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By Jason M. Reynolds and Dave Flessner
Staff Writers
Nearly half of all Chattanoogans surveyed say they would have reservations about supporting EPB's cable television venture if it were financed with public money, according to figures released Tuesday by the state cable industry.
"EPB has gotten their message out about what they think will happen, but people don't realize how much is at risk if this venture fails," said Stacey Briggs, president of the Tennessee Cable Telecommunications Association.
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According to the telephone survey of 500 Chattanooga voters, 45 percent said they would be less likely to support EPB's fiber-to-the-home plan if it were financed through a bond issue supported by public money. The survey found 59 percent of Chattanooga voters thought public funds should not be used to compete against private industry.
EPB officials insist that neither city taxpayers nor electric users will have to pay higher rates if the company expands its telecommunications business into residential telephone, cable television and Internet services.
The utility estimates the plan will save the electric system nearly $30 million a year in reduced meter theft, improved reliability and better load management, said Katie Espeseth, vice president of the EPB fiber-to-home system. EPB's business plan for its proposed residential telecommunications service envisions that all of the extra costs will be paid by customers willing to sign up for new high-speed Internet, cable TV and telephone services from the utility.
EPB will not cross-subsidize the telecommunications venture with electric system revenue, President Harold DePriest previously said. EPB's electric division will own the fiber-optic lines, since the fiber-optics are planned as an electric system upgrade. EPB's telecommunications division will pay rent to the electric division for using the fiber-optic network, officials have said.
The company is seeking to issue $219 million in bonds, with the financing split through electric system revenue and revenue that would be created from video system rates, Mr. DePriest said. A total of $169 million in bonds would pay for the electric system fiber components. That portion of the bond issue would be guaranteed by electric system revenues, according to EPB.
An additional $50 million in bonds would finance the purchase of video system equipment and be financially backed by video customer payments, Mr. DePriest said.
Who owns EPB?
Ms. Espeseth said she was especially surprised by one finding in the cable industry survey: Only 43 percent of respondents knew EPB was a city-owned utility.
"They don't realize that this is a publicly owned venture, and if there is a problem the public will have to back this venture either with higher electric rates or taxes," said Larry Powell, a professor of communications studies at the University of Alabama at Birmingham who conducted the telephone poll.
Ms. Espeseth said the Chattanooga City Council has signed off on EPB's telecommunications plan, and she has received positive feedback from various community meetings where she did not sense any confusion on EPB being a municipal utility.
The Tennessee Cable Telecommunications Association also has claimed that no city utility can make a profit by offering telecommunications services.
"Of the municipal utilities that have gotten into this business in Tennessee, none of them are profitable," Ms. Briggs said.
According to filings with the Tennessee comptroller in 2006, municipal electric systems in Jackson, Clarksville, Pulaski, Morristown and Bristol, Tenn., had yet to report any net income.
But Michael Browder, president of the Bristol, Tenn., electric system, said its cable TV and Internet service now is showing a profit after two years.
"We originally didn't expect to be profitable for eight years, which is typical in a capital-intensive business like this," Dr. Browder said Tuesday. "We're well ahead of where we expected to be at this point."
E-mail Jason M. Reynolds at jreynolds@timesfreepress.com
E-mail Dave Flessner at dflessner@timesfreepress.com
