Sunday, July 10, 2005

"Fiber debate delves into digital divide"

Today's Digital Divide story in the Advertiser is a pretty good one as such things go. If you thought the the fiber optic issue itself was complicated you haven't yet encountered the digital divide issue. It isn't an easy story to cover, especially in overview.

Some hard truth background is useful and the truth is that the digital divide wouldn't be on the table if it weren't for our public utility, LUS, attempting to offer Cox and BellSouth some competition. Noise that you hear from the incumbents on this score is just that: noise. They never mentioned it before and if this project goes away they'll never willingly mention it again. The reason is simple: as a private for-profit corporation the bottom line is all that matters and all that is supposed to matter. The wealthy, densely populated regions will always be the most profitable and poorer areas will always be less profitable. The first will always get new infrastructure and the attendent services first, the latter, later, if at all. This is by no means a condemnation of these private companies. That is exactly what they are supposed to do: tend to their profits. The more profitable a company is, the more successful we judge it to be. Public utilities operate using different criteria for success: a utility is successful if it delivers good service at the lowest possible price. The ideal utility makes just enough money to pay for costs and system maintenance. A public system that made lots of money to ship away from its service region would not be doing its job well. A private corporation would not be doing its job unless it did.

So when BellSouth brags that it will offer advanced services to 80% of Lafayette without help and almost to 100% if we subsidize them from the public coffers, it may not seem like much of an offer to us. But they are only doing what they need to do to be a good corporation: finding every opportunity to maximize profit. Similarly, when LUS says that it will serve its entire service region offering the same services to 100% of its customers at the lowest possible price without concern for large profits, it is only doing what it needs to do to be a good public utility.

Both organizations exist to serve their owners first. The difference is that in Lafayette the owners are also the customers...and the voting citizens.

Given that background, let's move on to the Advertiser story.

[Just for the record: this story treats the digital divide as solely concerned with internet access. I think this a mistaken way to think about the issue. But I'll not complicate the discussion of this story with all that.]

There are some broad areas of agreement. All sides seem to agree that there is a digital divide in Lafayette, and that it needs to be closed. All sides agree that the most important tool to do that is to lower the costs of participation. Durel:
“The issue is saving all people in this community enough money and making Internet access more widely available,” Durel said. “Secondly, we’re looking at innovative ways of getting hardware into everyone’s hands, available to the poorest and wealthiest in Lafayette.”
This is pretty much the position the digital divide committee took. Lower the barriers to entry in every way possible. Not, chiefly, by giving more to the poor but by making more available to everyone and not excluding the poor and the underserved through price and availability.

But that pretty much ends the area of agreement. Tim Supple launches into some pretty demonstrably false claims about price: that LUS can't lower prices and that fiber is the most expensive way to provide broadband.

But Tim Supple of anti-fiber citizens group Fiber 411 said LUS’s plan will not bridge the digital divide because LUS will not be able to offer lower prices than private companies charge.
I'm not sure what exactly he is referring to here. But, of the triple play currently contemplated, broadband is what is easiest to offer more cheaply. Both the current choices are offering broadband as an add-on to their lucrative, established business—businesses which are using all the capacity they have. Broadband is squeezed in the current system and has to justify itself cost-wise against the alternative of using that bit of the capacity for more channels or better telephony. If it doesn't make as much for the company (recall profit maximization, discussed above) as what it displaces off the network then there is no reason to offer it. On the other hand LUS will have capacity to burn. The only limit, and this need not apply insystem, is set by the cost of transport to the internet backbone. That is a real cost and will have to be paid but it is a small and falling cost that only has to be paid where it is actually used. The economics of broadband costs will be very different for a system which has massive excess capacity and those systems where the rational limit is not connection cost but making the most lucrative use of a scarce resource. In short, LUS should easily be able to lower prices for broadband at little costs to itself while the incumbents will have to give up limited capacity that they can sell at a premium.

Capacity counts.

Tim Supple also says:

“The problem is the digital divide can be best solved by cheap access,” Supple said. “Fiber is the most expensive access on the market. You cannot reconcile those two differences.”

Only the first sentence is true. Fiber was, until very recently, the most expensive way to deploy connectivity. It was cheaper to connect point A to point B with copper. But, counting lower maintence cost and longer life, even that is no longer true. But even when copper was cheaper to lay all of the corporations and the feds laid fiber backbones. Not to be "futuristic" but because fiber was cheaper per megabyte. Much cheaper. Fiber is and has been cheaper per megabyte than any alternative delivery method for a long time. If what you want is high-speed, high-capacity connections fiber makes sense now. And if you are intending to make the same capacity available to all then you need to provide fiber to all. That is the logic of utility service and hence the logic of LUS.

There is no difference to reconcile. Or at least not for a public utility.

The story interestingly goes through a lot of examples of how people use limited and relatively expensive broadband and how it benefits them. It is inspirational to read about but it doesn't hold a candle to what will soon be possible.

But we get down to brass tacks with Bill Oliver's little bits of misinformation:
BellSouth representatives met with Durel in June to discuss an alternative plan for which BellSouth would expand its network to 80 percent of Lafayette’s households. But the city would have to help the company financially to extend service to “low-usage” parts of the city where it becomes uneconomical, he said.

“The proposal we put on the table provides the speeds and services they were looking for to cross the digital divide,” Oliver said. “It guaranteed speeds, it guaranteed delivery, it crossed the digital divide and provided the speed they were looking for for economic development,” Oliver said.

Part of that plan called for closing the digital divide through wireless technology, either WiMAX or WiFi, that could be expanded throughout the city and parish, Oliver said.
It's appalling what some men will say... Starting from the bottom up: BellSouth's "plan," such as it is (A 5 page letter with 3 pages of content) "suggests" that the city consider wireless as a tool to bridge the digital divide. IT DID NOT suggest that BellSouth would do so as part of its suggested deal. Good ideas for others to do come cheap. Mentioning it is just a ploy to inject a little confusion and uncertainty into newspaper articles like this one. Continuing up to the next paragraph: The deal offered guaranteed NOTHING in the way of speed repeatedly saying "up to 24mbps." The city pretty clearly has said that the offer of "up to 24" isn't, in fact, good enough.

The bit about the Digital Divide is appalling enough to bear repeating:
The proposal we put on the table provides the speeds and services they [the city] were looking for to cross the digital divide
Of course the city never says anything about speed and services when they talk about the digital divide. They always, sensibly, talk about cost and availability. This little substitution is worthy of a Heartless Institute paper. But Oliver doesn't get to redefine the term just because he is uncomfortable with the real definition.

Of course, he has good reason to be uncomfortable with the real definition. No where, no where, does he offer to lower prices (which LUS fully intends to do). Nor does he promise to make it available to all. In fact, he promises not to do so during the life of the plan . . . not unless the city finds a way to pay his company off for doing something so "uneconomical" as serving all the people of the city. If they don't give him some money from the general fund, he plans to stop at 80%. Do you think River Ranch will be in that 80%? You betcha. Do you think the majority of the 20% who do without will be in the areas Chris Williams says only have 3-5% of the people using the internet? You betcha!

Bill Oliver and the private incumbent companies have no plan to bridge the digital divide; to some degree it is to their credit that they won't promise what they have no desire to deliver if they can't make a standard profit doing so. But it isn't to their credit that they try to present a plan that makes no promises at all to cut costs to consumers and openly plans to exclude 20% of the city, and try to sell it as a plan that would do anything other than perpetuate the difference between groups in our community.

Kevin Domingue gets it exactly right:
“But the LUS plan offers two benefits that no one else will: lower costs and universal access,” Domingue said. “These two features will tend to level the field, making it less likely that someone who wants Internet access will be unable to get it because of money or the location of their home.”
That is the last line of the story and the bottom line for the issue.

Vote Yes! For Fiber on July 16th.


Larry Amy said...

The digital divide could have been addressed a long time ago by all parties, LUS included. It has been made a political issue at this point by the fiber supporters.

Larry Amy said...

I almost forgot, PLEASE VOTE NO!

Jon Fitzgerald said...

Mr. Amy,
Rather than make a statement about how it should have been done, why dont you offer a suggestion. That's the problem with obstructionist, like yourself,
you say it's bad but you don't do anything to make it better. I, for one, would rather progress.

Larry Amy said...

I think that the plan Bell has offered to LUS would suffice to move forward with the digital divide issue. We certainly do not need to spend $125 million dollars to get there. In addition, there are a myriad of ways for our government to pitch in and subsidize TV, Telephone and Internet connectivity without resorting to massive debt.

There is your suggestion.

Shad Price said...

I don't guess that anyone remembers what Verizon did then? Sure they got subsidies, they made promises, and they never delivered.

Why didn't BellSouth just start doing this before if they were so interested in all of this progress? Why not bring the plan, slap it down on the table, and get approval? Because they didn't have to before since they had no competition.

In the face of competition, it's a much different story though. All the sudden they want to make our dreams come true, and further, they wanted to do it all along it seems! How could we have been so blind to this?! We were not blind, it wasn't happening before.

And they want to give us less than what we can give ourselves! Let me ask you a question. When we would hit the plateau with their FTTC solution, who will pay to make it go to the home? BellSouth? Cox? Who? What will be the reason for them even to go any further? They have no incentive. No competition. It's all up to them.

Don't fool yourself. FTTC will hit a wall and it CANNOT deliver the goods for true triple play service. Only FTTH can do it. So why don't they just do the FTTH then?