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Ten Years of Fiber Optic and Smart Grid Infrastructure in Hamilton County, Tennessee

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Ten Years of Fiber Optic and Smart Grid Infrastructure in Hamilton County, Tennessee Ten Years of Fiber Optic and Smart Grid Infrastructure in Hamilton County, Tennessee Bento J. Lobo, Ph.D., CFA First Tennessee Bank Distinguished Professor of Finance The University of Tennessee at Chattanooga August 31, 2020 Lobo 2020: Ten Years of Fiber Optic & Smart Grid Infrastructure in Hamilton County TN Table of Contents List of Tables ...................................................................................................................... 3 List of Figures ..................................................................................................................... 3 List of Case Studies ............................................................................................................ 4 Acknowledgements ............................................................................................................. 5 EXECUTIVE SUMMARY ................................................................................................ 6 CHAPTER 1. INTRODUCTION ....................................................................................... 7 CHAPTER 2. HAMILTON COUNTY, TN ..................................................................... 11 2.1 Demographic Profile ................................................................................................... 11 2.2 Commercial Profile ..................................................................................................... 12 2.3 Broadband Profile ....................................................................................................... 14 2.4 COVID-19 Effects ...................................................................................................... 16 CHAPTER 3. ECONOMIC DEVELOPMENT ............................................................... 17 3.1 Employment Effects.................................................................................................... 17 3.2 Business Investments .................................................................................................. 19 3.3 The Entrepreneurial Ecosystem .................................................................................. 23 3.4 Taxes ........................................................................................................................... 28 CHAPTER 4. SMART GRID EFFECTS ......................................................................... 30 4.1 Reduced operating and maintenance costs .................................................................. 31 4.2 Outage reduced ........................................................................................................... 31 4.3 Demand-side management and reduced peak demand ............................................... 34 4.4 Pollution reduction ...................................................................................................... 35 4.5 Reduced costs from theft ............................................................................................. 36 4.6 Other Societal Benefits ............................................................................................... 37 CHAPTER 5. BUSINESS EFFECTS ............................................................................... 39 CHAPTER 6. HOUSEHOLD EFFECTS ......................................................................... 45 6.1 Consumer Surplus ....................................................................................................... 45 6.2 Residential Savings ..................................................................................................... 48 CHAPTER 7. COMMUNITY EFFECTS ........................................................................ 50 7.1 Healthcare ................................................................................................................... 50 7.2 Telecommuting ........................................................................................................... 56 7.3 Education .................................................................................................................... 61 7.4 Media Publicity ........................................................................................................... 66 7.5 Other ........................................................................................................................... 68 CHAPTER 8. CONCLUSION.......................................................................................... 73 REFERENCES ................................................................................................................. 76 2 | Page Lobo 2020: Ten Years of Fiber Optic & Smart Grid Infrastructure in Hamilton County TN List of Tables Table 1. Summary of Estimates of Value (2011-2020) .................................................................. 6 Table 2.1 Hamilton County Demographic Profile ........................................................................ 11 Table 2.2 Hamilton County Business Profile ............................................................................... 12 Table 2.3 Hamilton County Employment by Industry & Occupation (2018) .............................. 13 Table 3.1 Announced Investments and Start-up Funding ............................................................. 20 Table 3.2 EPB Payments In-Lieu of Taxes due to Fiber Optic Infrastructure .............................. 29 Table 4.1 Meter Read and Switching Cost Reductions ................................................................ 31 Table 4.2 Electricity Outages Reduced ......................................................................................... 32 Table 4.3 ICE Calculator Results.................................................................................................. 33 Table 4.4 Peak Demand, Energy and Pollution Reduction ........................................................... 35 Table 4.5. Pollution Reduction Benefits ....................................................................................... 36 Table 4.6 Power Theft Reduction ................................................................................................. 37 Table 5.1 Download Speed by Bandwidth and File Size.............................................................. 40 Table 5.2 Business Efficiency Cost Savings................................................................................. 44 Table 6.1 Consumer Surplus in Hamilton County ........................................................................ 47 Table 6.2 Electric System Cost Savings Due to Fiber Optics Division ........................................ 48 Table 6.3. Community Cost Savings Due to Fiber Optics Division ............................................. 49 Table 7.1 Gig and Smart Grid Media Coverage ........................................................................... 68 List of Figures Fig. 1.1 Maps relevant to this study .............................................................................................. 10 Fig. 2.1 Digital Divide Index for Hamilton County, TN .............................................................. 15 Fig. 2.2 EPB - Fiber Optic Data Take Rates 2010-2020 .............................................................. 16 Fig. 2.3 EPB - Residential fiber gigabit subscriptions .................................................................. 16 Fig. 3.1 Cumulative Change in Employment by Sector in Hamilton County (2011-2019) ......... 19 Fig. 3.2 Downtown Chattanooga Real Estate Development (2015-2020).................................... 21 Fig. 3.3 Hamilton County Digital Entrepreneurial Engagement (2018-2019) ............................. 28 Fig. 4.1 Electric System Automation Benefits.............................................................................. 32 Fig. 4.2 EPB SAIDI - 2017 ........................................................................................................... 33 Fig. 4.3 The Value Components of the Smart Grid ...................................................................... 38 Fig. 5.1 Time Savings with Bandwidth ........................................................................................ 40 Fig. 5.2 Cost Savings from Bandwidth ......................................................................................... 41 Fig. 6.1 Average cost per residential kWh (cents) ........................................................................ 49 Fig. 7.1.1 Diagnostic Radiology Consultants - Data Usage (2007-2019) .................................... 55 Fig. 7.1.2 Diagnostic Radiology Consultants - Days to Completion (2010-2019) ....................... 55 Fig. 7.2.1 Telecommuting Trends in Hamilton County ................................................................ 58 Fig. 7.2.2 Telecommute Savings in Hamilton County.................................................................. 59 Fig. 7.2.3 Work from home survey of 4 big cities ........................................................................ 60 Fig. 7.2.4 COVID-19 Effects of Telecommuting in Hamilton County ........................................ 61 Fig. 7.3.1 Chattanooga Public Library Digital Circulation 2012-2020 ........................................ 65 Fig. 7.3.2 CPL Digital Engagement and Reach July 2012–June 2020 ......................................... 66 Fig. 8.1 The Economic Value of Fiber Optic Infrastructure in Hamilton County TN ................. 73 Fig. 8.2 This is what happens in an internet minute (2019) .........................................................
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