home values increased by 14 percent. This growth happened despite cruel austerity measures imposed by Tennessee's right-wing state government that resulted in roughly 3,000 jobs lost in the government and construction sectors. However, new businesses are rapidly locating to Chattanooga, eager to capitalize on the fastest internet in the United States.

Volkswagen opened a new plant in Chattanooga in 2011, and recently added an SUV line to the factory, creating another 2,000 jobs. Claris Networks, an 85-person company, moved its data center from Knoxville to Chattanooga "just because of the network," according to company representative Hunter Lindsay in CNN Money. The New York Times mentions how Toni Gemayel, owner of a software startup in Tampa, moved his company to Chattanooga after the rollout of the high-speed municipal network. QuickCue, a company that began in Chattanooga in 2011 to help restaurants digitize their processes, grew so successful that OpenTable, a similar company with a larger market share, bought it for $11 million in 2013.

Chattanooga's EPB didn't cut have to cut out Comcast and impose its own monopoly -- it's simply beating them with faster internet and superior customer service. Online reviews for the two companies in Chattanooga speak for themselves. Comcast's services in Chattanooga have an average rating of one star on Yelp. However, Google reviews of EPB's services are overwhelmingly positive.

"The product itself is very poor. Internet is spotty and unreliable, to say the least. We regularly clocked download speeds of 3 MB/second...agonizingly slow," Rusty W. wrote in a 1-star Yelp review of Comcast's Chattanooga services in January of 2014. "I'm nominating Comcast for the Worst "Customer Service" in the history of customer service award. Zero respect for their customers' time... I could go on and on, but Comcast offers the best punch line. Their advertising campaign says "Don't fall for EPB!" What a joke. Just try Comcast. You won't "fall" for EPB, you'll RUN to EPB!"

"Never going to back comcast. Only ever written about 2 reviews in my life but sooo happy with EPB I had to!" wrote Jen T. in a 5-star Google review of EPB's services in July of 2014. "Customer service is super helpful (and local)."

"EPB puts At&t and Comcast to shame. Once you switch you will never go back," wrote Kyle Simpson in another 5-star review of Chattanooga's public internet provider last August. "If EPB doubled their rates and the other guys offered service for free, EPB would still be the better value."

"Never going back to Comcast! Have had my net connection through epb for 2 years and have never had a outage," Robert Bell wrote in March of 2013. He also gave the company 5 stars.

What's already a reality for Chattanooga may become a reality for more cities and towns in the coming years -- the FCC recently overturned local laws in North Carolina and Tennessee, lobbied for by big cable companies, that make it harder for municipalities to create their own broadband networks. Chattanooga has proven to everyone else that having a public option for internet, cable, and phone service is better for consumers. And though the big companies would never admit it, the competition that socialist local broadband networks provide is the heart of the free-market capitalism they claim to espouse.