Every time you take a sip of Coca-Cola, you are tasting a bit of the history of Chattanooga. In 1901, the Atlanta-based company was selling its sugary syrup base to restaurants and drug stores, where it was mixed with carbonated water at the point of sale. Then a group of young Chattanooga businessmen persuaded Coke to sell them the right to pre-mix and bottle Coke. So skeptical was the company of their success that it sold the rights for $1. The businessmen turned that modest investment into a nationwide empire of bottling plants that sparked the global distribution of today.
For a century following the end of America’s Civil War in 1865, Chattanooga thrived on this kind of entrepreneurship. The tow truck was invented and commercialized there, and a number of national food brands were launched from Chattanooga. Chattanoogans also founded two of America’s largest insurance companies. But foundries, casting metal parts, were the mainstay of the economy. Heavy industry created wealth and ample employment for blue-collar workers. It also produced pollution. Local joked about changing their shirts twice a day and turning on the headlights of their cars at noon, but in 1969, the US government cited Chattanooga for having the dirtiest air in America.
The designation shocked the community into action. The city council joined with local manufacturers and doctors to pioneer an air-quality control program a year before the creation of the US Environmental Protection Agency (EPA). An air pollution control bureau covering all of Hamilton County, which surrounds Chattanooga, motivated manufacturers to invest $10m in pollution control. The effort proved so successful that the EPA recognized it as a national model in 1972.
Local government, business and institutional leaders did not know it at the time, but they had just created the team they needed to steer the community through tough times to come.
The Lost Decades
The 1970s began a period of long, slow decline as Chattanooga’s manufacturers fell victim to the forces of rising global competition. Legacy companies shrank and closed, and few new ones stepped up to take their place. The entire decade of the 1990s passed without producing a single new major employer.
The city did not go down quietly. The civic leadership, which had conquered the air pollution problem, organized and funded a massive effort to revitalize the urban core. In the 1990s, they constructed the Tennessee Aquarium, the world’s largest freshwater aquarium when it opened, and a children’s Creative Discovery Museum. They redeveloped the waterfront, built riverside parks and an 11-mile river walk to reconnect the city to the Tennessee River.
In fact, Chattanooga gained a national reputation for downtown revitalization, which created confidence and produced a cityscape that made citizens proud. But once the construction stopped, the projects did little to change the economic fundamentals. Community leaders entered the new century realizing that they needed a new game plan. What emerged was not a single, coherent strategy but a set of coordinated actions by different members of a close-knit leadership. Decades of battling decline gave them the determination to move ahead on many fronts.
Like many manufacturing cities, Chattanooga had an educational system designed to turn out large numbers of low-skilled workers. It gave secondary school students a choice between vocational and college preparatory tracks. In 2003, the Hamilton County school superintendent junked this system with the support of the Chamber of Commerce and began holding all students to the higher standard. In a world where traditional blue-collar jobs increasingly require problem-solving and technical certification, there seemed no other choice.
Hamilton County schools also partnered with local companies and business associations to develop more than 30 Career Academies, in which secondary school students learn core academic subjects through their application to a particular industry. At a construction academy, students learned math by applying it to costing and completing construction projects. They still read Shakespeare but also learned how to read a construction contract and write a job proposal. That project and a health care academy were instrumental in boosting student scores. In the 2009-2010 academic year, the school system increased its graduation rate by 10%.
Chattanooga is home to a branch of the University of Tennessee and the Chattanooga State Technical and Community College. Their leaders established a close working partnership with each other, the Chamber of Commerce and a dozen local organizations to bridge the education last-mile. With the help of 1,000 volunteers, they deliver school-to-work programs to 15,000 secondary school students. One program, “Reality Check,” lets students role-play being a head of household at different levels of income based on their educational attainment. As they simulate paying utility bills, obtaining child care and making choices about transportation, they quickly learn that a single parent with a high-school diploma cannot afford to buy a sports car.
The two institutions have also partnered to help lower-income students start their education at Chattanooga State and finish it at the University, which can save the students tens of thousands of dollars. Chattanooga State offers a full range of technical degrees in health sciences, robotics, mechatronics and other leading fields, while the University offers a high quality College of Business, programs in engineering, computer science and math, and the National SimCenter for computational engineering, one of the world’s pioneers in solving engineering problems through computer simulation. The state of Tennessee ranks 48th out of 50 states in education, but the percentage of Chattanoogans with bachelor’s degrees exceeds the national average.
Putting Smarts into the Grid
When electricity was first commercialized in the US, the utility companies focused on America’s largest cities, where they could get a faster return on investment at lower risk. (The same would later be true of telephone service and broadband.) Chattanooga shares with many smaller American cities a valuable legacy of that earlier commercial neglect: a local electric utility owned by the City Council. The Electric Power Board (EPB) has delivered electricity to the city since 1935, telephone service since 2000 and Internet service since 2003, always with a mission to improve quality of life and economic opportunity for citizens.
A decade ago, EPB began studying the installation of a fiber-optic network to better control electric distribution. The technology looked promising: the business plan forecast that real-time information from smart meters and distribution systems would let EPB reduce its transmission capacity by 40% while delivering a higher quality of service.
But fiber was too expensive to meet the utility’s 25-year payback requirement. EPB’s technology team put the plan on the shelf and waited. They watched as, after the dotcom bust, the price of optical fiber cable fell sharply then continued to decline year by year. When the price was right, EPB moved.
By the end of 2010, EPB had installed its network into all of the 170,000 businesses and homes in its service area. With each fiber install went a smart meter able to provide real-time data on energy usage at that location. The meters are also capable of controlling energy-hungry devices in the home or office as well, but EPB is taking it slow in exploring their use. Some smart meter installations in the US have been controversial. Customers have accused their utilities of using the new metering systems to raise rates. EPB has kept the good will of Chattanooga for decades by ensuring that the innovations it introduces actually make its customers happy.
A fiber network, of course, is not just a control system for electricity distribution. Each home or business receives 1 Gbps symmetrical broadband as a standard offering, making possible Internet, voice and television service. The interesting thing about the EPB deployment, however, is that the telecommunications services are almost an after-thought in business terms. The network is fully cost-justified just for its impact on electricity distribution; revenue from communications is just a bonus.
Not only does Chattanooga have one of the smartest smart-grid systems in the world, it is providing every resident who pays for electricity –nearly every resident, rich or poor – with the world’s most advanced broadband network. The adoption rate in Chattanooga’s poorest neighbourhoods is little different from the rest of the community, and programs from its Housing Authority have provided training and computers to more than 600 housing units.
The network is also having an impact on Chattanooga’s healthcare system. The city’s three primary care facilities include a teaching hospital, children’s hospital and Level 1 Trauma Center. They are working with healthcare business ventures to leverage EPB’s broadband capabilities. A partnership between BlueCross BlueShield of Tennessee and Cerner Medical is implementing a Web-based medical records system able to store and transmit high-resolution medical images. Chattanooga’s public hospital has received a grant to use the new network for telemedicine: remote diagnosis of patients at outlying health clinics to determine if they can be treated locally or need hospital care. One radiological group has found that the EPB network has so reduced waiting time for large medical image files that the productivity gain is equal to having another doctor on staff.
What have all of these separate but coordinated efforts brought about? By its own admission, Chattanooga began the 21st century as an economic development non-entity, with lots of great parks and museums but not much in the way of long-term job generation. By 2007, a survey of US site selectors rated it among the “50 Hottest Cities.” The EPB fiber project played its part in that turnaround. Stories on the project have appeared in The New York Times, Bloomberg TV and dozens of other news sites, as well as garnering 9 million Twitter impressions. The city has attracted relocating customer care centers, which are bringing hundreds of jobs into the region. The National SimCenter at the University is in talks with IBM about locating one of its most powerful computers – one not even commercial available – in Chattanooga to take advantage both of the highly reliable power and communications infrastructure. Its crowning achievement has been to land a $1 billion Volkswagen assembly plant, which will provide both white-collar and blue-collar jobs and have a substantial economic impact.
There is also a steady uptick in the community’s entrepreneurial spirit. Nonprofit organizations have stepped up to accelerate the base of small company formation and innovation. The Chamber of Commerce runs one of America’s largest business incubators, with 60 companies employing more than 500 people under one roof. The Lyndhurst Foundation funds a program called CreateHere, which provides business planning and support to sustain and grow Chattanooga’s arts and artisan community. Culture and tourism are increasingly important parts of the local economy. Lyndhurst has also launched a second project, InnovateHere, which provides incentives for technology companies to locate in Chattanooga. Providing additional impetus is the Renaissance Fund, an angel investment group of Chattanooga investors seeking to build a pipeline of local companies that can mature to the point of attracting venture capital.
With its unemployment rate below state and national averages, Chattanooga received good news in February 2010, when the Moody’s financial rating service named it among the first wave of US cities entering economic recovery. With so many different actors pushing forward in so many different sectors, the recovering economy is more flexible and balanced than at any time in the community’s past. That leaves Chattanooga’s leadership well-positioned to keep doing what they do best: adapting to a fast-changing world.
More About Chattanooga
Labor Force: 162,000
Bristol is one of the few communities in the world with a political boundary running down its spine. Lying to the south of the center line on State Street is the city of Bristol in the state of Tennessee. On the north side is a different city with the same name: Bristol, Virginia.
Bristol is nestled deep in Appalachia, a mountainous rural region of the American Southeast known for coal-mining, tobacco-growing and their traditional companions: poverty, poor education and lack of opportunity for bright young minds. The city's per-capita income in 2007 was only $20,000 compared with the Virginia average of more than $41,000 and the US average of nearly $39,000. Bristol is proud of its reputation as "The Birthplace of Country Music" and as home to a 160,000-seat NASCAR car racing venue known as "The World's Fastest Half-Mile." But Bristol's leaders knew that a proud history and the ability to attract fans on race day are no foundation for prosperity in a 21st Century community.
Electric Legacy, Broadband Future
Like many rural American communities, Bristol Virginia owns and operates its own electric company, Bristol Virginia Utilities (BVU). City-owned and cooperative utilities are a legacy of the last wave of rural development in the United States, which focused on electrification. In 1998, Bristol's city council voted to allow BVU to construct a fiber-optic backbone to improve communications and control among its eight electric substations. The business case was straightforward and the implementation successful. By 2000, BVU had extended the network to local schools and government offices to support telephone, data and broadband Internet, which reduced the city's operating costs and expanded the capabilities available to users. It also spurred demands from local businesses and real estate developers to provide service to them. So, in 2001, the council and BVU agreed to begin offering fiber-to-the-user (FTTU) service, branded OptiNet, to all residents and businesses.
Private-sector carriers were quick to challenge the move. One incumbent objected to the Virginia public utility commission, which regulates communications, stating that Virginia law barred municipalities from offering retail telecommunications services. Such a law was indeed on the books but, in Bristol's view, had been rendered invalid by passage of the federal Telecommunications Act of 1996. Only after Bristol sued the state did the Virginia General Assembly pass legislation in 2002 overturning the old law. As BVU prepared its commercial launch later that year, the incumbent cable TV operator claimed that the utility lacked the legal authority to provide television service. A court agreed. BVU returned to the Assembly seeking legislative and charter changes, which were granted in 2003. But later that year, the company's chief financial officer was back in the state capital testifying before a commission on the issue of cross-subsidies. The incumbent had accused BVU of charging phone rates that were below its costs and making up the difference on other services. The commission ruled against the complaint. Finally, after three years and $2.5 million in legal fees, BVU had won the right to deliver retail communications.
Financial Success Spurs Growth
As it turned out, the private sector was right to fear competition from BVU. Market research conducted by the company in 2001 suggested that 70% of respondents might switch telephone and television service from the incumbent operator, while half might switch Internet service. By August 2008, BVU's OptiNet FTTU service had captured more than 62% of the available residential and business market in its service area, thanks to effective marketing to electric customers with whom BVU already had a relationship. Despite millions of dollars of investment, OtpiNet had reached financial self-sufficiency on $16 million in net revenues in the 2009 fiscal year. A 2008 study conducted for the BVU Board determined that OptiNet customers, while enjoying the bandwidth bonanza of FTTU, had saved nearly $10 million over incumbent competitors' rates or special offers since the start of service.
The OptiNet service area was no longer limited by the city lines. BVU entered into partnership with the Cumberland Plateau Planning District Commission in 2003 to build CPC OptiNet. Managed by BVU, the network began with a 45-mile fiber-optic circuit reaching to Richlands, Virginia, funded by grants from the US government and the Virginia Tobacco Commission. It grew gradually to 200 miles across four rural counties with the help of additional grants. (The Tobacco Commission distributes money paid to the state by US tobacco companies following the 1998 settlement of the largest class-action lawsuit in US history.) BVU's success in designing, building and operating the network led it to establish a business unit called BVU FOCUS, which stands for Finding Opportunities for Communities throughout the United States. BVU FOCUS offers consulting and management services to other entities that seek to build advanced telecom networks. The unit's first customer in 2007 was MI-Connection, a telecom co-op owned by two communities in the state of North Carolina. Under BVU's management, the $80 million network grew its customer base nearly 5% in its first year and exceeded budget by 27%.
Creating a Broadband Culture
While the struggles of OptiNet make an exciting story, Bristol did not become a fiber carrier in order to win competitive battles with business. The city council's goal was economic and community development and, though the network is still so new, early results are positive. BVU's extension of the network convinced two major companies – CGI and Northrop Grumman – to build multi-million-dollar facilities in a regional business park during 2007. Since the network extension was completed in 2007, 185 businesses in the four-county service area have become customers and two new industrial parks began construction. Recent media reports indicate that business growth resulting from the broadband build-out has created 1,220 jobs in seven coal-producing counties worth $37 million in annual payroll, and attracted $50 million in new private investment. The new jobs entering the area are paying about two-thirds more than the normal weekly wage. To leverage this success, Bristol has launched a marketing campaign called AccessBristol, which makes its 1 Gbit broadband capacity the centerpiece of business attraction.
The entry of these major employers into the region has sparked a multi-level effort to develop a local knowledge workforce. Both CGI and Northrup Grumman discovered that it is difficult to attract outside employees to the region because payrolls are scaled to its very low cost of living. No matter what the arithmetic, employees resist accepting a reduction in salary as part of a move to a new area. The University of Virginia at Wise stepped forward to create the first undergraduate software engineering program in the Commonwealth, while three community colleges have joined forces to offer advanced technology classes.
These efforts are not occurring in a vacuum. Northrup Grumman's decision to locate a data center in southwest Virgina was not random; it was part of an outsourcing contract with the Commonwealth. A Southwest Virginia IT Task Force lead by Virginia's Secretary of Commerce brings together major area employers with state, county, educational and nonprofit organizations to identify requirements, develop programs and monitor their progress. In addition to the educational programs, projects include a "Return to Roots" campaign that seeks to attract highly skilled former residents to return to Southwest Virginia. Thirty percent of employees in Northrup's data center are locals and the percentage is expected to rise as the University graduates its first software engineering majors.
Bristol is also using the now 800-mile network to build quality of life and create opportunity for the next generation. Virginia High School in Bristol has nearly one computer for every student and relies on the rock-solid, high-speed access provided by the network to conduct all of its state-mandated standardized testing. BVU OptiNet has partnered with the Mount Rogers Regional Adult Education program to offer online access to preparation courses for the GED, a set of tests that give passing students the equivalent of a secondary school degree. The fiber network now links local, county and university libraries, giving residents access to more than 1.8 million items, as well as rural health clinics and city hospitals. The Bristol SeniorNavigator program provides online access to a database of services for seniors, adults with disabilities and their caregivers through libraries, community centers and senior citizen housing. Programs like these aim to power deep cultural change in Bristol, which will ensure that the hard work and innovation of its current generation of leaders pays dividends far into the future.
Labor Force: 8,120
Smart21 2009 | 2010
Effective collaboration among innovative business leaders, government and local institutions allowed this former agricultural machine manufacturing hub to develop a public fiber network now being extended with WiFi. Strong commercial growth followed, creating new prosperity in what was once a "bedroom community."
A "well-kept" secret in terms of its attraction to technology oriented businesses, the community of 22,000 has become one of the largest and most important hubs for pharmaceuticals and biotechnology processes in the world.
The second largest city in the US state of Illinois, Aurora lies on the western edge of the Chicago metropolitan area. That location has determined much of the city’s past. Railroads and manufacturing brought it great success in the Industrial Age, but the sharp contraction of industrial employment in the 70s and 80s boosted unemployment to near-Depression levels. Brownfields, a downtown full of vacant storefronts, poverty and crime looked set to dominate its future.
Turning on the Light
But the leadership and people of Aurora chose a different path. A Business Roundtable organized by the Mayor focused on downtown redevelopment and created a Riverfront Vision that attracted $20 million in state support for environmental clean-up and rebuilding of the Fox River shoreline. The work of a technology advisory group led, in 2012, to the formation of OnLight Aurora, a nonprofit company that has built a 60-mile, 10 Gbps fiber network to serve community anchor institutions and businesses. It strengthens the city’s ability to compete with nearby tech corridors for companies and high-wage employment, and has been crucial to Aurora’s success in attracting and retaining three data centers.
During the bad years, Aurora allowed public education to stagnate in terms of skills and graduation rates. It has since launched multiple programs to bring STEM education to primary and secondary schools. A STEM Discovery Academy offers a challenging curriculum to students age 3 through 7, while the Fred Rogers Academy does the same for older children. The Mayor’s Pathways to Progress project brings school districts together with the regional chamber of commerce and the local university and community colleges. It is developing career-oriented academic programs focusing on health sciences, IT and advanced manufacturing. Aurora University has founded a graduate Mathematics and Science Education Center and is helping school districts train teachers in math and science topics.
Creating a Startup Ecosystem
The university, community colleges and a private school are collaborating to deliver training to local business on entrepreneurship, technology and management. An Innovation Hub in the planning stages aims to foster collaboration among citizens, businesses, educators and government in the creation of a startup ecosystem.
During the bad old days, gangs took root in Aurora and the city developed a reputation for violence and crime. A long city-state-Federal effort backed by citizens’ groups has made big strides since then. Gang membership declined an estimated 70% from 2001 to 2007, while gang-related murders plummeted 81%. In 2012, the city celebrated its first homicide-free year since 1946. But reputations take a long time to change, and the Mayor’s Business Roundtable recently voted to launch a re-branding campaign to create new perceptions of the city. An award-winning online permitting process has boosted building permits to pre-recession levels, and Aurora appears on course for its next wave of prosperity.
In the late Eighties, fourteen semiconductor manufacturers and the US government created a partnership called SEMATECH to solve common manufacturing problems.
The selection of Austin as its headquarters sparked a technology boom. Growth was so robust for so long that the Austin economy began to look recession-proof – until the dot-com collapse of 2001 tripled the unemployment rate.
Responding to Collapse
In response, city government partnered with the Chamber of Commerce on a long-term economic development strategy that led to a nearly $6 billion increase in regional payrolls over five years. A second five-year plan launched in 2010 seeks to add another $11 billion. Austin's successful tech companies – including such major names as Freescale, Samsung, Facebook, eBay and Altera – are bolstered by rates of Internet access far exceeding US averages, a highly educated workforce and the presence of multiple universities. But achieving the 2015 goal will take more than repeating the past.
Educating the Workforce
Austin faces a workforce challenge: only 4% of the homegrown population attends higher education and only half of secondary school graduates emerge "college-ready." A significant low-income population accounts for this performance. Technology commercialization and tech transfers also present a challenge, despite high rates of patents issued for developments at the University of Texas in Austin, due to shortages of seed funding and expertise in building a business.
A program that puts College Enrollment Managers into public schools to guide the choices made by students has helped boost the graduation rate for low-income students 14 percentage points to 75%. The City Council has also created an Emerging Technologies Program to provide a single point of contact for entrepreneurs, tech businesses and Austin's many incubators. It offers consulting, matchmaking and expert advice on where in Austin to find the resources a growing company needs.
It is through this kind of public-private collaboration that Austin will achieve the growth it needs to maintain its place as America's second Silicon Valley.
Labor Force: 436,336
Returning to the Smart21 for the third consecutive year, Ashland has diversified a tourism-based economy through Ashland Fiber Network (AFN). The city-owned electric utility deployed an open-access fiber-to-the-premises network that attracted multiple service providers offering up to 100 Mbps, and then added wireless connectivity for low-income residents and public use. The city has deployed applications such as automated meter reading and remote management to reduce costs and pollution. Broadband has spurred business start-up and growth in software, outsourced services, import/export and online retailing that would have been impossible before AFN.
Smart21 2007 | 2008 | 2009
Arlington County benefits greatly from its location on the border of Washington DC. It is home to the Pentagon, the Defense Advanced Research Projects Agency (whose research created the Internet) and the National Science Foundation. More than 8,000 Federal employees work there, and tens of thousands more private-sector and nonprofit jobs are enabled by Federal spending. The concentration of nationally-known universities has given the county a remarkably educated workforce, in which more than 73% of adult residents has a graduate degree. Its high-tech public school system is ranked in the top 2% nationwide.
Arlington County is also a national example of smart growth planning, thanks to successful lobbying in the 1980s that caused a new Metrorail line from Washington to run through an existing commercial corridor rather than a cheaper route along a future interstate highway. High-density economic growth took place around Metrorail stations, leaving quiet residential neighborhoods and 1,100 acres of green space beyond.
Attracting the Leading Edge
But what Washington gives, Washington can also take away. Decisions by the US Department of Defense will empty 3.2 million square feet (297,000 m2) and export 13,000 jobs over the next several years. Arlington’s success has raised housing costs and commercial rents while expansion of the Metrorail system is putting the county into competition with cities offering lower costs. Nearly 60% of Arlington’s commercial space was built before 1990 and lacks the amenities needed to attract today’s leading edge companies.
Attracting leading edge companies in high-growth tech sectors has become Arlington’s top priority as it seeks to reduce its vulnerability to Federal decision-making. It is going about this job as it has always done, through something called The Arlington Way. It consists of a formal structure of more than 40 citizen advisory groups and commissions, which influence decisions on everything from land use to technology, and intense collaboration among government, business and the nonprofit sector to spur innovation.
A Plan for Rebuilding on Success
The county has forged a Telecom Master Plan whose centerpiece is Connect Arlington – a public-sector fiber network linking all county and school facilities, which is extending dark fiber connections to office buildings throughout the county. An E-Government Master Plan seeks to reinvent the way citizens engage with government and bring The Arlington Way into the digital age. A partnership with a venture capital firm is fostering the creation of a vibrant ecosystem for national security technologies. Most ambitious of all is a 40-year redevelopment plan for Crystal City, an important urban center, to house 26,000 new residents and attract 56,000 jobs in the kind of walkable, mixed-use neighborhoods favored by the technorati. Through these and other initiatives, Arlington County expects to retain the competitive advantages that have underpinned its success and update them for the greater demands ahead.
In the News
Read the latest updates about Arlington County.
Smart21 2010 | 2012 | 2014 | 2015
Top7 2010 | 2014 | 2015
Albany is the capital of New York State but lies in its "upstate" region where the economy is stagnant and government is one of the top employers. As both a political and economic leader, Albany is seeking to jumpstart growth in the "Tech Valley" chain of 18 upstate counties that have a history of skilled manufacturing. The city has attracted a partnership to build the world's most powerful supercomputer at the University of Albany and helped fund a top-ranked College of NanoTech. Investments in ICT infrastructure have included the Albany FreeNet wireless network and Technology Roadmap, which connects citizens, businesses and governments to opportunities in Tech Valley.
Involved in wireless broadband deployment to serve a changing community.