When municipalities first started developing fiber-based gigabit Internet systems—a higher capacity Internet that lets you transmit data faster—naysayers scoffed that nobody needed that much bandwidth. But gigabit Internet has turned out to be a boon for economic development in those communities.

While potential economic development has often been used to help build community support for municipal networks, these political promises are often proving to be reality. The Institute for Local Self Reliance (ILSR) has a gigantic list of economic development successes that it attributes to high-speed municipal networks. “Fiber is rarely the sole reason for a relocation, but it can often be a deciding factor,” the organization notes.

Nowhere is this growth more true than in the state of Tennessee—appropriately being the home of former Vice-President Al Gore who is known for his role in creating the commercial Internet. Although Tennessee has never been seen as a tech hub, that’s starting to change, primarily because of regions in the state that have taken the initiative to provide gigabit broadband Internet. Tennessee now has at least seven  “Gig Cities” that offer gigabit Internet, starting with Chattanooga, the first “Gig City” in the U.S.

“What this means for Tennessee is that soon we’ll have more cities and people with access to gig speeds than anywhere else in the country,” writes Charlie Brock CEO of Launch Tennessee, a public-private partnership focused on supporting the development of high-growth companies in the state.

Research into the expansion of broadband in general shows that it stimulates the employment sector.  A 2010 study, Does Broadband Boost Local Economic Development?, found that the availability of broadband led to a 6.4 percent improvement in employment growth overall. It also reported that employment growth was lopsided in a number of sectors, particularly high-paying ones, such as corporate management (40.8 percent), utilities (16.7 percent), and professional and technical services (16.4 percent).  Another study specific to gigabit Internet found similar results, noting that gigabit broadband communities exhibit a per capita GDP approximately 1.1 percent higher than similar communities with little to no availability of gigabit services.

Chattanooga is now implementing 10-gigabit Internet, and claims it will be the first city in the world—not just the U.S.—to offer it. “The economic impact has been huge,” J. Ed. Marston, vice president of the Electric Power Board in Chattanooga, tells David Thomas of the Jackson Sun. “Like many places, Chattanooga has had some entrepreneurial activity, but it has just exploded in a positive way. New companies have moved to Chattanooga, and a lot of investors, outside investors, are looking at Chattanooga.” In particular, the service helps make Tennessee cities more attractive to site selectors, which increasingly consider gigabit Internet, Thomas adds.

The city’s advanced internet technology is already expanding the job market.  HomeServe USA, a provider of emergency home repair programs, increased its staff to 140 employees at its call center in the Chattanooga area, which it directly attributed to the availability of gigabit Internet there. Another Tennessee company, Claris Networks, moved its data center from Knoxville to Chattanooga specifically to take advantage of its fiber network.

The start-up scene in Chattanooga is also taking off, with more than 1,000 new jobs being created since the city began offering ultra-speed Internet service in 2009, Thomas writes. The high-speed Internet service also helped Chattanooga become the first midsize city to set up its own “Innovation District,” which clusters talent, startups, established firms, nonprofits, and cultural assets to incubate creativity and serve as labs for far-reaching concepts and policies to harness new ideas and technologies, writes Brooks Rainwater in Tech Insider.

“In the past three years, the city’s unemployment rate has dropped to 4.1 percent from 7.8 percent and the wage rate has also been climbing,” writes Jamie McGee in The Tennessean. “We know that the wage rise is linked to Internet jobs and particularly the technology sector,” Chattanooga mayor Andy Berke tells the paper. The mayor also said last year that Chattanooga had experienced the third highest wage growth of all mid-size U.S. cities and had added many high-tech jobs paying an average of $69,000 a year.

Elsewhere in the state, the Morristown Utility Systems has been offering gigabit Internet since 2006 to its 30,000 residents, writes the ILSR. The city can point to several examples of companies locating facilities there due to its reliable, high-speed Internet, including a contract furniture manufacturer with a $4 million expansion resulting in 228 new jobs, and another company that located its primary backup facility in Morristown.

Similarly, when Tullahoma set up its own municipal gigabit Internet network, a number of employers either increased their staff, or moved to the city to take advantage of the high-speed reliable connectivity.

Tennessee is also looking at ways to expand gigabit Internet service beyond the cities in to the rural areas, but is stymied by a state law that doesn’t allow municipal networks to offer their services beyond the borders of their electric territories, writes Christopher Mitchell of ILSR.

Tennessee isn’t alone. Gigabit Internet offerings in a number of cities in the U.S. appear to have been responsible for economic growth in those cities. And as time goes on and gigabit Internet becomes more prevalent, the tide may turn—where cities that don’t offer it may start calculating the economic growth they lose without it.

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