Celebration...and Post-Celebration Intranet and Wireless

LUS Fiber supporters had a good day today. The city's telecomm utility marked another signpost victory and, more crucially, began looking beyond the viability of the new utility and toward the benefits it can begin to provide as a successful operation.

Celebration & subscriber numbers:

Veterans of the Fiber Fight

The day started off with a gathering of employees, long-time supporters, politicians, and reporters in the atrium at city hall. Folks who'd worked hard during the fiber referendum in '05 held a mini reunion after  a period of circulation, talk, and anticipation. The chair of both the council and the LPUA (LUS' governing authority) gave brief talks but Huval, as directory, held center stage as he laid out the case for  considering LUS Fiber successful, promised new services, and urged the crowd to encourage residents who intended to sign up to go ahead and do so.

And, finally, he revealed subscription numbers, saying that LUS had 14,000 subscribers out of a possible total of about 43,250—based on water customers. That's right at a third of the available households and businesses.

Signposts:
At both the press conference and the subsequent presentation to the City-Parish Council Huval emphasized the encouraging numbers that emerged from the recent audit of City-Parish finances.

income rises, expenses level off, cash flow is positive

Three factors interact: 1) That significant market share—33% spreads the cost among enough people that the services can be offered at a cost-competitive price. In two years the customer base expanded 293% 2) Costs are leveling off; the large startup costs are settling back into maintenance mode. Costs only rose 6.5% last year. 3) Revenue increased by 41% reflecting increased numbers of subscribers served at a much smaller per household incremental cost. The result: cash is flowing into the new business at an increasing rate. This was always the predicted pattern but everyone surely breathed easier when the expected numbers showed up.

Looking Forward; the Benefits of a Successful Utility:
With LUS Fiber willing to declare itself over the threshold of success the focus immediately, and correctly, turns to what "What next?"  What can a vigorous LUS Fiber do for the community. That's a spot where I think the utility could use a little community input. What they offered was worthwhile and interesting:

Why wait on Google Internet?
We didn't.

• Allons TV—The mobile platform upon which HBO Go recently launched and which already contains a raft of other channels (from ESPN to ABC to SyFy) are already making their material available to smartphones and tablets.
• The Lafayette Intranet—LUS Fiber has long touted a nearly unique feature: the 100 Mbps internal network that makes the link between all subscribers the same speed, regardless of how much or how little they are paying for their data service. To this LUS is adding a 1 Gbps service between businesses. Why not everyone? Well that's a product of the fact the electronics on the sides of residences top out at 100 Mbps practically speaking. Commercial grade electronics doubtlessly are a step up...so there is no extra cost for new electronics to offer this to their business customers but providing it to all the already established homes would be a major expense. But...there is no reason not to make it clear that this IS the issue, if indeed it is, and to promise that LUS will continue to provide "best possible" intranet to all its customers on the intranet. We should all have a Gig. 
• Wireless Lafayette—LUS has long had numerous hotspots—for the use of LCG and LUS only. But today they announced the provision of their first commercial wireless installation. It will be at  Acadiana Mall and the WiFi signals will be free to all users. That's interesting news in one direction: it implies that LUS is developing a wireless division for large commercial venues. This is actually a fairly good-sized undertaking with its own raft of specialists and maintenance personnel. That is surprising and may turn out to be a significant part of making a larger wireless play in some degree self-supporting. Public WiFi in public places is also on the agenda and is intended for public buildings and the parks. That'd be a good start but not anything very unusual or notable. My guess here is that there is that there is a deep reluctance to devote the manpower and maintenance expense necessary to keep up an area-wide WiFi network until the utility itself is absolutely secure; it costs money. Frankly, that's an outlay that may require public pressure as it would compete with the final benefit that Huval said a successful fiber utility would bring:
• Cash on the Barrel Head—If customers continue to sign up LUS Fiber can get considerably beyond just paying for itself and saving Lafayette's citizens a pile of cash. It can, Huval noted, also save us on taxes. The mechanism is the oft-discussed (and oft-misunderstood) In Lieu of Taxes (ILOT). Huval projects some 5 million dollars a year in ILOT monies should all the citizens of the city who say they intend to get around to buying LUS Fiber services would just go ahead and do so. That's not at all pie in the sky and would only increase as further customers sign on. The incremental additional cost of new customers, once the basics are paid for is very small; new adds very quickly become very profitable gravy. All that money could go into the city's general fund! Now it may be that there should be some discussion about whether we want it to go there or whether we'd like to get other benefits from our telecomm utility: what about a wireless cloud over the city? or maybe a real attempt to close the digital divide; a task the Council once endorsed? If we want to have that discussion about the surplus LUS Fiber will one day generate I fear we'll need to insist. 

Huval closed with a convincing plea that we should all try and get those the surveys show simply haven't gotten around to subscribing to LUS Fiber to go ahead and do so. The advantages, whether it is saving on our taxes or getting valuable new service, are to great to ignore. He's right. Talk it up. It is to all our benefit. 

Celebration? LUS Fiber Teases -Updated

LUS Fiber is holding what it is billing as a "celebration" at 3:30 in the atrium at city hall today. They're being coy about just what it is they are celebrating but I do like the idea.

Surely they will brag on the recent audit—it seems unqualifiedly a good report that alone might justify a celebration. But there is also talk about new products, a hint about a gigabit product on the facebook announcement page, and hints that I take to be about wireless networking. And we know, cause it's been promised: we'll get a peek at official subscriber numbers. 

We'll see. And if you've been involved in this fiber thing for awhile you just might want to attend. (I'm going!) Who knows, maybe we'll be surprised.

Update 11:30 5/21/13: A media "reminder" sent out this morning adds the point that Huval will be making a presentation to the council during the president's report. That occurs very early on the agenda so it should start not long after the meeting begins at 5:30. You can watch it on AOC 2 (LUS 3, Cox 15). Alternately, catch streaming live or view the recording at LCG's ustream account.

LCG Audit reveals LUS Fiber progress; subscriber numbers to be released

Screen shot from Advertiser Video

The headline news from the LCG audit is that the city-parish has brought its rainy-day cash cushion back up to a level that could keep the government running  for 81 days; the last audit had revealed a mere 7 day cushion.

But that's not the reason this blog is reporting the Advocate story by Richard Burgess — the secondary story is the health of LUS Fiber, the city's local telecomm utility:

The audit released on Monday also offers a close look at the finances of LUS Fiber, the city-owned fiber optic telecommunication service that launched in 2009.  

That’s enough to cover debt payments on the more than $100 million the city borrowed to build the fiber optic system and to cover nearly all operating expenses with the exception of depreciation... Factoring out depreciation, LUS Fiber made enough money to roughly break even by the end 2012, according to the audit figures.

LUS Fiber operating revenues rose from $17,010,937 in 2011 to $24,041,236 in 2012, according to the audit. 

As nice as that news is the real news for avid followers of fiber is the final paragraph:
That's continuing good news. LUS Fiber is paying all its bills—ongoing expenses, cable contracts, debt service, the whole schmear. What it can't say it is doing is storing away enough cash to replace or upgrade the equipment. Even that is a bit misleading. LUS Fiber is, in capital turns, mostly a huge investment in equipment which is scaled to serve the whole city. That hardware is almost all installed upfront before the customers begin to be served in any numbers. The equipment is brand new and it is being depreciated at a steady rate based on its expected useful life. In reality those parts won't begin to fail for a long time. So there is this huge mass of capital investment that is being depreciated on paper each year. Until growth catches up to the amount the accountants want to see being socked away as savings for the eventual day it is needed LUS loses money on the spreadsheets. But it is in no sense that any real businessman would acknowledge "losing money."

The city has never made public the number of customers served by the fiber optic system, citing laws that allow it to keep competitive information secret, but Huval said he plans to release the numbers later this month.

That's a good thing. I've long argued that keeping stuff like this secret is pointless: Cox knows quite well when a customer leaves for the competition and if it wants to spot check to confirm its estimates all it has to do is ride down the streets and look for houses with fiber optic cable running into the home. Cox knows exactly how many customers LUS has to within a small percentage of error. The only ones who don't know are the public—and hiding those numbers looks, well it looks like LUS has something to hide. It is much better in terms of public relations to simply be upfront about it.

Lagniappe: The Advertiser doesn't yet show its article on the audit but it does have a nice video up that has Huval explaining EBITA, Cash Flow Positive, and Profitable to our community. It's a tad surreal to realize that these terms are now useful terms that the citizen-owners of the new telecomm utility have good reason to understand. And you can see him promising to release subscriber numbers.

KATC had a badly mangled story up that Joey Durel immediately blasted in its comments section. Durel wrote:

Wrong. Please try again. I will make the independent auditor, Chief Financial Officer, and Director of Utilities available to your reporter to try and get an accurate accounting of the facts. As disappointing as it may be to someone there, the communications division of LUS is on the right track and continues to grow into the asset this community VOTED with confidence for it to be for Lafayette.

That sounds like the Durel of the fiber fight—an immediate feisty response. And he was right. The article, which has since been pulled, was an unsigned mishmash that confused In Lieu Of Taxes (ILOT) (which LUS Fiber does not yet pay) with an internal "loan" (where LUS Fiber is forced to pay market rates for a loan that returns to them money that they earned) and made the thinly veiled claim ("But that can't be taken at face value") that the auditor and Terry Huval were lying. It showed an embarrassing lack of understanding of the fiscal issues involved and revealed that someone at the station is drinking the anti-fiber cool-aide. KATC was wise to get its mistakes out of the public eye.

Update: The Advertiser story with full text is now available.

Update 2, 5/14/13  The Independent has a story up with the provocative title: "Lafayette’s ‘sinking ship’ is cash flow positive." That title refers to councilman Theriot's strange ideologically-fueled rant last year. Some fun bits:

On some marketing research:

"And what we’ve learned is that of the people who have not bought our services yet, about half of those probably aren’t going to buy our services because they’re against the idea of the government providing these types of services. But the other half that do intend to buy our services just haven’t gotten around to doing it. And if we end up with a big percentage of those who just haven’t gotten around to hooking up, we think the numbers that we have now will probably increase those by 60 to 90 percent in revenues, so it’s pretty significant.”

I have no doubt that there are significant parts of the population who see the city's telecomm utility as a new, risky idea. But that will be true only for as long as the fiber utility is new and risky. As it incrementally morphs into a stable fixture on local scene those concerns will drop away—and folks will buy according to what's best for them from all the established providers. Time will cure this ill.

Concerning the climb to profitability:

Says Huval, “We’ve gotten past that dark hour, but we knew it was going to be this way, if you look back at our feasibility study. We did the whole city. From the beginning, we didn’t discriminate. The poorest parts were hooked up just as fast as the wealthy. We promised that.”

Huval's remark tying the time to profitability to the political commitment to serve all demographics immediately reflects his understanding that doing so, rather than serving high-income, high take-rates first as Google is doing, kept LUS Fiber from getting over the hump faster. That points to one difference between public and private providers.

The take-away really ought to be that things are going roughly according to plan. Advocates of fiber always said that it would take awhile to get to profitability on any enterprise that required huge upfront capital investments. None of this was unanticipated and those that want to pretend that something scary is going on because a startup loses money that it always said it would lose in the first years is not being "fiscally responsible"—they are playing some other game.

"New Yorkers Envious of Lafayette and Chattanooga? Yes."

What's Being Said Dept.

Community Broadband Networks posts a nifty short piece that points to how ingrained a positive perception of community-owned fiber networks has become among the digerati. Notice that this really isn't a story about community networks; the basic story is about creating a strong digital workforce in New York City.  The person interviewed is using Lafayette as shorthand for attending to the basic infrastructure needs supporting a vibrant tech community. I like that NYC considers Lafayette to be the obvious case of a community that has done its basic homework. (Of course, we still need to get about building on what we've made possible.)

Aw hell, rather than summarize the summary, I'll simply repeat; it's pithy enough to reproduce in full; enjoy:

In a recent New York Daily New article, Scott Stringer wrote about the Big Apple's tech employment trends. He noted that more tech related positions now come to the city but those jobs still tend to elude women and people of color. He suggests looking at New York's own workforce and offering better science and technology training. How do they do that? Improve curriculum, of course, but: 

Ultimately, the new workforce is only as strong as the infrastructure that supports it. Today, fast, reliable Internet access isn’t a luxury — it is a core utility of the modern age.

Stringer notes the antiquated copper throughout the city and looks south for a model:

Lafayette, La., constructed a municipal fiber network in 2005, linking fiber to every home and business. In Chattanooga, Tenn., the city worked with the public electric company to build a fiber network that not only helped modernize the energy grid, but also linked 150,000 homes and businesses to a gigabit connection that is 20 times faster than connections in much of New York City.

London-based Foreign Direct Investment recently recognized Lafayette as one of the top 10 Small American Cities of the Future, in part due to its fiber infrastructure. Chattanooga has receivedmultiple recognitions for it innovative municipal network.

"Lafayette Gets Kudos on Foreign Investment List

Lafayette gets praise from a welcome source: A European list of good, mid-size cities in the US for foreign investment. That's a source of new business for which Lafayette's relatively cosmopolitan culture and tech infrastructure should prove synergistically attractive.

From the mayor-president:

“This recognition highlights what I have said for a long time—our LUS fiber optic initiative, along with our culture of innovation, has brought great attention to Lafayette,” says Joey Durel, Lafayette City-Parish President. “Combine those assets with our active ties in the international community and our strong economy, and Lafayette is a natural fit to be on an international ‘Cities of the Future’ list.”

Municipal broadband contenders: Lafayette, La.

-What's Being Said department-

Fierce Telecom is running a story on municipal broadband. Its positive coverage is not exhaustive or in-depth but it is a sign that the trade press is beginning to notice the significant impact that municipal providers have on their market and realize that the munis are not going to somehow shrivel up and go away as their incumbent informants had implied.

In the series introduction the author says;

Just a few years ago, municipal broadband looked like a long shot to many communities. State or local regulations, legal challenges by established broadband providers, and a shaky economy were among the hurdles that communities had to surmount to bring affordable, high-speed service to businesses and residents. 

But times appear to be changing....these homegrown efforts are giving incumbents like AT&T (NYSE: T), Cox Communications, Time Warner Cable (NYSE: TWC), and others a run for their money

. 

Lafayette makes the cut as one of their five "top municipal contenders." From the page on Lafayette:

The investment so far is paying off. Incumbents including Cox Communications are competing on price, saving the city's 120,000  residents a considerable amount of money in subscription costs. And the LUS Fiber network's speed is drawing in new businesses that see connectivity as critical to their bottom line. 

"Their advertised speed is actually what you get. I don't know any other provider in the United States that can do that," Scott Eric Olivier, owner of Skyscaper Holdings, told USAToday in a 2012 article about the city's fiber build. He moved his startup from Los Angeles to Lafayette on the strength of those speeds and service. 

...LUS Fiber's network is also large enough to provide wholesale broadband services. Overall, it has served as an example to other municipalities of how to build on existing dark fiber assets to future-proof the connectivity needs of businesses and residents.

Also, of course, we get to control our own destiny and staunch the flow of money bleeding out of the community.

Susan Crawford's Sez: "Life is short; get in the way.'

Susan Crawford addresses the actual broadband need of the United States. She closes with what we need in an FCC chairperson.

If you've got the 9 minutes you really ought to watch the whole thing. Smart, clean, exactly on target and delivered fearlessly.



And even if you've watched it all you'll want a repeat of the closing crescendo.

Terry Huval @ Freedom to Connect 2013

Day one of Freedom To Connect (F2C) is up on livestream. For those from the Lafayette community the highlight of this first day was Terry Huval's presentation on the history-to-date of LUS Fiber and a discussion of the implications and obligations of the public's new system.



F2C, and it's maestro David Isenberg, have always been huge friends of municipal broadband and Lafayette's efforts. Local readers will recall the year that David brought his international entourage to Lafayette in lieu of holding that year's F2C in its traditional DC home. It was an unimaginably good debut on the national and international stage for a fresh local start-up somewhere in swampy south Louisiana and only Isenberg could have pulled it off.

This year continues the municipal broadband tradition and the whole first day of the conference will prove valuable to anyone interested in alternative ways to bring big broadband to US communities. Do take a gander at the lineup; it includes Friend of Lafayette (FoL) Chris Mitchell (who has written extensively on Lafayette's network in the national arena) giving a stirring speech on the central value of local ownership: Local Control. FoL Jim Baller (Lafayette's legal eagle during the fiber fight) also makes an appearance as the moderator of a panel on "Communities and Networks."

Footnote: Joey Durel, who was scheduled to appear, stayed home to tend his wife who was injured in a traffic accident earlier this week. 

Crawford: High Prices, Slow Speeds for U.S. Internet Users

What's Being Said Dept.

Found this bit of a gem in The Valley News out of New Hampshire which ran a nifty review of Susan Crawford's book. (That's the same Susan Crawford that's a dark horse candidate for FCC chair.) The opening paragraphs of the piece set the tone for the review and reveal what the author thinks will set the hook for readers is the story of Lafayette's successful battle for fiber.

(Excerpted from Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age.)Terry Huval is a large, friendly man with a lilting Southern accent who plays Cajun fiddle tunes in his spare time. He is also the director of utilities in Lafayette, La. “Our job is making sure we listen to our citizens,” he says.  

In recent years, the citizens of Lafayette have been asking for speedier Internet access.In 2004, the Lafayette utilities system decided to provide a fiber-to-the-home service. The new network, called LUS Fiber, would give everyone in Lafayette a very fast Internet connection, enabling them to lower their electricity costs by monitoring and adjusting their usage. 

Push-back from the local telephone company, BellSouth Corp., and the local cable company, Cox Communications Inc., was immediate. They tried to get laws passed to stop the network, sued the city, even forced the town to hold a referendum on the project — in which the people voted 62 percent in favor. Finally, in February 2007, after five civil lawsuits, the Louisiana Supreme Court voted, 7-0, to allow the network.  

From 2007 to mid-2011, people living in Lafayette saved $5.7 million on telecommunications services.

The article then goes on to discuss the problems with cable's monopoly power as Crawford sees them.

Opinion: FCC’s plan for faster Internet is a sign of progress

What's Being Said Dept.

An opinion piece in the LSU Reville takes on the US' abysmal progress toward international internet competitiveness. Here's the take-home message:

In order for the FCC to achieve these new goals, telecommunications companies must look past their immediate shareholder returns and work toward improving the country or competition should be returned to the market in the form of municipal broadband providers, Internet access services that are funded by local governments.

Lafayette’s LUS Fiber is a municipally owned broadband provider that provides ultra-fast speeds at competitive prices. Since the introduction of LUS Fiber, Lafayette has seen a surge in interest from technology-related companies and Cox Communications, one of the city’s main private providers, has slashed its rates for some across the city, according to USA Today.

It is a testament for what fast, affordable services can do for a city in today’s connected age.

If Baton Rouge — a city already teeming with bright, young individuals — can position itself as Louisiana’s gigabit community, then it can potentially open itself up to similar new innovation and investment.

Of course Louisiana already has its gigabit-available city in Lafayette and we're "teeming with bright, young individuals." But we have no objection to Baton Rouge joining us.

Susan Crawford for FCC chairman

Occasionally, very occasionally, something appears on the horizon at the federal level that would actually make a big difference to advocates of local broadband. The emerging grass-roots advocacy of Susan Crawford for the chair of the FCC is one such event. An op ed in the Washington Post lays out the case for Crawford and along the way says:

Crawford would preempt the unfair and uncompetitive state laws that infringe on the rights of local communities to expand broadband access. To support local efforts to build out fiber-optic networks, she proposes creating an infrastructure bank that would provide long-term, low-interest financing.

That's huge. The FCC could assert its control under a number of federal laws to simply outlaw state laws in that ban or anti-competively restrict community-owned telecommunications networks. Their mandate is very broad. What is lacking is the political will. Susan Crawford is the sort of person who has the will. She certainly has the background in internet activism, founded OneWebDay, served as President Obama's Special Assistant for Science, Technology, and Innovation Policy, and co-chaired the FCC transition review team during the Obama transition. (See her short wikipedia bio for more.) If you're doubtful scan a few of her occasional blog entries. Oh, and she's written the book on the subject: Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age. (Public Library) That title alone should tell you that she sports the no-nonsense boldness needed for the job.

I'll be frank: She's ideal. The perfect mixture of intellectual background, civic activism, and consumer orientation. So ideal that many will say, regardless of her ties to the Obama administration, that she has no chance of being nominated. And, that if she were nominated, she'd have no chance of overcoming entrenched corporate objections to her Senatorial approval. That may be true. Elizabeth Warren's travails are illustrative: she was the ideal candidate for the job of the first head of the Consumer Financial Protection Bureau; hell, she pretty much designed the agency. And even with administrative support and logic on her side she wasn't appointed. But on the other hand: Elizabeth Warren might be just the reason to support her candidacy. Elizabeth Warren's rejection was painful for the bought-and-paid-for senators. It made their true allegiances all too painfully obvious over an prolonged time and made her a hero to a national constituency. That in turn led her to an insurgent campaign for senator with huge funding from the national pro-consumer constituency that her long battle in Washington had built. Now she is a senator and she sits in the seat of power that had once rejected her. That's got to be disconcerting to the senators who dismissed her and will now have to deal with her intelligence and expertise on a daily basis.

Maybe trying, and failing, to get Susan Crawford appointed to head the FCC wouldn't be such a bad thing.


Lagniappe:
Synchronicity? While tweeting a link to this post I scanned Crawford's stream for an appropriate hashmark for her candidacy and found the following in a LSU Reville story she'd read and recommended:

In order for the FCC to achieve these new goals, telecommunications companies must look past their immediate shareholder returns and work toward improving the country or competition should be returned to the market in the form of municipal broadband providers, Internet access services that are funded by local governments. 

Lafayette’s LUS Fiber is a municipally owned broadband provider that provides ultra-fast speeds at competitive prices. Since the introduction of LUS Fiber, Lafayette has seen a surge in interest from technology-related companies and Cox Communications, one of the city’s main private providers, has slashed its rates for some across the city, according to USA Today.

She not only gets it; she stays on top of the discussion to the point finding good material in LSU's student newspaper?  Gee.

Business Briefs

Don't usually dig down deep into the business section but here's two business briefs from the Advertiser that might be of interest to readers:

Colorado company moving to Lafayette  

Tapes Again, a company started in Boulder, Colo., more than 20 years ago is moving to Lafayette next month. The decision to move is attributed to the bandwidth capacity available in Lafayette through LUS Fiber, according to a news release. 

The company's clients include musicians and others that have a need for media reproduction and packaging. Much of the company's interactions are through the internet, so the time that it takes to upload and download large files has a direct impact on daily production schedules.

That's a pretty natural fit: music and bandwidth.

The second short announces CajunCodeFest 2, with an emphasis on healthcare. The best bits:

The Center for Business & Information Technologies at the University of Louisiana at Lafayette is seeking innovative thinkers and programmers of all types that want to change the world and improve health care outcomes....Participants will organize themselves into teams, and for 27 hours will build prototypes and tools for improved health care....

The first-place team will receive $25,000. Additional prizes will be announced in coming weeks as sponsors are confirmed. All participants must register. Registration is free, but space is limited. For more details, visit cajuncodefest.org, email info@cajuncodefest.org or call 337-482-0627.

Cox Boosts Speeds, Offers 150 Mbps - 5, 25, 50 and 150 Mbps Flavors

BroadbandReports reports that Cox has radically raised its speeds; effectively lowering its price for internet access. A quick check of "Louisiana" Cox site reveals that it has done so in the Greater Louisiana market (New Orleans—Baton Rouge—Lafayette) as well.

Cox gets serious about the internet
Here's the monthly prices Cox is offering in Louisiana as of January 2013 and a comparison to the 2012 speeds and prices:

• Essential: 5 Mbps down, 1 Mbps up @ $44, in Jan. '12: 3 Mbps/384 Kpbs @ $39
• Preferred: 25 Mbps down, 5 Mbps up @ $56, in Jan. '12: 15/1.5 Mbps @ $53
• Premiere: 50 Mbps down, 10 Mbps up @ $68, in Jan. '12: 25/2.5Mbps @ $65
• Ultimate: 150 Mbps down, 50 Mbps up @ $100, in Jan. '12: 50/5Mbps @ $95

My snap judgment is that in jumping their speeds in this way Cox is declaring itself first an internet service provider and then a cable company in a solid way. All the cable companies have been making noises in that direction. And the "noise" is well-founded; providing internet service is much more profitable these days than providing cable; the time is past to begin acting like it. These speeds say that we are willing to take the hit on the cable side; we are willing to run the risk that cord-cutters will drop cable or scale back on their packages if we give them fast, affordable internet. It says that even with the limited competition we have we want to go after those few residential and business customers that might choose DSL or wireless in lieu of our landline internet product; we are more worried about losing internet customers to other competitors than we are worried about cannibalizing our own much less profitable cable video product. That's smart.

Then, right after that adulatory snap judgment the cynic in me rears his head: The dirty little secret in broadband provisioning is that the cost of provisioning a 100 extra megs to a formerly 50 meg household is minuscule. It really hardly effects the bottom line at all. Above about 15 or 20 megs adding more potential speed only very occasionally serves to significantly limit the bandwidth use any individual household uses. This is probably less true for businesses but even there I'd imagine that 50 megs is the limit for all but really large businesses engaged in a very narrow range of video or graphic business lines. The cynic says they've run the numbers and watched previous "bumps" in speed very closely. Cox no doubt knows that few people notice actual differences in their experience and even fewer bother to change the tier they have purchased to a newer less costly but only possibly adequate level of service. It is all about the first purchase decision and ARPU. That's Average Revenue Per Unit. (You are the unit.) They need to ensure that their average income per "unit" doesn't go down—and they've cleverly arranged to do little damage to that sacred number. Notice that in my list above that no one who purchased a particular tier last year would be getting better service than they thought they needed a year ago. The tiers are carefully arranged so that downgrading your speed doesn't actually give your a better experience than you wanted a year ago.  Yes, that's probably smart too.

It's smart whether you are a fan of or a cynic about Cox Communications.

LUS Fiber: How does this effect Lafayette?
It means that for the first time LUS Fiber has real competition for their internet product. That is, it has real competition for the most important and profitable leg of the triple play of internet, cable, and phone services. LUS, much more dramatically than Cox, needs to ensure that it doesn't lose customers and that it sustains its current ARPU. LUS Fiber is still pushing to move from cash flow positive to fully profitable.

Still, there is no question but that LUS Fiber must respond.

[Yes, I know, LUS Fiber is NOT offering the same product as Cox and, frankly, LUS' service is superior even aside its speed. Yes, LUS offers symmetrical bandwidth: yes, the service is more reliable; yes, jitter and latency are stunningly low. Yes, price per meg has been lower. Yes, we have a nifty 100 mbps between each of us. But those, to be frank, are geek issues. Perhaps they should be important to regular folks since they make a noticeable difference in user experience. But right now these matter to only to the few. Simple speed and the cost differential between tiers are what reasonable but untutored folks base their decisions on. Even more: LUS is community owned and controlled. The money you spend with LUS stays to enrich our community and build our capacity, not Atlanta's. That probably matters to more people than jitter; but it doesn't allow LUS to stand pat.]

It seems to me that LUS has little choice but to respond strongly. It must regain its leadership in the crucial internet portion of its business, and maintain its promise to the community to offer cheaper services than the competition. What might that look like?

Here are the figures for LUS Fiber a year ago and today:

• Jan. 2013 3x3 for $20 (only with a special intro package); Jan:12 no equivalent
  

• Jan. 2013: 15x15 for $35; Jan '12:  Fast 10/10 for $29
• Jan. 2013: 40x40 for $50; Jan '12:  Turbo 30/30 for $45
• Jan. 2013: 75x75 for $100; Jan '12:  Extreme 50/50 for $58
• Jan. 2013: 100x100 for $200; Jan '12: Ultra Extreme  100/100 for $200

What you'll notice is that tier for tier, after the name and speed changes LUS had restructured its tiers so that each of the "real" tiers it has actually raised prices (except for the 100x100 speed) even if it also reduced the price per megabyte. Though only new customers have to buy the new tiers (old ones could stay with the old tiers and prices) this had the effect of likely raising the ARPU.

This time we'll have to take a page from Cox's book, at the minimum they need to raise speeds in a way that beats Cox but does the least potential damage to their ARPU. More on the morrow as I reason that through. But suffice it to say: LUS Fiber has been issued its first real challenge.

Cities, Schools, Hospitals Seek Faster Broadband - WSJ.com

What's Being Said Dept.

The Wall Street Journal notices that, hey, a lot of cities are satisfied with what the incumbent providers are (or rather aren't) providing; the cities want real broadband for a variety of reasons.

Lafayette gets its own paragraph:

Many schools across the country are experimenting with "bring your own device" and online learning programs that are vastly increasing their bandwidth needs. Audrey Menard, principal of St. Thomas More Catholic High School in Lafayette, La., says that when she found out this fall that LUS Fiber, the city's fiber operator, would soon offer gigabit-speed Internet service, she "almost tackled" the company's leader "in the middle of a Chamber of Commerce meeting" to ask to be his first gigabit customer.

Folks here have been aware of the amazing things St. Thomas More is doing with a gig, but now it's made the national press.

F2C: Freedom to Connect...& Lafayette

Freedom to Connect (F2C) 2013 has been announced for March 4th and 5th in Washington, DC. If you've any interest in cutting edge approaches to communications technology it is pretty much a must-see event. Run by
friend of Lafayette and web legend David Isenberg the conference has popularized phrases like, well, "the freedom to connect" and has regularly been an early, accessible way to peer a little over the horizon on progressive uses of the internet. He's also been very supportive of Lafayette, bringing his conference organizing talent and ability to draw top names to his events to Lafayette for fiberfete in 2010.

This year he's highlighting three areas of interest: open infrastructure, the development of publicly specified set of Internet protocols, and the use of the Internet to promote government of, by and for the people, and to counteract autocratic government power. The speakers he has already garnered commitments from are an impressive list of current actors on each of these stages.

But most interesting to readers of this blog is the fact that Joey Durel and Terry Huval have both agreed to speak as part of the "open infrastructure" strand of the conference. Here's the relevant 'graph from David's announcement:

The first is an open infrastructure owned or controlled by and responsive to the community it serves and whose resources it depends upon. This will be addressed by Joey Durel (Mayor of Lafayette LA), Terry Huval (Director of Lafayette Utilities System), Pat Kennedy (founder, Lit San Leandro), Chris Mitchell (MuniNetworks.Org), James Salter (Atlantic Engineering Group), Catharine Rice (President, SEATOA) and others to be announced.

Beyond Durel and Huval regular readers will likely recognize Chris Mitchell, and may recall James Salter. Mitchell has visited Lafayette, published a case study that featured LUS Fiber, and through his work at muninetworks and its parent organization the Institute for Local Self-Reliance has promoted municipal networks nationwide. Salter's company, Atlantic Engineering, was the lead contractor for Lafayette's fiber build and has served in a similar capacity for many of the other municipal fiber networks.

The conference should be great again this year. Highly recommended.

WAFB, KPEL, others go dark on Cox Cable (updated)

The company that owns WAFB, KPEL and Cox communications has failed to reach an agreement and these stations are no longer being aired on Cox's cable network. (WBXH, a subsidiary station of WAFB, and WPGX out of Pensacola have also vanished from the Cox Acadiana lineup. Cox's message boards and its facebook page are filled with unhappy customers.

Here in Lafayette Cox customers can switch to LUS Fiber, in parts of Baton Rouge they can move to ATT and there is always EATEL down Gonzales way. Beyond that most folks don't have a wireline alternative. 

The whole fracas goes back to ongoing "retransmission consent" battles that grew out of a Federal law passed back in 1992 that, for the first time, allowed local stations to charge for their carriage. Prior to that time cable companies could simply grab the signal off the air and, without consent, retransmit it over their wires for their own profit. That, in fact, is pretty much the way cable got its start. After the passage of the new law the advantage initially went to the cable companies who provided access to households that could  be sold by the local stations to advertisers. Local stations asked for a good spot on the lineup corresponding to their broadcast channel but didn't generally ask for a money. But with falling local revenues and the spectacle of "cable networks" charging truly outlandish fees and setting conditions that often pushed local channels out of their cherished historical channel locations local stations have begun demanding—and getting—retransmission fees for their unique content. Compared to what some of the large channels charge, the fees for local channels are pretty much chump change. If Cox and the others give in it simply isn't enough over the entire cost of their programming to much effect the amount they charge you. But it is a fee the big cablecos are not used to paying and the local guys can often be selectively targeted for defeat without a lot of danger to the cableco on a national level....unlike HBO and ESPN who simply cannot be defied.  

Frankly neither Raycom, the stations' corporate owners, nor Cox is acting in your interest. It's all about the money and where each side sees the opportunity to squeeze the other. 

I've got a soft spot for local stations that are actually locally owned and local cable/internet providers. They've got an entirely different framework from which to work—they can't treat a local loss as a risk worth taking; it's one thing to lose a small fraction of a percentage point of your users to some down south local retransmission conflict. It's another thing altogether to lose something that all your customers want to watch. (Which is why Cox will never take such a "noble" stand against HBO and ESPN. They don't have the spine to fight with folks their own size.)

Buy local.

From the horses' mouths: Cox, WAFB, KPLC

click for larger version

Update 1/4/13: WAFB in Baton Rouge is running a half page advertisement in the Advocate suggesting that the additional fees they are asking for would amount to a two cent increase in the price of a Cox bill. Like I said, chump change.

Click the photo on the right for a larger, readable version of the ad; it is pretty entertaining. 

Netflix, Disney and You; the Starz Realign

The LA Times (and everyone else) reports that Netflix has entered into a deal with Disney (including Pixar, LucasFilm and Marvel) to take over exclusive streaming distribution of its new films and its historic libraries. The current holder of those rights is the premium cable network Starz. Starz, for it its part, puts a brave face on the matter by saying that:

"Our decision not to extend the agreement for Disney output past that time allows us the opportunity to implement our plan to dramatically ramp up our investment in exclusive, premium-quality original series which will best meet the needs of our distributors and subscribers."

If you listen closely you can hear the faint workings of the gears as the stars realign into strikingly different patterns.

Right now you see a movie content-distribution system defined by Big Movie Houses, several Big Distribution-to-theatre networks that secure advertising on Major Media, roughly simultaneous late release to DVD and Big Premium Cable Networks. The Big Dog syndrome is deep in the DNA of the business—something that is the root complaint of indie developer.

Somewhere off in the future is that misty land where chokeholds on access to movie houses, advertising contracts, and the major cable networks no longer keeps "the talent" from controlling the creation and distribution of movies. Nirvana for creators. But it is also the promised land for fans who want access to products that aren't tied to a system where the broadest possible appeal is emphasized by those who control the big screens and where those who control the little screens of TV want the largest audience for advertising.

Starz losing out to Netflix pulls out a critical lynchpin that kept the current system running even after defections and new technologies have riddled the neat story about movie production that has been told since the 1920's and 30's. There will be NO premium cable channel involved in Disney's distribution framework after 2016. Disney has declared that is sees no important downside in skipping cable moving directly streaming; that, in fact, it considers streaming and premium cable to roughly be reaching equivalent audiences. That's huge.

Even more important is the dynamic this move sets in motion. Starz response is to double down on its move toward producing its own material—something Netflix and all the other premium channels have been driving toward already. (HBO has been stunningly successful with it; HBO movies and series have put it far out in front of other premium channels.) The big three channels of yesteryear have long since dissolved into the welter of channels that we see on cable. As "streaming houses" become substitutes for those channels we can expect the further expansion of indie production houses and ad hoc combinations of players who stay together for only a few productions. They can make money by selling into the vastly expanded, ever more specialized audiences built by speciality channels who will find their type of material widely streamed.

With the collapse of premium channel exclusivity streaming video is set to become a radically reorganized, chaotic, wide-open field where smaller and more specialized audiences can be "feed" profitably. The new pattern will surely be flatter and wildly more diverse.

And So?
The patient reader will likely think this "interesting" but wonder what it's doing on a "Lafayette profiber" blog. The answer is pretty simple and may be obvious: LUS Fiber and other small providers are selling a superior network and hometown control. Network superiority is a nice bragging point but having to play the same game as the big guys to get the movie content puts them at a dramatic disadvantage. It's never good to have to play a game that is defined and controlled by your opposition. The coming disintegration of the Big Cable chokehold on quality video distribution is nothing but good for the small network competitors. They will have superior networks for downloading streaming. Aggressively cacheing content on network can assure the highest quality, least compressed work is always available on their network at no access disadvantage to users. The demise of cable as we know it is visible just over this Netflix horizon.

It's a death to be devoutly wished for. Especially if you want to see local control of your communications networks succeed.

Why Communities Should Decide What Telecom Networks They Have - Forbes

Friend o' Lafayette Christopher Mitchell has a piece in today's Forbes ("the capitalist tool) titled: Why Communities Should Decide What Telecom Networks They Have. The title pretty much tells the tale. Chattanooga and Lafayette get starring roles in the story Mitchell tells. One nice pull quote:

Publicly owned networks overwhelmingly help public safety, schools, libraries and other community anchor institutions. While AT&T has been caught overcharging schools for their connections, Lafayette dramatically increased the capacity of school and library broadband connections at nearly the same price AT&T charged for far lower quality services. Lafayette’s network is one of the most advanced in the nation and has attracted hundreds of new jobs while saving millions for the community by keeping prices lower, as documented in our report Broadband at the Speed of Light. In response to Lafayette’s investment, Cox Cable prioritized that community for its upgraded cable network – compounding local benefits.

Give it a read, Mitchell constructs a clean and powerful argument that state legislators ought to hear.

US Ignite Lauds Lafayette's "STEAM" Team

US Ignite's summer newsletter leads off with a bit about Lafayette's STEAM (Science, Technology, Engineering, Art and Mathematics) Education initiatives.

In Lafayette, the city's children will begin a journey focused not only on traditional STEM but rather STEAM (Science, Technology, Engineering, Art and Mathematics) education with the benefit of the 3D animation and modeling tools available through the leadership of the Louisiana Immersive Technology Enterprise (LITE), the public school superintendent, Lafayette Utility Services, University of Louisiana Lafayette, and FiberCorps. Lafayette has also completed its first US Ignite brainstorming event to foster the creation of applications for a “Living Lab for Health Innovations” program. 

Nice.