Sunday, May 30, 2010

"LUS fights for acceptance"

Richard Burgess of the Advocate's article is a good overview of one of the issues that have bogged down channel acquisition for LUS Fiber video offerings—a long delay in gaining membership in the cable purchasing cooperative that provides most small, local operators with reasonable wholesale prices for the channels they offer. It's not just about getting channels at a reasonable price, it is sometimes about getting them at all. (In fact, getting its channel lineup in shape was so arduous that it was the factor cited in the late launch of LUS services in the first place...that, and not any technical or build issue, was the cause of the brief delay in launching the service from January to February of '09.)

LUS has had an application in to join NCTC, the National Cable Television Cooperative, for a long time now. I had heard they were hopeful and that there was no legal way to deny their participation. There was a long period when the organization simply had a moratorium on new members that only "coincidentally" effected LUS. Other public power utilities with cable arms have joined the organization previously. The NCTC isn't a small organization with little bargaining power; the alliance of generally small cable companies controlled what was the second largest subscriber base in the nation in 2004, ranking second only to market leader Comcast according to a public power white paper in 2004 (p. 29). The discount the NCTC can command has to be comparable to that which, for instance, Cox can command.

Cox....that brings up an interesting issue raised but not fully explored in the Burgess article. Cox is a member of the NCTC...but is most assuredly not a small operator of the type the coop was founded to benefit, being the third largest cable company in the United States. One would think that Cox would not be a favorite of the little guys...but Cox's subscriber numbers surely dwarf those of any other member. And those subscriber numbers are an immense help in negotiating good wholesale contracts that benefit its smaller members. If Cox has threatened to withdraw it could be enough to seriously scare the coop. And that would, not incidentally, mean that Cox is seriously afraid of LUS' competition and even more afraid of what the success of Lafayette could mean for other communities contemplating doing for themselves what the big boys refuse to do for them.

The article makes it clear that Cox is indeed the suspected villain in Lafayette's version of this story:

City-Parish Attorney Pat Ottinger said in a memo dated May 21 to City-Parish Council members that the cable cooperative’s denial of membership to Lafayette seems to be “a conscious effort to discriminate against municipalities” that are trying to launch their own cable, phone and Internet services.

Ottinger also notes in the memo that Cox Communications, a competitor of LUS Fiber in Lafayette, is among the cooperative’s largest members and has a seat on the board of directors....

Ottinger, in his memo to Lafayette council members on the issue, said the cooperative might be reconsidering its denial of membership for the other two cities “but has continued to refuse to allow Lafayette to become a member.

“It is my understanding that the only distinguishing factor is that Cox is not the competing cable provider in those areas,” Ottinger wrote.

Burgess offers Cox a chance to reply which they decline citing pending litigation but nonetheless piously declare:
...Cox has always embraced competition in Lafayette.
Now that, at least, we know is a bald-faced lie. Cox did just about everything imaginable to keep LUS from starting a competing service—from writing laws to funding an ugly push poll. Cox is not your friend in the digital age if you hale from Lafayette.

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