Friday, April 21, 2006

It's Working In Utopia; Unbundling in Utah

Competition is working in Utah where a regional consortium of cities calling itself "Utopia" is building out a Fiber To The Home infrastructure in member cities. (Services are provided by third-party participants.)

Comcast, the regional cable provider, has lowered its prices to area communities that have, or will soon acquire, the service according to a piece on DSL reports. Other cities in Utah are not being offered the deal.

The triple play is available for pennies under 90 dollars. That's a big savings for residents that want that level of service.

But the exciting news is that competition has killed the triple play bundle. Comcast is offering the services unbundled for 29.95 apiece--there's no discount for buying the bundle. That's the bigger marketing news. The whole point of bundling has been to capture the lucrative big-ticket buyer and lock them in. So "deals" were only offered to that class of customer. It appears that Comcast has been forced to start fighting for the customer who's not quite so profitable. And that is the really, really good news for the average joe in the Utopia cities.

Related stories out of Utah in the recent past have focused on deals similar to the recent Cox announcements in Lafayette and Baton Rouge which offered a good deal for a longish contract-based triple play in cities where Utopia's services were not yet actually being offered. Comcast's (and Cox's) hope was to lock customers up before the choice went live.

This breakthrough indicates that those customers that took Comcast up on their sweet deals might have been wise to wait a bit...you can now get a better deal without the contract and for only the parts of the triple play that the customers actually desire.

I certainly hope it works out that way here as well.

3 comments:

Anonymous said...

Utopia is another example of the business model that Lafayette should choose. The government builds the infrastruce and opens the system to the 3rd parties to provide retail services like isp, telephone and tv. Whereever you see that model, like Grant County Washington, you also see the lowest prices, highest bandwidth and most choices for both the residental and busincess consumer. It puts government on the same side as the consumer, instead of making the consumer a target for government revenue. I think we would all be better served if we focused on the model we want, instead of what bell and cox are doing. An open model would really bring competition to Lafayette. Mike Stagg said it best "The Road to Innovation is Open: Closed Network Model Runs Counter to LUS's Community Objectives. Corporatist model of network managment ignores community interests, will stifle innovation."

Tim Supple

John said...

Hi Tim,

This is an old disagreement. ;-)

In the best of all possible worlds I might agree, as I've recently remarked in comments elsewhere.

But I think it too risky to bet Lafayette's future on.

Just to recount my part of the old argument for new "listeners:"

First, I am of the opinion that the only way that Lafayette will ever get an open network is if LUS builds its network. Neither AT&T/BellSouth or Cox will ever willingly open its network just because the citizens of Lafayette or any locality think it a better idea. If we actually hope for that model the only sensible behavior in the present it to support LUS, help it get on its feet and then mount the battle in the council. If I thought the community's network was secure I'd consider joining that cause...

Part of this old disagreement is that I think (really!) that our local government is on our side...and Tim doesn't. Honest men can disagree here but I trust Joey and Terry more than I will ever trust some guys that have risen to the top in one of the country's largest megacorps. ATT/BellSouth and Cox really don't have our interests at heart (and shouldn't); we have to watch out for own interests. If we didn't understand this before the storms we should now.

(Tim and I had this argument ad nauseam during the referendum...I think we both still hold the same positions we did then. :-) Tim, correct me if I'm wrong.)

The reason ATT/BellSouth and Cox will never willingly agree to step back and merely be a conduit is because it is a weaker business plan--it leaves the profit off content on the table and is unproven as well. LUS is planning on emulating a proven business plan.

I wish we could point to US examples of successful, open, muni networks. UTOPIA may, eventually provide such. I hope it does. They've earned it. But they are doing it using an open model because the state, at the behest of the incumbents forced it on them. Not because they thought it wiser. In fact the Mayor of Provo was straightforward in saying that Lafayette's plan was the stronger business plan. He's right; the incumbents in Utah did not lobby the state to impose this condition because they thought that it would make their opposition stronger! The same is true of Grant county--the state forced open networks on the community.

None of these open access networks are successful yet. The most successful muni networks have held on to at least the video portion of its network. All successful commercial networks, every one of them, has held on to its core content business. With the amount of money that our community would have to invest I don't have the cojones to take the risk. And I'd be worried if LUS or LCG were willing to do so with so little evidence that the model is viable.

John said...

PS

Tim,

On the subject of doing for ourselves and not relying on outsiders--I went to a lecture by Barry Ancelet about a month ago and he mentioned your taking a boat into New Orleans to bring folks out. That was the right thing.

Good for you and for all that went in regardless of being waved off.

We ought to all learn from the way that went down this last time and be more ready next time around to ignore those that want to stop us from taking care of our own.

John St. Julien