How businesses connect to the internet
* Cable - 40.9 percent
* DSL - 21.9 percent
* Fiber - 11.1 percent
* Fixed wireless - 6.6 percent
* T1 lines - 4.8 percent
* Mobile wireless - 4.1 percent
* Dial up - 0.6 percent
Source: Strategic Networks Group survey of 3,936 establishments
Fewer than one in four Tennesseans have high-speed broadband connections for their internet service, even though broadband is now available to 87 percent of the state's households, according to a study released Tuesday.
The study commissioned by the Tennessee Department of Economic and Community Development found more than a third of the rural areas of Tennessee still don't have any broadband links for high-speed internet. And much of the existing broadband infrastructure isn't being fully utilized because consumers are opting to use slower and cheaper internet connections.
Statewide, 13 percent of all households in Tennessee lack access to any high-speed broadband internet service. That's 834,545 Tennesseans unable to get the connection speeds the Federal Communications Commission says are preferred for today's e-commerce, education and work links.
But even where faster options are available, a majority of households in Tennessee still get internet service through slower DSL, wireless or dial-up connections.
The study of Tennessee's broadband services conducted by the Strategic Networks Group showed a wide digital divide.
One in six Tennesseans, including 99 percent of those in Hamilton County, have access to gigabit-per-second internet speeds — some of the fastest broadband connections in America. But outside the "gig cities," broadband connections are not always available.
"Having access to broadband services is quickly becoming the most important differentiating infrastructure of our time," the 172-page study concludes. "Education, healthcare, business operations and innovation, workforce training and e-government applications all rely upon advanced broadband networks."
The study defined high-speed broadband as at least 25 megabits per second download and 3 Mbps upload. To achieve such broadband service to all Tennessee homes, the study projected, would cost between $1.1 billion and $1.7 billion.
Among Tennessee's 95 counties, Hamilton County had the greatest broadband penetration. At the other end of the spectrum, 99 percent of residents in Bledsoe County and 88 percent of those in Sequatchie County lacked any broadband access.
Chattanooga's EPB, which launched the nation's first communitywide gigabit service in 2010, has applied to offer its high-speed broadband in other parts of Tennessee.
State law restricts municipal power utilities from offering telecommunications services outside their power territories, but the FCC voted 3-2 last year to overrule that state law and allow EPB to expand its service. The state is challenging the FCC decision in the 6th U.S. Circuit Court of Appeals.
EPB President David Wade said Tuesday the new study "helps quantify the significant gap in broadband availability" across Tennessee and its impact on business recruitment.
"We were glad to see that the report included municipal fiber optic providers and electric cooperatives as having the strong potential to help address this challenge," Wade said. "If EPB is given legislative approval to expand, we stand ready to serve people in surrounding areas who have requested our services."
But a spokesman for AT&T called the consultant's report "disappointing," because it appears to favor more government involvement in private business.
"It largely ignores private sector investment and focuses heavily on proposals that grow government with little reference to the associated costs and risks to taxpayers," spokesman Joe Burgan said.
The Strategic Networks Group ranked Tennessee 40th among the 50 states in overall broadband availability and investment. Georgia ranked 37th and Alabama ranked 33rd.
The study said 19 of the 20 states with the highest penetration of broadband had state broadband offices.
But Sen. Mark Norris, R-Collierville, believes such an office would be a mistake. Norris led an effort for a comprehensive study of broadband by the Tennessee Advisory Commission on Intergovernmental Relations, which is due to release its findings this fall.
Norris said he expects "there will be recommendations — and I anticipate legislative proposals in January — to help expand broadband and access to the internet."
"But the technology and the laws are changing very quickly and this is not like rural electrification was in the 1930s. There are a lot of choices and options for people with broadband that we didn't see with electricity."
Norris, who said he remains wary about municipal broadband based on the failure of Networx in his district near Memphis, said he hopes the push for more broadband is not an excuse for bigger government.
Sen. Mark Green, R-Clarksville, vice chairman of the Senate Commerce Committee, also expressed concern about allowing government-owned utilities like EPB to compete with private firms such as AT&T or Comcast.
"We want to look closely at this study, but in general, I am not for government and business competing in the marketplace," he said.
Randy Boyd, the commissioner for economic and community development who commissioned the study, said "not every option included in the report may be the answer for Tennessee, nor is there one simple solution." He called the study "a starting point for meaningful conversations."
Contact Dave Flessner at firstname.lastname@example.org or at 757-6340.