20 May BadgerNet: Public Internet service losing business to private ISPs
Madison, Wis. – Frustrated by the comparatively expensive broadband service offered by the BadgerNet Converged Network, a growing number of Wisconsin school districts and municipal libraries have gone to private Internet service providers outside the BCN when adding bandwidth.
The BCN, also known as BadgerNet, is the provider of converged data and video services to Wisconsin education and government sites. It was established to provide scalable bandwidth to authorized users, but now finds itself in a price-disadvantaged position in urban and potentially in rural areas.
There are no qualms about the quality of the service, particularly the two-way video that enables distance learning in classrooms, but in only the second year of a five-year contract, the BCN is being bypassed in favor private sector vendors.
Thanks to the volatile technology market, state officials concede the BCN’s original business requirements, which were established two to three years before the contract was finalized, require an updated business model.
“The original business requirements are now three to four years old in an area [technology] that changes quickly,” said Oskar Anderson, administrator of the Wisconsin Department of Administration’s division of enterprise technology. “It’s a case where time has passed since this was first looked at, and now it’s time to look at it again.”
The division of enterprise technology has contracted for the services of the Wisconsin BadgerNet Access Alliance, the organization of Internet service providers (telecommunications companies) that are part of the BCN contract. Among those vendors, AT&T serves as the prime contractor, but the state oversees basic ISP services on the BCN rate sheet. (AT&T also can provide services outside the BCN contract).
Anderson’s office indicated the BCN extends to all 72 counties, 379 of the state’s K-12 school districts, and 408 library sites. In addition, the BCN is accessed by 22 UW campuses, all 17 technical colleges and all 28 private colleges and universities, several tribal nations, and 1,013 state agency sites.
Users that purchase additional broadband services outside the BCN must negotiate the price for those services, and many already have.
According to Bob Bocher, a technology consultant for the Wisconsin Department of Public Instruction’s division for libraries, technology and community learning, school districts are facing ever tighter budgets, primarily because of state revenue caps. When schools can get more bandwidth from a local provider at less than the BadgerNet contract price, they often go with the less expensive option.
In urban areas, Bocher said it’s not unusual to see a five- or six-fold cost differential between the BCN and alternative vendors.
“DPI is a strong supporter of the BCN,” Bocher said, “but by the same token schools are caught between a rock and a hard place. I know from the phone calls and e-mails I get that this is an issue.”
According to Bocher, by the summer of 2007 the DPI had determined that about 70 percent of the state’s 388 public libraries reported very slow Internet access, primarily because of insufficient bandwidth. The state’s 2007-09 budget gave the DOA more budget authority to increase the BadgerNet bandwidth subsidy for both libraries and K-12 schools. Since the budget passed last October, most libraries with bandwidth issues have received an increase, as have some school districts, but the ever-increasing demand for more bandwidth will likely require subsequent increases in library and school bandwidth.
Bocher, who chairs the American Library Association’s subcommittee on telecommunications, cited a pair of libraries in the Lakeshores Library System that get bandwidth from BadgerNet and other providers. He said Racine Public Library is getting three megabits per second (Mbps) for wired patron access via TDS Metrocom and a 2.2 Mbps digital subscriber line via TDS for patron (wireless) laptops, while Fontana Public Library is getting 1.5 Mbps through a contract with Time Warner Cable.
Overall, six of the 15 libraries in the Lakeshores system have gone outside the BCN for extra bandwidth, and a seventh is poised to follow suit, according to Jim Novy, the system’s wide area network manager.
Bocher believes the price disparity is more of an issue in urban areas of the state, where BadgerNet’s postalized rates are often higher than the open market rates. He worries that if nothing is done to restructure the BCN contract, which expires in 2011, “we’ll see significant erosion of K-12 participation.”
Urban versus rural
The reason broadband is less expensive for urban areas that go outside of BCN is that more competition and larger volumes of fiber exist in urban areas. Since vendors have an excess of fiber in urban areas with nothing running on it, they can offer lower prices in these areas and still recoup their infrastructure costs, according to Ed Meachen, associate vice president of learning and information technology for the University of Wisconsin System.
In rural areas, the service providers would ordinarily charge higher prices to recoup the costs of putting the infrastructure in the ground, especially where no infrastructure exists. DOA, however, required contractors to postalize their rates across the state, which forced them to equalize those rates, particularly for services offered in rural areas where there is less competition.
One of the allures was an e-rate discount provided under the federal Universal Service Fund, subsidizing bandwidth to the point where it was reasonable for K-12 school districts and libraries. But that subsidy can only go so far, Meachen said, in period where libraries and schools are increasing the bandwidth they use.
The BCN was supposed to help cover gaps in rural broadband service as part of the state’s economic development strategy, and some worry that a mass exodus by urban school districts would make the service cost prohibitive for rural districts.
“If we have urban districts cherry picking or jumping off the network, that leaves us with a pretty high cost network for the rest of the state,” said Joan Wade, agency administrator for Cooperative Educational Service Agencies (CESA) 6, one of 12 regional service agencies that serve public schools.
Alternatives to BCN
CESA 10, based in Chippewa Falls, serves 30 school districts – both urban and rural – in the west-central part of the state. Ross Wilson, IT director for CESA 10, said the BCN’s strength is the ubiquitous video services it provides. With bandwidth, however, he said the original network contract is based on “what we were doing in the last decade instead of what we need to do in the future.”
For CESA 10-supported applications like course management for students and financial packages for school districts, users need at least five Mbps of bandwidth, Wilson said. However, many purchase three Mbps at the BCN rate of $1,080 per month, and they would have pay $1,440 per month for five Mbps.
The cost disparity prevents them from seeking business efficiencies that can be gained by deploying software systems provided by CESA 10. “CESA  supports a school financial package that we can get to them, at a much lower rate, if they use an ASP model,” he said, “but that requires more bandwidth.”
Wilson acknowledged that CESA 10 is looking into private vendors as a way to upgrade service.
Another alternative is leveraging a private vendor to reach WiscNet, a non-profit organization that serves educational customers. Whereas the BCN is the provider of a network circuit in Wisconsin, WiscNet is a provider of educational services, including Internet access.
Thomas Lange, district technology coordinator for the Rice Lake School District, wrote in an e-mail that beginning next year, Rice Lake will take advantage of WiscNet’s new pricing structure. Under this pricing model, he believes the district will be able to increase its bandwidth from three Mbps to 100 Mbps at about the same cost over the next two years.
The BCN, however, only provides the local loop. For a small increase in monthly cost over the BadgerNet 5 Mbps service, Lange indicated that Rice Lake will be able to contract with Charter and obtain a 100 Mbps circuit for its transport to WiscNet, “which will allow our district to grow without being choked by bandwidth restrictions.”
“In discussions with BadgerNet, we had to prove that we needed more bandwidth showing graphs of usage, etc.,” he wrote. “This was difficult because we have limited usage on our network to make sure our current systems were functional.”
Now that it has plans to improve to 100 Mbps, Rice Lake will encourage its staff to take advantage of Internet services like streaming video and online textbook resources.
A visioning retreat is tentatively planned for this summer to examine different business model options for the remaining three years of the BCN contact and the agreement that will succeed it.
“Due to the passage of time,” Anderson said, “we now have good reasons to look at the structures we have in place.”
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