Stay on Top of Emerging Technology Trends Get updates impacting your industry from our GigaOm Research Community

The telephone company that provided the copper service that in 1923 allowed Calvin Coolidge to be sworn in as United States President, at Plymouth Notch in Vermont, is trading its storied copper for fiber. VTel, a telephone company providing service to 21 Vermont communities is upgrading its network to an all-fiber, gigabit-capable network.

So far, it’s offering about 500 residents gigabit speeds for $35 a month and plans to cover its 17,500 customers by the middle of 2014. That’s about the same time Google plans to start offering gigabit service to its first Austin residents, and means VTel will be hooking up 200 homes to the network each week. So when we counted gigabit homes earlier this week, Vermont likely supplied a few.

VTel’s transition from POTS (plain old telephone) to photons was made possible in part from the broadband bucks the federal government allocated as part of the American Reinvestment and Recovery Act in 2009. Thanks to ARRA grants totaling $94 million, plus matching grants from the local utility that wanted to use the planned network for smart grid deployments and its own investments, VTel has spent over $150 million building out more than 1,200 miles of fiber.

VTel also operates a 100 gigabit per second backbone in the North East with peering points in New York City, Boston and Montreal, which supports the network and provides redundancy via alternate routes. Inside the home Vtel has to upgrade the equipment it offers consumers to match the gigabit speeds coming into the house. It purchased Actiontec routers for inside the homes, and now its customers are typically experiencing speeds of 925 Mbps to 950 Mbps.

VTel CEO Michel Guité, told the Wall Street Journal that the growth of Google Fiber helps him get approvals for the federal grants to upgrade the network. From the article:

That comes as Google’s Fiber project, which began in Kansas City and is now extending to cities in Utah and Texas, has raised the profile of gigabit broadband and has captured the fancy of many city governments around the country.

“Google has really given us more encouragement,” Mr. Guité said. Mr. Guité said he was denied federal money for his upgrades the first time he applied, but won it the second time around–after Google had announced plans to build out Fiber.

Most tellingly however, was Guité’s quote to the Journal where he says it remains to be seen if this is a “sustainable model.” Selling broadband access for $35 may be possible if much of your deployment costs were covered by federal grants, especially in a rural area where homes are spread out. Generally the more dense a population, the lower the broadband deployment costs, which generally translates in higher monthly bills for customers. But since customers aren’t sure why they need a gigabit yet, getting too far ahead of demand can mean VTel spends money to upgrade before customers want to pay money for the product.

VTel is scheduling community meetings to educate people about the benefits of having a a gigabit network as part of a drive to get customers to sign up. However, for those that are leery about living so far in the future, VTel still offers customers dial up access for $21.95 a month. Now, that makes for a digital divide.