Thursday, December 30, 2004

Reflections: Lafayette isn't small, it's central

A tip in the comments to yesterday's post, Lafayette, poster child for municipal broadband, noted that the same story discussed there had been posted to Forbes and subsequently I found it on ITToolbox. In both those locations it is simply presented as a USAToday story. Apparently this is the story that was to have run last Wednesday; it seems to have been released into their distribution network even though it has not yet appeared on the USAToday site.

In yesterday's post I focused on the Lafayette portion of the story. Seeing Lafayette recognized so favorably at the national level is very gratifying. The quarrel I'd have with that part of the story is that it presents Lafayette as a small rural town. The title and subtitle in the Forbes layout is revealing: "Bells dig in to dominate high-speed Internet realm; Consumers could pay if giants squash rivals like tiny Lafayette, La." Maybe from the perspective of the writer it is a small town...but playing the story that way leads to a more substantial mistake: in making Lafayette just another rural town it misses the fuller reason that our story causes concern for the telecom monopolies. Lafayette is actually a small to medium-sized city that lies at the center of a large rural network — it gets telecom services in the second or third tier. It will be the largest municipal fiber project in the nation. By no one's estimation is it small potatoes. But its surrounding communities may never get the same quality service; they are fourth tier and below. However, Lafayette seems psychologically poised to provide services to the outlying regions. Not immediately, it needs to secure its own system; but the signs are there that regional leaders are thinking in terms of expanded service even at this early stage. Should it move forward in that realm as briskly as it has moved forward at home the dominance of the incumbents could be threatened not just in Lafayette but regionally.

National attention on regional networking has focused on networks connecting municipalities like Utah's Utopia and Iowa's proposed network. I for one think these exciting efforts and likely to succeed. But they are based on an unfamiliar and untried consortium model—the consortium builds the backbone, individual cities build out their own internal networks. The business model is generally one of leasing bandwith and hoping providers will appear that are profitable enough that they can afford the rent that pays back the bonds taken to build the system. While there might be ideological and idealistic reasons to prefer this model it is clear that as a simple business model it is not as strong as a single entity owning the network and providing the essential services that run on it. Even the mayor of Provo, which is making great strides with a consortium model, remarked at the councils first vote for fiber that Lafayette's business plan is stronger. (State law prohibits Utah's cities from delivering retail services.)

The potential model we see emerging in Lafayette could be very different. And perhaps much more threatening to the traditionally conditoned sensibilities of the bureaucrats that run these large corporations. What they might well see in LUS is full blown, locally popular, all-fiber competitor whose business model does not depend on anyone's success but its own. LUS has chosen to own the well-established services, just as do BellSouth and Cox, but also to sell bandwidth to all comers for new services. The bureaucrats see a steady competitor with a long history of being a successful municipal producer in a sea of private electrical providers. Cox and BellSouth have tried to push the idea that their opposition is based in their certainty that LUS will fail and a concern for the citizens in the area. (A concern which is more abstract than real as recent news symbolically demonstrates.) But it seems much more likely that the incumbents concern is not that they look at LUS and see an oddball business arrangement they think unlikely to succeed but instead that they look out and see something very familiar--except that LUS is more popular, passionately local, publicly owned, and very, very patient about its rate of return. I think they see a competitor that scares the socks off them.

I have to believe that they are astute, if misguided, and recognize LUS as the potential hub of a regional network that could threaten their dominance throughout Acadiana. The business potential is too obvious. Less visible to these executives is the history of technology penetration in rural areas: small cities like Lafayette got electricity, a local phone exchange, and a little cable company and that service radiated into the surrounding areas. There is no reason to think it can't happen again.

2 comments:

Anonymous said...

Apparently, this article came out in the international edition of USA Today last week. It is slated for print in across the country on Tuesday.

John said...

Thanks Anon, that makes a certain sense of it.