If the heart of your broadband network’s sustainability plan is selling subscriptions to individual residents, you should re-think your plan. Were the network a house, this is similar to fixating on making a classy roof while ignoring the strength of your foundation.

Starting with the hype-heavy days of muni wireless, community broadband projects have been plagued with this concept that individual subscribers alone can sustain a network. Residential subscribers collectively are important, but they are the secondary consideration. Why not the foundation? Numbers, costs and financially superior alternatives. This last factor, superior revenue alternatives, is where sustainability lies because they represent possibly50% or more of your network’s revenue.

Regardless of what the final definitions from NTIA and RUS are, many of those lacking adequate service live in small towns and rural areas. That means a small number of potential subscribers. Only portions of these populations will become paying customers (think kids, teens, low income individuals until they get better jobs). Not everyone who can afford service wants to pay for it, at least initially.

The cost of winning and keeping individual subscribers is a major pain in the assets. Yeah, you quickly snag that low-hanging fruit, people who have no access or despise the access they have. Everyone else, you have to spend money to win, and it may take months to recoup that expense. Collecting isn’t cheap, supporting individuals is expensive. Did I mention customer churn? Competitors won’t sit still while you rake in the bucks. They raise the heat. So you have to drop prices, offer incentives, bring lost customers back
to the fold.

Smart cities go after financially superior alternatives. Towns such as Fredericton, New Brunswick in Canada bring the largest local businesses into a room and have everyone chip in to underwrite the network operating costs. Each business gets broadband superior service for a cheaper price. Or like Santa Monica, CA, you focus on selling fiber services to local businesses. This helped generate ver $2 million in operating capital for their network.

Use the network to convince two or three major businesses to move into the area bringing mondo dollars and other benefits. Franklin County, VA’s economic development point man Scott Martin (interviewed in my last Snapshot Report) says a data farm such as the one Virginia’s network convinced Google to build brings a $500 million investment into the community representing $3 million in new tax revenues, enough to run three elementary schools.

The bottom line is this. Residential and individual subscribers comprise the quality roof on your house of sustainability. But the financial foundation lies with government use of the network to cut its operations costs as well as your leading businesses. They’re solid, they don’t require much customer support and once satisfied they rarely churn. Other institutional customers such as medical facilities and colleges are the walls. And a fresh generation of broadband-stimulated home-based businesses provides financial insulation.

An important side note: once you shift the focus of your sustainability plan from the general public to institutional customers, you avoid some of the spitting contests such as the one Wilson and Salisbury NC are forced to have with the conservative think tank, John Locke Foundation [www.salisburypost.com].

Many community broadband opponents’ arguments are dubious at best, but if you come to the table and slap down a dozen pre-network memoranda of understanding with local businesses, you’re much less vulnerable to the “fiscally risky” argument.

- Craig Settles