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Chattanooga Data Plan Irks Some

6/23/2002 8:00 PM Eastern

Internet-service providers may find themselves facing a politically well-connected new competitor in Chattanooga, Tenn. — the city itself.

The municipality's electric utility has filed a business plan with the state controller, detailing what critics describe as an enterprise set up to engage in "super-cherry-picking" in Chattanooga's downtown business core.

"They're calling it a not-for-profit, public/private partnership. If you're confused by that, join the group," said Patsy Hazlewood, district manager of BellSouth Corp., which has taken a lead role in opposing the Chattanooga project, called MetroNet.

"We question the whole public policy issue of a government entity using their money to replicate services offered by the private sector," Hazlewood said.

BellSouth Corp. has raised the types of issues typically voiced by cable operators who face video overbuilds. A similar situation exists in Pennsylvania, where Kutztown intends to overbuild MSO Service Electric Co.

Kutztown's fiber-to-the-home project will replicate products that the fully upgrated operator already offers in that city, lobbyists argued.

Chattanooga announced plans for the high-speed network in May, positioned as a component of Mayor Robert Corker's "digital vision."

MetroNet will be an outgrowth of the city Electric Power Board's EPB Telecommunications unit. It should be a major drawing card for technology, according to comments the mayor made during the launch announcement.

TAX BREAKS

Corker and the EPB have painted MetroNet as an economic development tool, but the city's telcos see it as "government super-cherry-picking," said Tennessee Cable Telecommunications Association president and executive director Stacey Briggs.

That's because the city's central business district, east side and west side — where deployments are planned, according to the state filing — have been designated as a "renewal community" by the U.S. Department of Housing and Urban Development.

As a result, business investors can get special tax incentives and credits for developing the area.

The business-plan filing noted that Corker has negotiated with the Oak Ridge National Laboratory for an "off ramp" of the lab's Next Generation Internet connection. That will allow connectivity beyond the central business district, the filing said.

Tax incentives may be why the venture can boast prices 40 percent below those of its potential competitors. MetroNet proposes two types of service: shared, 10 Mbps broadband Internet access, priced at $425 per month; and dedicated 100 Mbps connections at $4,000 per month.

The EPB is scheduled to vote on MetroNet on June 28.

September