Thursday, August 10, 2006

"High-tech projects begin to pay off"

"High-tech projects begin to pay off" is the title of an article in the business section of today's Advertiser. NuComm cited technology and the spirit of energy that technology complex indicated for its decision to choose Lafayette over the other approximately 200 locales it investigated. It mentioned no other differentiator. That deal will bring a 1000 jobs and inject about 115 million in total benefits into the city each year. Citing Fiber To The Home, the LITE center, and LONI, the paper talks to university, LUS, and business people about the economic development benefits to our community.
When RĂ©al Bergevin, the founder of Canada-based NuComm, said the company had chosen Lafayette for its new call center, he singled out three projects that made the city stand out: LUS' fiber-to-the-home plan, the LITE center and LONI.

While some may not be entirely sure of what they do, this high-tech trinity has become a cornerstone of the city's economic strategy...

Huval said the city-owned utility always is at the table talking to prospective business because electricity cost is a main concern for companies. But the talk usually turns to the fiber plan.

"Every time we've met with a prospect to describe that to them, their eyes light up,"...

Mike Spears, CEO of Firefly Digital, said local companies benefit, too. His Web design and software development company is positioning itself to offer services to companies who use the LITE center.

"The benefits cascade across the entire market," he said.

During the fight for the fiber network economic development was one of the benefits promoted by the fiberistas. This single big event realizes that hope even before the network is built. It might seem logical on the surface to assign 1/3 of the benefit of this deal to the FTTH network. That's conservative since there's no reason to think a company like NuComm will find LITE's graphical supercomputer useful or that it will do the sort of research that will gain it access to LONI's superfast but basically academic network. So the main immediate benefit to the company (besides the food, music, culture, and local attitude) is that it will have access to the local area network of at least 100 megs. Mike's written usefully about that benefit, as I pointed out yesterday, and the bottom line is that NuComm will get a huge pipe to their center at relatively low cost by working with LUS (you can bet that a deal has already been cut there) and their employees will have a 100 megs of internal-to-the-system-bandwidth with which to connect back to their office network. Understand that most local networks operate at 100 megs internally so that means that homeworkers will have the same access to databases and VOIP functions that their colleagues at Northgate mall will have. As NuComm gets their workforce trained and start to expand they would be crazy not to buy computers and a nice connection for homeworkers. That would allow them to avoid the substantial additional costs of opening and running new physical centers. (Setting up this one is due to cost 3.5 million. The real financial benefit of Lafayette's advanced technology is FTTH. And that's the reason NuComm brought its jobs here.

So assigning only 1/3 of the benefit of NuComm's investment to the FTTH project is conservative in the extreme. Even at that discounted rate 1/2 of 115 million that is 57.5 million in benefits to the local economy each year. Setting up the system is to cost 125 million. If you do the math you'll see that that 125 million will be returned to the region in just a bit over 2 years 1 month as a consequence of Lafayette approving the fiber initiative. That's not a bad ROI on Lafayette's investment for Acadiana.

That's not the last of it; already an article has appeared that speculates that NuComm's entry will further dry up an already tight labor market and put upward pressure on wages at the low end of the market.

All that can only be good for local citizens, Lafayette, Acadiana, and Louisiana. And we all need the good news.

Addenda: North Lafayette, in particular should be happy...and if it wants to know who in their community did the most to bring this benefit to the heart of the north side let me be the first to congratulate Gobb Williams whose tireless work to pass the initiative has borne fruit for his community--just as he said it would.

5 comments:

Anonymous said...

That ROI looks even better since Lafayette didn't have to actually invest the $125M. Say $250k in project costs to date- "if you do the math" the return to the region is just over 1 week.

I hope the guy who came up with this blog's financial logic isn't the same one who wrote the business case. If so, your city is in trouble.

Even FEMA can do better than this.

John said...

Ah, brilliant analysis by anonymous persons. A root contradiction.

Honestly now, for this win to occur the people of the community had have already decided to invest the 125 mill and committed themselves to it. It was the commitment that brought the investment and the cost of that commitment is clear. ROI is regularly calculated in advance. It's not odd to sit and figure out how much you're going to make. On the contrary it is essential. Some folks really stretch to find something negative to say.

The same who people just hate other people's success.

From the day of the NuComm announcement forward it is going to be impossible to argue that the investment in a fiber network won't yield returns...And that is a bitter pill for those whose faith depends upon Lafayette's failure.

Just wait until the network is up and running.

Some folks will be really bitter as the community turns to a cheaper, superior service that kepts their money circulating locally. A prediction: every success of LUS will be greeted by crocodile tears for some of the most rapacious and enormously powerful corporate organizations around. These will be the same folks who moan about little local LUS--with a territory covering a part of a parish-- having some sort of incredible advantage over one of the most powerful corporations in America that required that multinational to run to the state and impose restrictions on LUS that no "private" corporation would think of accepting.

Get real.

Grump.

Anonymous said...

Now that's the fiber to the home we don't have, that your talking about?

Anonymous said...

please don't kick John when he is down. Don't blame him for having his own personal agenda.

John said...

My, how it does sting to have that certainty that nothing good would come of fiber taken away...

Doesn't anyone want to tell the CEO that's bringing a 1000 jobs to town that he's wrong, that he didn't really mean it when he said his business finds fiber a substantial part of why Lafayette was chosen?

I repeat, I think it sad when some folks can't look other people's success in the face.


What we ought to be hearing--and are not hearing--are the opponents admitting that they were wrong in saying that fiber would bring no benefit to Lafayette, Acadiana, the Northside, etc.

What that demonstrates to me is that the original protestations that there'd be no benefits were not honestly held. If they were really worried that the investment would yield no return they'd be relived and happy to be proven wrong and would be saying so now.

There were plenty of people who basically accused proponents like Joey, Terry, Gobb--hell, me and Mike-- of deliberately misleading people when the proponents said big bandwidth would attract jobs. Turns out that accusation was untrue. I'd say an apology was in order. (Not that I ever actually expected one.)

I held all along that the myriad different excuse some people came up with to oppose the project weren't honestly held--that they switched to new ones so easily each time one didn't work to convince the community they should drop fiber because they believed none of their own objections.

The sort of reaction we see in this string of anonymous replies is typical...they lose a major point, the development benefits turn out to be real and all they can think of to do is to try to distract attention to some other piece of BS.

Come on folks...you claim to have Lafayette's best interest at heart. If that's true admit that this makes it look like some of the advocates were right--at least about attracting jobs.

Come on, it's not so hard. You were wrong.