Public sector broadband customers are slow to change, even when it means fast broadband

by Steve Blum • , , ,

Schools and other big broadband users have been slow to sign up for service on Digital 395, a 500-plus mile fiber network that reaches from Reno, down the eastern Calfiornia side of the Sierra Nevada, along U.S. Highway 395, to Barstow. The slower than expected take up rate for anchor institutions is causing financial headaches for the system, according to Michael Ort, president of Praxis Associates, the lead company on the Digital 395 project.

“We need to think about the long term sustainability of these systems”, Ort said.

The more than $100 million it took to build it came from federal stimulus program grants and from the California Advanced Services Fund. To get that money, backers had to demonstrate support from government agencies and other major institutions. Organisations up and down the length of the project were quick with letters of support, but enthusiasm for the concept did not automatically become willingness to buy.

Forty percent of those anchor institutions have not signed up for service yet, and those that have tend to buy low speed service that doesn’t take advantage of the gigabit-class bandwidth an open access fiber network like Digital 395 makes possible, Ort told attendees at a broadband conference in Riverside earlier this month, organised by the California Emerging Technology Fund. Hospitals are signing up for high speed connections, he said, but that aside the average institutional customer is buying 36 Mbps service, with many opting for 10 or 15 Mbps.

Meanwhile, one third of Digital 395’s annual operating budget – $1.5 million – is going to pay property taxes. That’s good for local governments and schools, but it makes for a rough financial ride.