Friday, February 24, 2006

Cox; the competition begins?

If you haven't picked up your copy of the Independent this week you should. In addition to a really fine piece about our local Mardi Gras Indians (much of it located in and around my neighborhood, I'm proud to report) there's also a hopeful article on Cox Communications purported new attitude toward Acadiana. Now this has been brewing for awhile. Cox kept a low profiled during the last part of the referendum fight; it declined to join the later lawsuits; it hired Kathleen Blanco's daughter to represent it; Cox even got a backhanded, indirect endorsement from the Mayor during his state of the city-parish address. Hey, they also went ahead with planned construction in Lafayette without threatening us. Now this article places all that in a context that paints a picture of Cox as a good citizen. I'm willing to hear it, even if I do want to wait to make a final judgment. Actions speak louder than words and recent actions at least have my attention.

Normally, I'd have a hard time taking all this too seriously, much of it, like hiring the not-particularly-qualified daughter of the governor is open to multiple interpretation. But Cox has been through major shakeups at both the national and the regional level and it seems at least possible that good things could honestly come of that. Nationally, Cox bought itself private during our fight here--something which changes its orientation toward the world pretty radically. Locally the "bad actors" that were most visible in opposing the community are gone, victims of a purge whose motivation is still murky. Much of the purge took place far in advance of the consolidation with the Baton Rouge market that followed Cox shedding rural markets across the country in order to help pay for buying itself private. The bulk of the purge took place suspiciously soon after the battle of Lafayette turned into a public relations disaster for the incumbents.

The Competition Begins
But all those musings about PR pale besides further evidence that Cox has decided to compete. Those who've followed the fight here will recall that Cox did not raise rates here when they raised them in Baton Rouge. That was widely read as a direct result of LUS' threatened competition. You don't raise rates while the city is waging a campaign to convince the public to allow it to compete with you.

So it's really nice that the Independent notices the clear implications of the new pricing structure for Cox's triple play:
Cox is offering its "Clear Choice" triple play -- cable, Internet and phone -- for $89.95 for new subscribers and expanded basic cable customers. The deal is available only in Baton Rouge, where it competes against Eatel's triple play, and Acadiana, where the threat of LUS looms.
That's right; you're only getting a great deal where Cox has Fiber to the Home competition: in LUS or EATEL territories. Living in New Orleans? You're out of luck. Now, in the interests of good consumerism I should immediately point out that this price only lasts for six months and the small print on the website is literally too small to read. You'll have to call and speak to a salesperson to find out what other conditions the offer carries.

6 comments:

Anonymous said...

Do you think this Cox price of $89.95 will effect LUS ability to market its fiber at $85. Will LUS be able to uphold up its promise to deliver at 20% below its competition? If I am doing the math correctly that would mean LUS would have to reduce its price by some $18 to $72. Thats a 20% reduction in its gross sales revenue. Add to that the fact that LUS has guarantteed to the Public Service Commission that it will actually pay to LCG the 12.5% of GROSS REVENUE as "in lieu tax". Something they promised the voters they would not do until the fiber division was profitible. Please read the LUS "Feasiblity Study" and read the LUS letter to PSC guarantying the payments regardless of profitablity.

If I add it up, thats a 20% reduction in gross revenue and a 12.5% increase in expenses = 32.5% loss in the gross revenue stream that was to pay back the bonds. Based on their Feasiblity Study, it is obvious LUS can't live up to their promise of a profitable fiber division. Obviously LUS cannot keep their promisess. Which promise do you think they will break first, 1) 20% lower cost then the incumbants, 2) not paying the "in lieu tax" until profitable (oh wait, they already broke that promise, so forget that one) or 3) the fiber division will be profitable and they will not have to raise utiltiy rates to pay back the bonds?

Anonymous said...

If you would have read the article fully, you'd see that the $89.95 price is a 6 month only special. If Cox can offer that price all the time, then you might have a point. I'm sure the price shoots up to somewhere over $120 after the prmo period.

John said...

anono 1,

I am pretty much out of patience with people who argue in bad faith. So let me be clear: I think you know better than the talking points you trot out.

1) Anon 2 is right: this is an attempt to get customers on long term contract at the almost 50% higher rate. It is targeted at careless consumers and should tell you something about he character of the company that touts a product deceptively and then provides you with literally unreadable small print. (Go to the Cox site, navigate to the offer, download the offer's image and TRY to read it blown up or enhanced in photoshop. I did. Can't be read.) Both the story and my overview explicitly noted the temporary quality. I really don't think your overlooking this could have been a mistake after looking at both my and the source article. I think it dishonest.

2) EVEN if your deceptive assumption were true and Cox were willing to offer a real 90 dollar package you are being dishonest in saying that LUS EVER promised 20% off the price Cox was offering for the Triple Play on any continuing basis. What they promised was that it would be 20% off the price that was being offered at the time the Feasbiility study was done. Since you show evidence of both having actually read the feasibility study and some analytical ability I can only assume that passing on that is deliberate. WHY? LUS was clear on this throughout the campaign. (To a degree that frustrated its supporters, including myself LUS would insist on going through a long, confusing explanation instead of estimating a consumer's prices when asked, say, in town hall meetings or by the press.)

3) It is astonishing to see you claim that a published business study containing the "in lieu of tax" deferral that LUS fought tooth and nail to retain but were then forced to let go of by a law passed BY THE STATE at the behest of THEIR CORPORATE COMPETITION -AFTER- the construction of the business plan constitutes anything anyone fair-minded would call a broken promise. Like other parts of the plan that were challenged by Cox and BellSouth their challenge to the clause was designed to raise the costs that LUS customers would have to pay. It is hugely dishonest to infer that LUS rather than Cox and BellSouth are responsible for this change.

So, your entire argument is built on a house of cards. Bad assumptions lead to nonsensical conclusion.

Just for the record: LUS has always said its business plan was "very conservative." The way people usually think of it is that it is conservative in the estimates of elements actually in the plan (i.e. pricing, penetration rates) It is true that they are very careful that every one of those are defensible and fiscally conservative. However, I think the most conservative quality of the plan are those elements NOT included in the plan. Do you see any mention of advertising revenue in LUS business plan? NO. Do you see any mention of advanced services like Video on Demand? NO. Both of those are huge parts of the actual business of selling cable TV in this country. Discounting your poor assumptions LUS should easily be able to make its nut. Adding in the obvious extras should make it clear that there is real headroom.

It is time and past time for anonymous nay-sayers to join their community and quit trying to unfairly tear down a project for which Lafayette has voted. Constructive criticism, concerns about making sure that the project is implemented in a way that makes for maximum economic growth and benefits the whole community--this I can understand. But, this style of anonymous, fundamentally dishonest attempts to confuse the issue can't be justified.

John said...

anon 2,

Thanks for the backup... I've been dealing with the nasty rotavirus that's been going around and appreciated the help. (Feeling yucky probably had an effect on my mood in the above comment. :-))

(And yes, there is something particularly unfair in getting sick over Mardi Gras!)

Anonymous said...

What LUS said was they would get market share by offering triple play at 20% below their compeititors. Are you now saying that they are not going to have lower cost, or they are not going to get their market share. Or do you believe then can have it both ways? Are you saying LUS did not anticipate competitors lowering their price to meet the market? As to the tax, LCG could have waived the "in lieu tax", they elected not to, rather they committed LUS to pay it regardless of whether or not LUS is profitable. That was their choice. What the PSC said was LUS could not deduct the "in lieu tax" from the "imputed taxs" unless they accually paid it. The fact that anyone blames the competition for competing is both naive and shows a lack of business acumen. That's the problem with this plan.

John said...

Gentle Readers:

This exchange is a nice example of why I object to the inherent dishonesty of anonymous posting. The writer here, Anono, is displaying a kind of shifty dishonesty that no person would want associated with their name. It's too easy to ignore the inconvenient truth and to evade the real questions if you hiding behind anonymity.

Let's take this latest post apart, shall we?

1) The dishonest person says: "What LUS said was they would get market share by offering triple play at 20% below their competitors." But if you'll patiently read the post above, as this person surely has, you'll see that not only is this just wrong but that I've pointed clearly to where the accurate statement can be looked up. Nobody that was paying attention believes LUS ever promised to maintain a 20% discount over whatever Cox or BellSouth offered forever.

The evasive author persists in pretending that a 6 month special that most subscribers don't qualify for--no one who currently gets beyond the basic tier qualifies--is the same thing as a "price." It's not. It's a time-limited, highly qualified special that most potential triple play customers of Cox won't qualify for. Pretending differently and continuing to pretend differently after this has been plainly pointed out goes beyond simple bad research to intellectual dishonesty.

2) The person who doesn't have the courage to use their name says: "As to the tax, LCG could have waived the "in lieu tax", they elected not to, rather they committed LUS to pay it regardless of whether or not LUS is profitable." This, to be as generous as possible, might simply be self-delusional. The faux "in lieu of tax" argument was the one that the opponents really thought would work for them during the election but didn't gain them any traction. They have an irrational attachment to it.

But the hiding speaker is wrong...and if rational should know that. LCG COULD NOT elect not to pay the whacky, magical "imputed taxes" the corporations used the the STATE to impose on Lafayette. These costs that Lafayette citizens would not have to bear were it not for BellSouth and Cox are entirely new creations of the corporations lawyers and state legislators. LCG/LUS could not evade them without repealing the law or at least that clause.

Pretending, as the opponents of Lafayette's plan did during the election, that your could delay paying these new taxes because you weren't making a "profit" was one of the more dishonest tactics used by those who supported the corporations. You can't just not pay taxes. No business can.

As was made abundantly clear during the election, the in lieu of taxes payment is entirely at the discretion of the elected city council. If they see that taking more out of the new division than is absolutely required by the corporations' law (about which, again, nobody local has any real choice) they simply don't have to take it. Nobody believes that they are going to deliberately do anything that hurts the project.

It is time and past time for anonymous nay-sayers to join their community and quit trying to unfairly tear down a project for which Lafayette has voted. Constructive criticism, concerns about making sure that the project is implemented in a way that makes for maximum economic growth and benefits the whole community--this I can understand. But, this style of anonymous, fundamentally dishonest attempts to confuse the issue can't be justified.