DADE CITY — A $40 million public-private proposal to increase high-speed Internet broadband capacity in the rural North Suncoast has hit a snag after one of the major partners dropped out.
Withlacoochee River Electric Cooperative pulled out of the federal grant application earlier this month after a financial analysis showed the utility could not recover its costs, said spokesman David Lambert. He declined to provide specific figures.
"It just did not provide the benefit to shareholders," he said. "We were looking at it pretty hard. It was tough, especially after investing all the time and resources we did."
Withlacoochee, which would have provided the fiber-optic cable, and Tampa-based service provider Rapid Systems were the lead private companies applying for the money and would have been required to kick in a combined 25 percent local match.
The federal stimulus money is part of an initiative to expand broadband access to rural and underserved parts of the country. Though the area's cable providers have been laying cable for high-speed Internet, the companies have little financial incentive to expand into less populated areas.
Economic development officials have been talking up the idea as a way to lure businesses and entrepreneurs. Local governments say they can benefit from reduced costs and the establishment of a high-speed pipeline so data can be stored at off-site locations in case of a catastrophic event.
"Nobody wants to move into an area that won't have Internet," said Dustin Jurman, chief executive officer of Rapid Systems.
Rapid Systems is now looking for a new partner to apply for the money. The deadline, however, is mid March.
To establish a viable customer base, Withlacoochee and Rapid Systems had recruited a number of public institutions — including the boards of commissioners in Pasco and Citrus counties and Pasco-Hernando Community College — to agree to sign up once the service is available.
In exchange, those customers would be guaranteed a 25 percent cost reduction compared with their current costs.
PHCC, which offers a number of online services, saw the deal as a good way to get high-speed Internet to students who don't have it, said Paul Wright, the college's dean of institutional technology.
"The college wants to encourage the expansion of broadband into our students' homes," he said. "We see the economic benefits to everyone."
James Cerny, Pasco County's chief information officer, said the service would be valuable for competition and would bring another backup system to the mix.
"The risk to the county was minimal," he said.
In Hernando County, Doug Chorvat, who oversees information technology for the county and Clerk of the Circuit Court, said he did not recommend that commissioners commit to becoming customers because he wanted more assurances that the new system would be less expensive than current services.
Still, he said, he thinks the new system itself is a good idea.
Chorvat said the Hernando landfill, for instance, cannot get high-speed Internet. If the new network of cable was installed, then not only could the landfill get the service but it would be available to residents in the isolated northern area of the county as well.
"If it doesn't happen, it's going to be a shame,'' he said. "It would provide a lot of opportunity to help a lot of people.''
The majority of the $40 million would be spent in Citrus and Hernando counties, according to a report put together by Citrus County administrators.
That report estimates more than 100,000 families in the tri-county area have no access to broadband.
Jim Tait, the former chief of staff to Gov. Reubin Askew and now a proponent of expanding broadband access to Florida, said the effort faces a number of practical challenges.
"It's very hard to make it sustainable in a rural area," he said. He questioned whether an initial customer base of government agencies — especially when they get a discount — is a good model.
"To me the best allocation of resources is through a competitive marketplace," he said.
Times staff writer Barbara Behrendt contributed to this report. Jodie Tillman can be reached at email@example.com or (727) 869-6247.