Yeah 3mbit/household doesn’t really sound great here unless your other options are even more limited. I don’t know what typical over subscription rates look like, but 20% of the homes watching Netflix at once saturating the entire town’s link sounds… high.

I’m in the boonies and the DSL connection I had as a redundancy for a time was 7mbit down, and that’s by far the slowest of the options available to me.

3 Mbps/household is right about the lower bound for average Internet usage. It's not optimal, especially going forward, but it's fine for now.

Upping those 2G backhauls to 10G is simple and cheap, however.

I suspect that's a bit low to cover evening streaming usage, but my main issue isn't so much the available bandwidth as selling it as 1 gbps. There should be some statutory minimum sla or something to limit the ISP's bullshit of selling you an ULTRASPEED™ GIGABIT* 1† Gbps‡ plan that reliably drops to about 0.5% of the advertised performance every night.

3 Mbps/household is enough for evening streaming, statistical multiplexing kicks in as the number of subscribers grow. It's a bit naff, but not overly so.

Averaging 3 Mbps of usage does not mean the gigabit connection drops down to 0.5% nightly. The key here is for the ISP to have enough excess backhaul to account for the occasional burst above the 3 Mbps average. As long as there is sufficient headroom, nobody will notice the oversubscription.

This is 500 houses so oversubscribed that 1 user using their nominal bandwidth would consume 50% of the total backhaul. There isn't sufficient headroom for no one to notice.

Yes, the 2G backhaul is underdimensioned. However, that's an easy fix with a 10G upgrade. Just need to swap the optics.

In my experience, 10G wavelengths are cheaper than 2Gbps EVCs.