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When EPB launched its Internet, video and phone services nearly a decade ago in conjunction with its efforts to build a smarter electric grid, the city-owned utility projected it should attract more than 30,000 customers of its telecom services within five years to cover its costs and break even.

But the fiber optic network exceeded those expectations in less than 18 months, and on Thursday EPB Fiber topped 100,000 paying subscribers.

The municipal power utility now provides telecom connections to more than 60 percent of all homes and businesses in its service territory, allowing EPB to repay its initial telecom investment years ahead of its original forecast and helping to provide an extra $42 million a year back into its electric system.

"Contrary to the fears some had about us spending power funds to pay for this service, our power rates are actually 7 percent lower than they otherwise would be because of our Fiber Optic network and the business it has generated for us," EPB President David Wade said.

City leaders claim an even bigger advantage is the economic gains for the community from having EPB's communitywide high-speed internet connections to every home and business in the utility's 600-square-mile region. With its fiber optic links, EPB helped Chattanooga become the first U.S. city to have 1-gigabit-per-second internet speeds available throughout the entire city.

Big Gig Festival To celebrate EPB Fiber topping 100,000 customers, the utility is sponsoring “The EPB Big Gig” community festival at Miller Park from 11 a.m. to 4 p.m. Saturday. During the EPB Big Gig, a portion of Martin Luther King Jr. Boulevard, 10th Street and Georgia Avenue will be closed to motorized traffic to accommodate a variety of family friendly activities that include: › Live Music — featuring The Beaters, Masseuse, and Rare Coalition › College Football Zone — football jumbo screen & game day food available from Sticky Fingers › Lumberjack Show — performed by Timberworks › Chef Exhibitions — featuring 2 Sons Kitchen & Easy Bistro › Food trucks › Halloween Costume Contests — for children AND dogs › Kids Zone — Race Car Moon Walk, Obstacle Course, Wacky Slide, Berry Go Round, Games, free cotton candy Free parking will be available in the EPB parking garage on a first-come, first-served basis, which can be accessed through the 10th Street entrance from either Broad or Market Streets. More information and a full schedule is available at epb.com/BigGig.

EPB, which boosted its internet speed to 10 gigabits per second in 2015, is more than 200 times faster than most broadband services and offers lower cost Gig service than even Silicon Valley. In an online connected world of e-commerce, what EPB has billed as "Gig City" has proven to be a major advantage in attracting attention, talent and startups trying to take their web-based businesses around the globe.

High-speed connections from EPB helped attract and grow such online startups as the moving service Bellhops, the code builder and development platform builder Skuid, the online counseling service known as Wecounsel and the global ship security startup known as International Maritime Security Associates in Chattanooga.

"Being a tech company handling the volume of calls and online traffic that we do, having access to high-speed internet is vital for our business," said Kyle Miller, head of brand and communications for Bellhops, which employs up to 110 full- and part-time employees in Chattanooga during its peak season and dispatches more than 1,500 workers in cities across the country with its Gig internet service. "For us, the faster the communications, the better."

Miller said EPB has allowed Bellhops to succeed outside of Silicon Valley, where costs would be much higher. The gig internet service that Bellhops gets for $2,500 a month in Chattanooga would likely cost the company around $10,000 a month in San Francisco.

Engine for growth, learning

"Our fiber optic network is today's locomotive that is driving Chattanooga's success and positioning us as a model for other communities," Chattanooga Mayor Andy Berke said. "It is a powerful recruiting tool to attract new businesses that need reliable, high quality power and communications, as well as a catalyst for launching startups and expanding our existing businesses."

In 2015, University of Tennessee at Chattanooga (UTC) Economist Bento Lobo estimated that EPB's fiber optic network had already generated as many as 5,200 extra jobs and as much as $1.3 billion in benefits for the community, and such benefits were projected to continue to grow.

Hamilton County Mayor Jim Coppinger said gigabit-speed connectivity has also unlocked the possibilities of online education and allowed more students to connect via the internet with high-tech equipment at remote locations. On Thursday, for instance, students in an advanced placement biology class at Red Bank High School were able to use the 4K streaming capability provided by EPB to remotely connect to the DX63 Darkfied microscope at the STEM school at Chattanooga State Community College.

Additionally, "we are on the forefront of advancing telemedicine so that more of our neighbors have access to health care services," Coppinger said.

Competition for Gig services

EPB's competitors have matched the municipal utility for Gig service, although few have yet built out an entire service territory like what EPB did within the first couple of years of its getting into the business.

Two years ago, Chattanooga became one of the first cities in the nation to get gigabit Internet speeds from Comcast, and on Thursday the cable giant announced it is now the nation's largest provider of gigabit broadband service.

Comcast's XFinity gigabit internet and Comcast Business Gigabit are now available to nearly all of Comcast's 58 million homes and businesses in 39 states. The national deployment represents the fastest rollout of gigabit speeds to the most homes and businesses in the country.

"By making these investments, we've set a foundation for delivering the next-generation of broadband and Wi-Fi-based services that will define the modern digital home," Comcast Senior Vice President Doug Guthrie said in a statement Thursday.

For the past 20 years, Comcast has invested an average of $120 million per year in Tennessee, enabling Comcast to deploy gigabit Internet to nearly all Internet-serviceable households in its footprint, increase speeds 17 times in 17 years, and double the capacity of its broadband network every 18-24 months.

In Chattanooga, Comcast has expanded its multigigabit network for the business community, launched Gigabit Pro, a 2-gigabit-per-second residential internet service, and deployed a 1-gigabit-per-second internet service.

But EPB has still managed to capture the biggest share of internet users in its service territory. EPB Chairman Joe Ferguson said the city-owned utility has worked to ensure it provides reliable, local service and has avoided short-term price discounts or hidden fees. EPB workers installing fiber connections have even made sure they wear plastic blue booties to cover their shoes to ensure they don't track dirt in customers' homes or businesses.

Favorable fiber Since EPB Fiber Optics began serving customers, Chattanooga’s fiber optics network and smart grid have helped: › Reduce power outages and incidents in half, or by more than 285 million customer minutes, saving customers more than $50 million per year in lower productivity, spoiled food, and other negative impacts. › Paid an extra $20.9 million a year in local government taxes through franchise and in-lieu-of-tax payments. Since deploying the fiber optics network, EPB has paid more than $172 million for local schools and government services. › Promoted more research by serving as a living laboratory with the U.S. Department of Energy, Oak Ridge National Laboratory and other national laboratories and researchers to field-test new best practices and smart grid technologies.

"We make sure we treat people they way we want to be treated and do what we say, " Ferguson said, noting that EPB has been rated as a top internet provider by J.D. Power and Associates surveys.

Wade said EPB is able to leverage its workforce, equipment and fiber network built for its electric system to realize benefits for both the power grid and telecom systems. But state law bans EPB from cross-subsidizing its services.

EPB got a $111.6 million federal stimulus grant in 2010 to help build out its fiber optic network for its smart grid, but Wade said those funds were to benefit the electric system, not the telecom division.

Critics object to government competing with business

Despite EPB's claims, some critics still express concerns about municipal power utilities competing with private-sector telecom companies, especially since municipal utilities don't pay federal income taxes and generate profits for shareholders.

"Regardless of the numbers of subscribers EPB brings in, it is not the government's job to compete with the private sector — or crowd it out entirely — when it comes to high-speed internet," said Justin Owen, president of the Beacon Center, a free-enterprise advocacy group in Nashville. "EPB has already taken hundreds of millions of our tax dollars to get to this point. The issue is that the government can afford to lose money while private businesses do not have that luxury, and that is not a balanced playing field."

Owen said government should focus on services like public safety, roads, and education and not try to compete with private businesses like Comcast, AT&T and Charter by providing broadband internet.

Ferguson heard such concerns when the EPB board initially decided a decade ago, at the invitation of then Mayor Bob Corker, to see if the city-owned utility could use the fiber network it was building for its power grid to help promote better internet service. The city has created the Metronet system, which Ferguson said "helped EPB see the potential for these citywide services."

At the time, EPB was virtually debt free, but EPB's board decided to borrow more than $220 million to begin building a fiber network throughout its 600-mile service territory.

"We thought the fiber optics network would help boost entrepreneurial activity, but we did not know it would be one of the major drivers in positioning Chattanooga nationally as a hotspot for technology start-ups, and there was no way we could have foreseen how Chattanooga's Smart Grid would make us a hub for national research by the U.S. Department of Energy, Oakridge National Laboratory, and so many others."

Contact Dave Flessner at dflessner@timesfreepress.com or at 423-757-6340.