Cleveland Utilities President Says It Needs To Catch Up In Broadband Technology

Tuesday, September 29, 2015 - by David Davis

Cleveland Utilities President and CEO Ken Webb said current state law prohibiting municipal utilities from extending broadband services outside their service territory creates a hardship for many Tennesseans. 

Mr. Webb was the guest speaker Tuesday at the weekly Cleveland Rotary Club meeting at the Museum Center at 5ive Points. 

He said the utility is behind in broadband technology and needs to catch up. Its position with high-speed Internet now is much as it was in the 1930’s and 1940’s with electricity. 

Tennessee Attorney General Herbert Slatery filed a lawsuit earlier this year to overturn the Federal Communications Commission’s decision allowing the Electric Power Board in Chattanooga to offer high-speed Internet service beyond its footprint. The lawsuit filed in the 6th U.S. Circuit Court of Appeals would erase the Federal Communications Commission's final order that struck down state laws barring municipal utilities from expanding broadband offerings outside their service areas. State Reps. Kevin Brooks and Dan Howell, and State Senator Todd Gardenhire supported legislation to remove the expansion barrier in 2015. The bill was rolled forward to 2016. 

He reminded the Rotarians that TVA was charged with reducing flood damage, improving navigation on the Tennessee River, providing electric power and promoting agricultural and industrial development in the region. All of the objectives were to improve quality of life in the valley and people are still benefiting from TVA since its formation in 1933. 

“I would contend reliable, reasonably priced and widely available high-speed Internet is just as necessary now as the need for the services TVA and local power companies began providing in the ‘30s,” he said. “Access to reliable high-speed Internet is no longer a luxury. It is a necessity.” 

High-speed Internet is needed in education systems. Cleveland City Schools Director Martin Ringstaff said city school system is not even looking at textbooks. Laptops issued to students are no longer gifts. They are a necessity. 

“Everything is Internet driven and there is no turning back from that,” Mr. Ringstaff said. Chattanooga is benefiting from fiber optics provided by EPB “while we’re still struggling.” 

Mr. Webb said high-speed Internet is also critical to economic development, growth opportunities and sustainable growth of existing industries. Doctors and medical professionals rely on the service to exchange patient information. 

“It is important to note local public ownership of a fiber system creates a spirit of community pride,” he said. 

Cleveland Utilities commissioned studies in 2001, 2008 and 2015 for its “Fiber To The Premises” project. The first study was for a hybrid fiber-coax system for network, Internet, video and phone. It had a $35 million price and would have been obsolete by now. 

The second study consisted of a fiber network design for triple play (video, phone and Internet.) It carried a $42 million price tag with a 13-year break-even point. The decision was made not to proceed at that time. 

The third study showed that triple play was not viable and Internet and phone service only was marginally viable. It cost $44.7 million with a 14-year break-even point. CU decided to look into a phased-in approach to the FTTP build out for Internet and phone and not offer video. Many people watch television on their computers, he said, citing streamed video from Netflix and Hulu. 

“We believe and most studies will confirm that TV access as we know it today will not exist in the future,” he said. 

A modified study is for a phased build out. The overall cost of would be approximately the same ($44.7 million), but easing into the business one area at a time could possibly reduce the upfront long-term debt obligation and the upfront working capital in the form of a loan from the Electric Division, which TVA would have to approve. 

He said the consultant is hopeful of having the results of the modified study available within the next 4-6 weeks.


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