Internet

How blazing Internet speeds helped Chattanooga shed its smokestack past

For Road Trip 2015, CNET looks at how one Southern city's embrace of superfast Internet turned it into a magnet for tech entrepreneurs.

Chattanooga has spent decades cleaning up its city, which is now known for its outdoorsy lifestyle. It's also home to the largest and fastest broadband network in the US. CNET/Marguerite Reardon

CHATTANOOGA, Tennessee -- It was once so polluted here that people had to drive through town with their headlights on all day. You could smell the stench from the tannery and heavy metal foundries in town before reaching the city limits. In 1969, news anchor Walter Cronkite dubbed it "the dirtiest city in America."

"Cronkite and others had basically written us off for dead," said former Chattanooga Mayor Ron Littlefield. "That day was a wake-up call to turn ourselves around."

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The old Chattanooga is long gone. Today, the city has some of the cleanest air and water in the region. Outdoor Magazine has twice in the past four years named the city the "best town ever." Instead of smokestacks and foundries, you'll see rock-climbing enthusiasts scaling the outdoor wall of High Point Climbing and Fitness on Broad Street -- just a block away from the city's revitalized waterfront and the nation's largest freshwater aquarium. And rather than a dirty, polluted river running through the center of town, you'll see kayakers and standup paddle boarders drifting along a rejuvenated Tennessee River.

Chattanooga's transformation has been decades in the making, but the construction of one of the largest and fastest Internet networks in the Western Hemisphere will be key to helping the city write the next chapter for the 21st century. The city represents the vanguard of communities pushing for better Internet service and serves as a model for the benefits that can stem from broader online access. The Gig, as the locals call its network, has attracted billions of dollars in new investment and a flock of entrepreneurs to the city, who may come to the city for the promise of superfast broadband, but stay for the easy, affordable lifestyle, abundant outdoor activities and hip culture.

Chattanooga may seem like an unlikely place for a tech hub, but a long history of progressive thinking has put the midsize southeastern city -- two hours north of Atlanta -- in an enviable position. In 2010, Chattanooga turned on its so-called gigabit service, an industry term for a network able to connect to the Internet at 1 gigabit per second, or 50 to 100 times faster than your average US Internet connection, through a faster fiber-optic line. That was two years before Google broke ground on its first gigabit market in Kansas City.

Today, the network, which has been recognized as a model of innovation by President Barack Obama, is the largest and longest-running deployment of gigabit broadband in the nation, spanning 600 square miles and covering the entire population of Chattanooga -- 170,000 -- with access to ultra high-speed broadband.

Giving them what they want

I drove through town on a tour of the city with Littlefield, now in his late 60s. Littlefield moved here in 1968, a year before Cronkite's denouncement. He worked as a city planner through the city's transformative years and served as the city's mayor from 2005 to 2013, taking the reins just as the city-controlled utility EPB, which once stood for Electric Power Board, began dreaming up the gigabit network.

Ron Littlefield served as Chattanooga's mayor from 2005 to 2013 and helped usher in Chattanooga's gigabit broadband network. CNET/Marguerite Reardon

Littlefield's biggest priority was keeping the city's youth from leaving.

"A city can afford to lose old industries, but not its young people," he said. "You lose them, you lose your future. I'm happy to say today we're shamelessly proud of the fact that we are stealing other cities' young people."

Littlefield catered to young people by giving them what they want: superfast Internet. With a gigabit network, you could stream at least five high-definition videos at the same time and still have plenty of bandwidth to surf the Web, check email and upload pictures to Facebook. You can download an entire high-definition movie in about 33 seconds.

While Chattanooga was early, it is no longer alone. Large companies, such as AT&T and Google, have announced dozens of planned deployments, and cities large and small see broadband infrastructure, and gigabit networks in particular, as a ticket to preparing their economies for the future.

"Ten years from now, many critical things a city and its residents can do, and the attractiveness of the city from many perspectives, will be affected by the quality of its broadband networks," according to a report prepared by Gig.U and the Benton Foundation.

A new tech hub is born

Startups have been flocking to Chattanooga in the past few years, fueling even more growth. Construction crews dot the landscape in the heart of downtown, where the city is promoting its so-called "innovation zone." This 140-acre patch of downtown is where the city hopes tech startups will set up shop.

Anchored by the Edney Building, an 11-story office building where workers for the Tennessee Valley Authority have been housed for decades, the zone also includes the building where venture firm Lamp Post Group is located, as well the historic Ross Hotel, a four-story landmark at Patten Parkway and Georgia Avenue. Lamp Post bought the building and is renovating it to create micro-apartments designed to house budding entrepreneurs and innovators in a shared living space.

Chattanooga has become a destination for startups, thanks in large part to the city's gigabit broadband network. CNET/Marguerite Reardon

While the Gig is often credited with Chattanooga's most recent renaissance, there are a number of other factors that help make Chattanooga an attractive hub for tech entrepreneurs. The city boasts investors, such as Lamp Post, which are willing to bet on early-stage startups. There is also the nonprofit, The Company Lab, or CoLab for short, which in 2012 launched "GigTank," an annual 14-week summer entrepreneur program focused on making the best uses of the gigabit broadband. And there is the INCubator program sponsored by the Chattanooga Area Chamber of Commerce and the Hamilton County Business Development Center, which offers office space, advice and mentoring opportunities for startups.

The city has been working for nearly 30 years to foster a collaborative environment that is conducive to economic development. The superfast network compliments that effort.

"It makes a thousand small things better," said Greg Compton, chief operating officer for the color sensor startup Variable, which is based in Chattanooga. There are other practical reasons that convince them to stay.

"One of the biggest reasons companies come here is that it costs three to four times less than operating a business in Silicon Valley or New York City," said Ted Alling, a partner at Lamp Post Group. "We may not have all the same resources, but we can build that infrastructure to support successful startups."

High-end rental rates for commercial space in prime downtown locations of Chattanooga run about $20 a square foot, according to J. Matthew McGauley, president of Fidelity Trust Company, a commercial real estate brokerage that specializes in properties in downtown Chattanooga. "Compare this to commercial rents in the San Francisco Bay Area, which can easily cost startups $80 to $100 a square foot."

But even though the real estate expenses are low in Chattanooga, these companies are still paying competitive wages to their technically skilled workers.

"These are jobs that bring young people back to Chattanooga," Littlefield said.

The city's current mayor, Andy Berke, said at the annual GigTank Demo Day in July, where startups pitched investors, that over the past few years Chattanooga has experienced the third highest wage growth of all midsize US cities. Many of these jobs pay an average of $69,000. The statewide average is $40,000 a year, according to 2014 data from US Bureau of Labor and Statistics.

"It really becomes a no-brainer," McGauley said. "The cost of living is so much less here. You can live really well in Chattanooga on a $100,000 a year. You feel rich. In the [San Francisco] Bay Area, you'd still be racking up credit card debt on that salary."

How it began

It all started when Chattanooga's municipally owned power company, EPB, wanted to modernize its electrical grid with fiber-optic lines to better manage power interruptions. Service disruption is a big problem for power companies and can result in $100 million in losses per year to local businesses, EPB officials estimate. To offset the cost of the investment, Harold DePriest, head of the utility, suggested selling Internet, television and phone services on top of power.

Meanwhile, Google began its search for a city in which to launch its first Google Fiber service that would deliver 1Gbps broadband to residents. More than 1,100 cities across the country were doing all sorts of crazy things to get Google's attention, such as naming their city Google for the day or mayors painting their faces.

But Littlefield, who was Chattanooga's mayor at the time, said he wasn't interested in courting Google. "I didn't want to see Chattanooga get back in a position where we only had one choice and were beholden to a company like Google," he said.

So the city moved forward with its plan.

"Chattanooga is the Goldilocks of cities," DePriest said. "We are big enough that we can try new things, but still small enough that everyone who needs to be involved in figuring it out knows each other."

Even though EPB's primary goal of improving its electrical grid was fully within the scope of its traditional business model, the idea of a municipally owned utility competing against private industry in the broadband market was somewhat controversial in the eyes of some in the business community and Tea Party activists, who were at their height of popularity as plans for the gigabit network were being laid.

DePriest said he first approached the business leaders and politicians he thought would oppose the construction of EPB's gigabit network. He said it took only a couple of meetings before he had their support.

"People just got it," he explained. "We knew the big broadband companies weren't going to do anything for us. So this kind of network wasn't going to happen unless the community built it."

The biggest benefit to residents in Chattanooga is the competition the Gig has inspired among the existing cable and phone companies serving the city. Comcast, which has unsuccessfully sued EPB multiple times to stop the network and to curtail its expansion, is now promising to deliver 2Gbps speeds to local customers. EPB's Colman Keane, director of fiber technology for EPB Fiber Optics, said his firm will be able to deliver 10Gbps service to some Chattanooga residents by the end of the year.

It's unlikely consumers or even startups will actually need 2Gbps or even 10Gbps broadband anytime soon. There's question about whether they even need 1Gbps, as consumers and businesses still try to find ways to take advantage of that speed. But Littlefield said this gigabit arms race is exactly the kind of one-upmanship the city hoped for when it gave its support to EPB's plans.

"We were a small market for the big broadband companies," he said. "We weren't on the top of the list. But now we are, because we're competing with them. God bless America! Isn't competition a wonderful thing?"