Friday, May 07, 2010

City, LUS Fiber marketing to unincorporated areas

Hmmn. According to the Independent blog Lafayette Consolidated Government (LCG) is undertaking a marketing campaign on behalf of the City of Lafayette and LUS Fiber.

That is all sorts of interesting... The implication seems to be that marketing campaign will be used to promote annexations by the city by using LUS Fiber as the focal point for a campaign that touts the advantages of joining Lafayette rather than one of the smaller cities in the parish. That makes sense...and it doesn't.

It makes sense to regard LUS Fiber as the easiest, most immediate, and most obvious municipal service that Lafayette can offer...and that the smaller cities cannot. LUS water, the last generation's trump card, has long since been distributed out into the parish via long-term contracts. LUS' electrical division would almost certainly be an improvement over Entergy...but only in degree. Better fire ratings, property values, and other city services are nice but not the sort of "point of purchase" incentive that move most buyers. The offer of a competing, local, technically superior, cheaper fiber to the home service on the other hand is unique to Lafayette. So promoting LUS Fiber to envious parish residents makes sense.

What makes less sense is the idea that LCG is going to enter into a contract to promote Lafayette against the interests of the other cities. Admittedly the consolidated in LCG only stands for Lafayette and the unincorporated areas since the smaller cities chose not to follow Lafayette into full consolidation, but the residents of the cities are also citizens of LCG in addition to their towns and I'd imagine that they and their representatives will look askance at this new LCG policy. The tension here underlines the question of sovereignty for Lafayette: If LCG cannot act on behalf of Lafayette's interests then who can?

It's also not clear that this plan is in the long-term or even middle range interest of LUS Fiber. Contrary to Broussard Mayor Langlinais' petulant remark recently that LUS "needs" the expansion, LUS is most definitely not particularly best served by expansion into the least densely populated areas of the parish. LUS is doing just fine in the city proper, its take rate, and the average billing per customer are both higher than they need to make the current plan viable. The narrow passage that LUS Fiber is currently navigating is that of the initial years when large upfront investments in plant and in the initial cost of bringing each customer online for the first time vie with the costs of repaying the bond schedule. The first several years are crucial. A misstep now could unfairly trigger elements of the so-called fair competition act and lead to a forced sale of a perfectly viable service. Oddly it is perfectly possible for there to be too early and too sudden a success...putting costs that would be easily managed if taken over the years into the dangerous first years of operation and producing a paper "loss" that the incumbents would use to force closure.

Given LUS Fiber's current success this may not be an issue but nonetheless the safest way to add new customers would be by taking in the members of the more densely settled inner portions of the smaller cities.

In the long run it would be best if all the citizens of the parish could join LUS Fiber's network but it's pretty clear that the annexation issues will need to be settled before that process can begin.

No comments: