Tuesday, February 22, 2005

Standing Up!—"LUS can keep pace with the advances in telecommunications"

It's a twofer! This Advertiser editorial addresses two of the complaints opponents of the fiber to the home plan have: the rapidity of technological change and the need for a referendum.

The idea that technological change is a problem for our local utility was always a not-so-subtle insult. The Advertiser responds smartly:
...it is interesting that BellSouth and Cox Communications encourage citizens to raise this question when it is LUS that is moving to the cutting edge with its fiber optic system. The private companies are doggedly clinging to older, slower technology for their customers.

We have no doubt that LUS can stay abreast of telecommunications technology. There is talk of wireless communications being the wave of the future. Because it requires fiber - and the broader the bandwidth the better the wireless delivery - the utility system is ideally positioned for that change, if and when it occurs."

Stop and think: LUS moved us far ahead of other cities our size when it developed the fiber optic system already serving local businesses. That was a giant technological move, expertly made. The question is not whether Lafayette can keep up with technological changes, but whether other communities can keep up with Lafayette.
The daily is right on target here. If keeping abreast of technology is your concern then fire the huge, slow-moving corporations that are tied to outdated networks and shaped by their monopolistic histories and hire a nimble, local firm with a history of successful technological innovation. LUS.

The second of the two essays is worth reproducing in full:
If Cox and BellSouth really believed that LUS is incapable of making the project work, they would simply stand back and watch it crash and burn. Instead, they are trying to keep it from getting off the ground with legal action and demands for a public referendum. They may well be trying to delay it until the next legislative session in which they could push for a state law banning entry of municipalities into the telecommunications field. Unfortunately, that has worked in some states.

The call for a referendum is an obvious attempt to stall the forward movement. We heard no such call when the city-parish council declared its intent to sell $200 million in bonds to fund expansion of LUS electrical generating capacity. In a representative form of government, that is the function of those we place in office. We entrust them with such decisions. If we start putting every controversial issue before the voter, we might as well relinquish the democratic system.

Because of the savings on telephone, cable television and Internet costs, we feel certain voters would - at this time - support the plan. However, we must consider the ability of Cox and BellSouth to unleash a high-powered, high-cost media campaign, while city-parish funds cannot be used in such a way.

That is not the issue, however. The real issue is whether or not the people elected by the majority of voters to make important decisions should be thrust aside - because two giant corporations want to protect their profits by blocking progress.

Again, the real reason for the demand for a referendum is that they know the LUS plan can work.

Nicely done. Is it more sensible to trust the motives of BellSouth and Cox or to trust the officials you voted into office (and can vote out agan)? The answer is clear.


GumboFilé said...

I'm not real concerned about motives. I just know that the free market does just about everything better than government politicians. If government politicians hadn't been interefering with telecommunications for the last hundred years we wouldn't be in this position. We would have true free-market competition offering good options to choose from. To add another layer of government intrusion is a step backward and will lead to negative unintended consequences just as onerous as the consequences you ostensibly want to correct.

John said...


You are just wrong about the economics of telecom networks. You seem to believe, contrary to both history and theory, that every market is free and what is called "frictionless." Every reputable economist I have ever heard of admits that some markets are natural mononoplies. It's a natural fact.

No amount of wishing or government absence will ever change the fact that some markets, chiefly those where the cost of delivery is high and the cost of the good delivered is low, can only support a "single provider."

The classic exampel is water: Almost all of the cost of water is in its production and delivery. Building a second "competing" network would be extremely inefficient. If half the people went with each company the people would each have to pay almost twice as much to receive water just to pay off the infrastructure. Adding more competitors would just make it worse.

Of course in the actual world one of the competitors would have some small advantage--say better loan rates or a longer payback--and would turn that advantage into the small wedge that allowed it to offer water for a fraction less. The more people moved to them for the savings the more they could lower their prices (and the more their competitor would have to raise theirs to pay back costs). In short order there wouldd be only one. This is inevitable, natural and not something that is really open to dispute. The only choices other than letting the monopoly run roughshod are regulation or building a utility. I prefer to be an owner rather than a customer of a monopoly so I always choose a utility when I get a chance. I urge you to do so also.

Just to be explicit. In a fiber network the fat pipes are expensive and the bits cheap. Like water, in the end there will be only one.

I want to be an owner. Given the realistic choices so should you. It really does come down to what "single provider" you trust. Motives do matter.

Aside: I like your taste in books. Cry the Beloved Country is, I think, the most beautifully written book in modern English. It really hit me when I was younger and first encountered it. Didn't think nearly so much of the movie, however, and disagree with you there.

GumboFilé said...

Water is a poor example. Governement does such a poor job with water that bottled water is now a big business.

As for books, I suggest "Economics in One Lesson" by Henry Hazlitt.

baycock said...

I have a big problem with the issue of LUS being able to keep-up with the advancing technologies required by this telecom-internet industry. An elementary and current example of LUS’s inability to stay up-to-date is this:

More and more people are paying their bills by online banking or by going to the website of the company that is billing them. In the overwhelming majority of these transactions, hard cash or checks are never part of the equation. It is all done by electronic-transfer.

Not when it comes to LUS. You cannot pay your LUS bill at their website. If you pay your LUS bill through your bank's bill payment service, the bank cannot electronically transfer that payment to LUS. LUS cannot receive electronic transfer of funds. The bank has to write a check and mail it to LUS. This is a much less efficient and more costly exercise for both the bank and LUS. If LUS can’t implement something as simple as electronic fund transfer or online bill payment, how can we have any faith in their ability to manage a city-wide network?

If Durel, Huval and LUS want to take us into the 21st century, why are they still operating in the last century?

As far as the matter of the people’s right to petition for a vote, Judge Hebert did a good job answering that.

John, you closed your comments by asking about our trust of “the officials that we voted into office”, and pointed out that we can also vote them out. You must have been reading my mind. I voted for both Joey Durel and Marc Mouton. That’s a mistake that I have learned from and will never make again.