Critics bash study proclaiming benefits of government Internet in Chattanooga

By Chris Butler /  Watchdog Tennessee

Critics call “useless” and “highly speculative” recent findings that Chattanooga Electric Power Board officials claim prove the municipal broadband network in that city is more than worth its cost to U.S. taxpayers.

EPB took $111 million in federal stimulus funds six years ago to set up a smart grid system to offer ultra-high speed Internet to compete against private providers like AT&T.

The new study, written by University of Chattanooga finance professor Bento Lobo, claims the government-owned network has brought nearly $1.3 billion to the Hamilton County economy and perhaps as many as 5,200 new jobs.

Photo by Chris Butler

Photo by Chris Butler Chattanooga’s EPB put out a new study proclaiming its government broadband is worth more than what it costs taxpayers and ratepayers.

Mark Cunningham, spokesman for the Nashville-based Beacon Center of Tennessee, a free market think tank, told Tennessee Watchdog Lobo’s report is “more like a brochure for EPB than it is an actual study.”

“I read the methodology, and I was quite frankly shocked they would even put out something like this,” Cunningham said. “They basically said there is a lack of data to support their conclusions, and that’s never a good thing.”

The report profiles several different companies that benefit from having ultra-high-speed Internet in Chattanooga.

The study also cites a RelocateAmerica.com article showing Chattanooga attracts new people at a rate of about 30 percent more than the national average.

Yet Lobo admits in the study he doesn’t have enough direct evidence to tie all the new jobs and investment in Chattanooga to EPB’s broadband network.

Another problem Cunningham said he has with the study — the information Lobo used came from EPB and another of the municipal broadband’s biggest cheerleaders, the Chattanooga Chamber of Commerce.

“If I was the one doing this report I would at least try to get someone from the other side, who has criticized municipal broadband, to at least give it some type of credibility, because when it’s from someone who clearly has an agenda then it makes it look bad,” Cunningham said.

Photo courtesy of Facebook

Photo courtesy of Facebook Bento Lobo

Lobo said his study, which examined the effects of EPB’s broadband between 2011-2015, was independent, regardless of where he got his information. EPB spokesman John Pless said the same thing, even though public utility officials previously hired Lobo to write four similar studies.

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Lobo’s familiarity with EPB’s broadband is one of the reasons the utility asked him to write yet another study, Pless said.

Tennessee Watchdog asked Lobo if he knows whether new people would have come to Chattanooga regardless of EPB broadband.

“Other people are looking into that,” was all Lobo would say.

Tennessee Watchdog then asked whether he knows if many of the new people, usually high-tech savvy millennials, plan to stay.

“That’s really hard to measure,” Lobo said, without offering specifics.

Lobo also said EPB’s ultra-high speed Internet hasn’t brought enough benefits to other sectors of Chattanooga’s economy, including health care and education.

“In my study it’s just not there yet,” Lobo said. “But it’s possible that down the road we’ll see larger impacts of high-speed Internet on schools.”

University of Colorado professor Ronald Rizzuto, who has already evaluated EPB’s plans for the Tennessee Cable Association, said many of Lobo’s findings make too many assumptions and are “ridiculous.”

Mark Cunningham Photo courtesy of the Beacon Center of Tennessee’s official website

 

“To say that all these jobs and all this investment in Chattanooga was due to EPB is a statement beyond the facts of the case,” Rizzuto said. “If I were profiling those companies, then I at least would have asked them, ‘Did you come to Chattanooga because of the telecom system? If so, how many jobs did you create?’”

Rizzuto said Lobo should have used data from sources other than EPB and the chamber of commerce, particularly U.S. Census data.

“In the end, this is nothing but a public relations piece for EPB, and no one should treat it as an economic study,” Rizzuto said.

Rizzuto also said Chattanooga’s economic development plan, including expansion of its Volkswagen factory, which produces automobiles, is “very aggressive.”

“To attribute all that growth to telecom alone is nuts,” Rizzuto said.

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