BusinessTN

Positioned at the junction of three valleys and a major river, Chattanooga has always been prime real estate for railroads. It's one of the city's most identifying characteristics and a major draw for tourism. For the last half-century, however, the railroad's monopoly on transit and freight has been overshadowed by the system of highways crisscrossing the nation. But the railroads may well be reborn as the nation's avenues of information and business, and the tracks laid in this ideal railroad town may give Chattanooga an ideal head start in the Information Age.

Rail lines, according to George Eichelberger at Norfolk Southern, have been selling right of way to national ISPs like Sprint and Quest for years. The old phone and cable companies had no trouble laying copper line along public streets and highways, but that was decades ago. Now, Eichelberger says, urban sprawl and improvement projects make streets a less viable option for laying lines. Railroads, on the other hand, are privately owned and protected. It's linear property that can be bought at once, rather than in piecemeal patches of land, and it runs right to the heart of the nation's biggest cities. Thanks to geographic fortunes, railroads also converge on Chattanooga, which makes the city a new Internet hub. But what does it mean that the Internet has a lay-over in Chattanooga?

Jeff Averbeck at Chattanooga-based AirNet Group explains that, "it's just like pumping water — the closer you get to the source, the easier it is to get it." For AirNet, a local ISP, ease of access is everything. With a major piering point and junction for the Internet just south of them in Atlanta, Chattanooga has information on tap, giving AirNet and their customers a powerful resource.

Even the topography of Chattanooga is friendly to advances in technology. Wireless providers like AirNet have a major advantage in site-to-site connection, as the mountains surrounding the city allow direct line-of-site transmission to customers downtown. The bowl shape of Chattanooga that once held so much industrial smog is now a soup of connectivity. Even the municipal authorities are cashing in on the wealth in Chattanooga's connection. Mark Keil, head of the city's Information Services, has been busy establishing a wireless network for emergency personnel and police. The system, utilizing mobile, wireless cameras, will allow officers to access surveillance data before entering a potentially dangerous situation. To cut back on the cost of redundancy, Keil is buying access on the existing wireless networks in some areas of the city, areas that AirNet has been connecting for free. It saves the city money in establishing an infrastructure, and gives even more business to a local company.

But AirNet isn't the only Chattanooga company benefiting from the fiber. It's part of a city-wide cottage industry of IT, an industry bolstered in turn by a community of tech-savvy personnel. George Bairaktaris has worked in the Chattanooga tech industry for more than a decade, starting out with the city's first ISP, Chattanooga Online in 1996. Bairaktaris watched the company move out of "a closet on UTC's campus," to its own location, sitting right on a rail line. For the fledgling company, location was everything. "When checking the maps," Bairaktaris says, "I noticed that in this one location, there were the POPs of [the three main service providers of the time] within blocks of each other. The only junction like that in the country was in San Jose, which has the largest POP in the country." (POP stands for "point of presence," an information translation point that is essentially the gateway to the World Wide Web.) Bairaktaris says that level of access saved Chattanooga Online $3,500 a month in connection costs.

Out of Chattanooga Online's success, several employees, including Bairaktaris, joined up with Jeff Averbeck and others to form the multi-faceted online company, ST3. Starting in 1999, ST3 rode the crest of the information boom until it went under in 2001. According to Bairaktaris, the day following ST3's official closing, 92 of the 104 employees showed up to work and volunteered to keep the company going. A judge ordered them to stop unless they could raise $8 million in a certain time frame; they raised $6 million.

But ST3's failure spawned a host of companies, as different departments specialized into their own businesses. (See above sidebar.) Ken Smith, a managing partner with local Web and system design firm, Episode 49, was one of the founders of ST3. Ultimately, the loss of ST3 was a boon to the local economy, as it "let people focus on what they wanted to do rather than trying to do everything with one big company [with] too diverse a focus," Smith says. Out of the ST3 fallout, Averbeck joined up with Keith Campbell to found AirNet, Ken Smith moved on with fellow ST3 alum Kurt Schaffer, making Episode 49, and George Bairaktaris helped bring Tubatomic Studios, another Web design company, to its headquarters in Chattanooga. All these companies know each other on a personal level, and support each other on a professional level, creating a network of businesses that are booming.

J. Ed Marston, vice president of marketing and communications with the Chamber of Commerce in Chattanooga, says that the information sector is the fastest growing industry in town. A factor contributing to growth, Marston says, is Chattanooga's high quality of life. Since it isn't a large city, Chattanooga avoids the downsides of urban life, attracting more young professionals. As Jeff Averbeck puts it, "We're not a tier 1 city," comparing Chattanooga to major hubs like Atlanta, "but we have the connection of a tier 1 city," granting Chattanooga the best of both worlds for starting companies.

The tremendous connection advantage afforded by the railroads, the visionary entrepreneurs tapping into that resource, and the room to grow provided by the area's relatively blank slate in technology combine to make Chattanooga's digital industry the little engine that could become a giant in the South.

From ST3's failure, multiple births
AirNet started in 2002 following the loss of ST3. Five years later, it's hooking up wireless all over Chattanooga, with free access at Coolidge Park, Finnley Stadium and the Chattanooga Airport. AirNet also provides Domain Name Systems (DNS) hosting to the Republican National Convention,with backup DNS provided by Coptix, a digital integrated design agency.

Coptix sent ripples through the blogosphere when, as an April Fool's prank, they photoshopped the Coptix logo onto a picture of Karl Rove. The company's involvement with the RNC is minimal, as Josiah Roe, executive vice president explained. (DNS does not actually house information, but when searching domain names like "gwb43.com," the Coptix name comes up.) This sparked a media frenzy, and when the smoke cleared and the hoax was revealed, Coptix came out with free national publicity.

Tubatomic Studios gained global publicity when delegates from this Chattanooga Web design company attended a massive Web design competition in Lemoges, France. Originally just guests of the massive affair, which awards the winner a major Web design contract, Tubatomic became the hosts of the U.S. preliminary competition, making Chattanooga the headquarters of the CRE824 competition in America. Episode 49 handles data processing and online support for businesses. Also working with the Republican National Convention, E49 has recently launched the Fred Thompson presidential campaign Web site and the gubernatorial campaign site for Bobby Jindal in Louisiana, as well as designing Newt Gingrich's site.

Tricycle has capitalized on the huge carpet industry in nearby Dalton, Ga. and developed a revolutionary way to make carpet samples. Their digitally produced paper samples are more color-accurate than pictures, more environmentally friendly and substantially cheaper to make than traditional samples.