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Johnson City Power Board told broadband profit, costs close to equal

JEFF KEELING • Jan 28, 2009 at 12:00 AM

Offering Johnson City Power Board customers a fiber optic menu of services — television, Internet and telephone — could yield an economic impact of nearly $350 million over 10 years, an economist told JCPB commissioners Tuesday.

That figure, which the economic impact study’s author called “super conservative,” nearly matches the estimated 10-year cost to JCPB to build such a network.

East Tennessee State University’s Jon Smith presented his findings to commissioners, who have spent the past year considering how far to take fiber optic technology. JCPB is moving forward on connecting its substations with fiber in order to meet federal requirements for its internal operations, something that’s estimated to cost about $6 million.

Less certain is whether JCPB will join electricity providers in Bristol, Bristol, Va., and elsewhere and offer broadband services commercially in direct competition with private “incumbent” providers. Locally, those include Charter Communications, Comcast and Embarq.

A feasibility study from late 2007 suggested a “fiber-to-thepremises” would cost about $381 million over 10 years, including personnel, programming content and construction.

Smith portrayed the possibility of stronger economic development and various social benefits from a publicly controlled broadband system. He cited a study showing states that had focused on building broadband infrastructure had 21 percent higher increases in “gross state product” than states that had not.

“Communities that are ahead of the curve in providing broadband access are the ones that are really attracting more industries,” Smith said.

He listed benefits in everything from telecommuting, “e-learning” and communications services for people with disabilities to telemedicine and economic development/“ecommerce” as areas defined by the Federal Communications Commission as benefits of more broadband service.

Smith estimated the system would create an average of about 310 jobs in each of the 10 years studied. And even though he didn’t include the economic impact of telemedicine in his study — though the average nurse practitioner contact with a patient could save about $200 if done electronically — Smith did say Mountain States Health Alliance representatives were enthusiastic.

“When we asked them, what did they think about the possibility of a system like this, their response was ‘can you tell Tom Bachman (who is leading the fiber effort at JCPB) to sign us up now,’ ” Smith said.

Commissioners only asked Smith a couple questions: whether the study figures in the net loss to the economy from a JCPB system simply winning customers away from private providers; and whether efficiencies gained through broadband usage — less driving from “telecommuting,” for instance — could actually result in job losses in other areas.

Smith said he thought such effects would be “negligible,” and that efficiencies gained in health care functions typically helped create jobs, not vice versa.

In other business, the board learned that despite the economic downturn, writeoffs of bad debt are actually lower from July-December than they were the previous year — $101,000 versus $128,000 last year.

“We anticipated it would be much worse,” JCPB Chief Financial Officer Brent Kitzmiller said. He said the rate of writeoffs is running about .11 percent, that the figure was .17 percent last year, and that .2 percent is an acceptable standard.

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