Getting electricity is difficult. It's expensive, unreliable, slow.
The electric company creates "fast lanes" for your competitors — big corporations — that pay to get electricity first and fastest. Their customers can reach them faster than your customers reach you.
That would make it really tough to launch a new company and succeed, right? It would mean your small business would be at a big disadvantage.
And it would significantly inhibit innovation.
2013: U.S. Internet speeds lag developed world
2012: La. city offers fiber optic speeds to residents
Now, substitute "the Internet" for "electricity," and that's exactly what's happening in America.
In many cities across the USA, business and residential customers have only two choices for high-speed data transmission: one cable company and one DSL provider. These providers have few incentives or requirements to develop the next generation of communication networks and keep costs down.
You have to experience in person what it's like to take unlimited, friction-less communication capacity for granted.
-You feel this every time you open your cable bill. But this is about more than how much you pay to get The Big Bang Theory.
"America led the world in the first generation of Internet application development, but it won't for the second," said Susan Crawford, Harvard law professor and author of Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age.
The United States ranks near the bottom of developed countries, 31 of 34, in the affordability of broadband access — behind countries like Slovakia and Poland.
"My eyes have been opened by recent trips to Stockholm and Seoul," Crawford said. "You have to experience in person what it's like to take unlimited, friction-less communication capacity for granted."
You don't have to travel to Sweden or South Korea. Just catch a plane to Chattanooga, Tenn.
C! ity leaders developed their own high-speed fiber optic network, referred to as "The Gig," that the city's electric utility company, EPB Fiber Optics, runs. The move is helping create jobs, launch new companies and spur innovation.
"I'm a radiologist. We look at medical images to help doctors make diagnoses," said Dr. Jim Busch, president of Diagnostic Radiology Consultants in Chattanooga. Medical images, such as MRIs and mammograms, create very large digital files.
"It's extremely dependent on network and bandwidth," Busch said. "I was in Boston when we made the transition (from analog to digital scans). It was unbelievably expensive to get high-speed bandwidth. …You can get a gigabit here for hundreds of dollars, compared to in Boston, where a T3 line — about 200 times slower — costs about $15,000 a month." A gigabit for Chattanooga homes costs $70.
Fiber optic cables make super Internet speeds possible -- and can make them less expensive.(Photo: Getty Images)
"It was a no brainer" to move to Chattanooga, he said. "I would not have done this in another location."
The average U.S. broadband connection speed was 10 megabits per second in the fourth quarter of 2013, according to Akamai's State of the Internet report. In Chattanooga, you can get 1,000 Mbps at home or work.
Gig-related recruitment efforts and an enlivened entrepreneural cultural locally have resulted in the creation of about 1,000 jobs, said J. Ed Marston, vice president of the Chattanooga Chamber of Commerce.
"I was tenured faculty at the University of Minnesota. I had no reason to move," said Dr. Ashish Gupta, associate professor of analytics and information systems at University of Tennessee at Chattanooga. Gupta relocated to this south! east Tenn! essee of about 170,000 residents in large part because of the high-speed, low-cost bandwidth.
He's about to launch his company, Mental Health Analytics, which crunches big data in the mental health field.
"In other places, there's huge limitations due to bandwidth," Gupta said. In Chattanooga, "the cost of using the infrastructure is phenomenally cheap, so it makes accessibility and adoption of new technologies much faster."
For most of the rest of America, Internet-access costs are about to get even worse:
• Comcast, the country's largest cable provider, wants to merge with Time-Warner, the second largest.
• The Federal Communications Commission also is about to effectively gut the principal of "net neutrality," that all data must be transmitted equally. Officials have proposed rules allowing some companies to purchase a "fast lane" for the Internet, meaning even less incentive to create high-speed networks for the rest of us.
Chattanooga shows the promise of city control of high-speed fiber networks. But telecom companies have pushed through legislation in about 20 states limiting municipalities' ability to create these critically necessary networks.
"The FCC is treating Internet access like a luxury product, not like a utility, allowing companies that offer it to discriminate and price that product however they like," Crawford said. "This is not a right-left issue. Even rock-rib Republicans want to be able to start a business without worrying about what Comcast thinks of them."
High-speed Internet in ChattanoogaEPB Fiber Optics, Chattanooga's nonprofit electric utility, serves almost 170,000 residents in a 600-square-mile area that stretches beyond city limits into north Georgia and surrounding Tennessee counties. It completed its high-speed network for all customers in March 2011. The costs for residential customers:
• 1 gigabit, i.e. 1,000 Mbps: $69.99 a month
• 100 Mbps: $57.99 a month
Business costs are higher becaus! e of high! er volumes. Other plans are available that include TV and telephone.
Source: EPB Fiber Optics
Rhonda Abrams is president of The Planning Shop and publisher of books for entrepreneurs. Her most recent book is Entrepreneurship: A Real-World Approach. Register for Rhonda's free newsletter at PlanningShop.com. Twitter: @RhondaAbrams. Facebook: facebook.com/RhondaAbramsSmallBusiness.Copyright Rhonda Abrams 2014.
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