Friday, August 26, 2005

Fiber Optic Competition Working in UTOPIA

The aptly named UTOPIA project has started driving price down even before services are offered at any city served by the Utah consortium of cities. Fiber is currently being laid in Murray and Midvale and representatives of Utopia have been going door to door in the two towns explaining the services to be offered and offering to sign up residents. The incumbents have responded by dramatically cutting their prices, offering a savings of $350 dollars a year by taking advantage of the new contracts:
Comcast's high-speed Internet service maxes out at 4 Mbps download and 384 Kbps upload and is shared with other users over a cable network. The standard price in Utah for Comcast's internet service is $45.95 a month. Remarkably, the price for this same service in Midvale and Murray has been dropped to $29.95 with a one-year contract, saving Comcast customers who choose to re-up $16 a month, or nearly $200 a year. Meanwhile, their friends in non-UTOPIA cities don't have that choice. That is the power of competition, directly attributable to the advent of UTOPIA.

A similar offer for cable TV is also being introduced to residents in Midvale and Murray. Comcast has dropped the price of its basic digital package from $48.55 to $34.95 a month on a one-year contract, a difference of over $13 per month or about $160 a year. As a direct result of the competition provided by the UTOPIA Community Metronet, Comcast customers in Midvale and Murray can cut their annual cable and Internet bills some $350 below their neighbors in Sandy, Draper, or Salt Lake City.
The prices in Sandy, Draper, and Salt Lake City. Unchanged. Apparently the service reps take your zip code and unless you are in one of the two communities being built out by UTOPIA you're not eligiable for the offer.

This is not an isolated, special instance. Wherever fiber-opitc based competition arrrives prices drop dramatically:
As confirmed by the GAO study, competition leads to better prices, better service, and more choices. The GAO looked at rates in six cities where broadband service providers had entered to compete with incumbent cable and phone companies, and compared them with cities lacking such competition. Cable TV rates ranged from 31% cheaper to 15% cheaper in five of the six cities.
Providers over the Utopia system will apparently be competitive:
The offerings being rolled out by MStar, AT&T, Xmission, and Veracity over the UTOPIA Community MetroNet will challenge the marketing prowess of the Qwest and Comcast. For example, MStar's Internet service clocks in at a minimum of 10 Mbps download and upload for as little as $39.95. This is more than double Comcast's maximum download speed, and 25 times faster for upload. The price comes to about $4 per Mb while the national average is $35 per Mb
The kicker for all this is the wealth that stays in the community and is available locally to generate more local spending and jobs. (I've touched on this before in relation to ILOT.) $360 per household that stays with the incumbents is a huge win by itself. Utahans who go with inexpensive true broadband also pump a larger portion of the money they pay for theirs services back into the local community, paying for the infrastructure build itself and creating yet more opportunity for locals to develop and make productive use of leading edge services. The local community wins and wins...this sort of structural change, changing the balance of money flowing into and out of communities is something that is almost impossible to change for the better--the national economy tends to erode the economic base of small towns. Building their own networks is one of the very few things a small town can do to offset that erosion. It's a good thing. Lafayette, as a growing medium size city, may not be quite in that category. But the dynamic is the same, only here you add it on to an expanding economy instead of applying it to offset loses. Looked at from that angle if its good for Murray, Utah, it's great for Lafayette.

Bring it on.

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