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Numbers Don’t Lie: No Evidence Chattanooga Taxpayer Broadband Helped Economy

August 24, 2016

Blue and red fibre optical cablesThe Tennessean recently published an enlightening column by Phoenix Center for Advanced Legal & Economic Public Policy Studies Chief Economist Dr. George S. Ford. Dr. Ford challenged claims, made by Chattanooga Mayor Andy Berke, that the city’s municipal broadband network, operated by the Electric Power Board (EPB) had helped the local economy.

Dr. Ford concludes, “Upon inspection, the mayor’s claims just don’t add up.”

Specifically, Dr. Ford refutes the mayor’s claim that Chattanooga’s network contributed to a decline in the city’s jobless rate. Mayor Berke had noted the city’s rate fell 3.7 percentage points over the past three years. Dr. Ford notes the national unemployment rate has declined at a similar rate during the same period. If this trend was national, Chattanooga’s taxpayer network had little to do with it. As Dr. Ford says, “Unless the Chattanooga system is having nationwide economic impacts, it’s pretty clear that attributing the unemployment decline to a city broadband network is bogus.”

Additionally, Chattanooga’s jobless rate decline was actually one of the slowest in Tennessee. Dr. Ford found that, on average, in Tennessee cities without government broadband networks jobless rates fell over the last three years by an average 4.7 percentage points. In cities with government networks, rates were down an average of just four percentage points. If the city’s network provided such a boost, why did Chattanooga do so poorly relative to other Tennessee communities? Dr. Ford concludes, “While the job market in Tennessee is recovering, it’s not being driven by municipal broadband.”

Despite the fact that Dr. Ford’s analysis makes it clear that it’s questionable to argue the economic benefits of municipal broadband, the managers of Chattanooga’s government network are lobbying constituents to push their representatives in the state legislature for more taxpayer broadband. According to The Chattanoogan, Electric Power Board officials recently encouraged Tennesseans to “make their voices heard” so Tennessee lawmakers will allow EPB to expand.

That’s a risky request. According to Dr. Ford, Chattanooga’s system already has cost about $4,400 per customer.