Wednesday, August 10, 2011

LUS Fiber Financials Covered in Local Media (and more)

I posted earlier about the LUS Fiber budget hearing yesterday. There I focused on the annoying return of the idea that LUS was (somehow) being subsidized — I suspected that Patin had successfully revived a truly dumb idea. Credit where credit is due: Neither the Advertiser nor the Advocate's reporters chose to take the bait and emphasize that foolishness. Instead they largely reported on the issues raised by the Councillors and Tim Supple. Take a look at both articles, they are worth the read though, frankly, the Advocate is better on the technicals possibly because Burgess was here during the fiber fight and has a deeper background.

Executive Summary: LUS' financials are confusing. Financials just are confusing. Always. But LUS Fiber, being a semi-autonomous arm of the semi-autonomous LUS utilities (which is owned by the city but semi-run by the city-parish) is especially confusing. This is exacerbated by a sick state law designed to raise the prices that customers pay that causes LUS Fiber to give money to LUS utilities so that LUS utilities can loan it back to LUS Fiber—at interest. (Which means there is a subsidy: of LUS utilities; not the other way around.) Got it? Confused yet? Anyway:

The Important Stuff: LUS Fiber is doing ok, not great but ok. The "ok" part can be seen by its more than doubling its installed base in the last year; recent statements by Huval confirm that the utility has made over the bump and has the minimum number of users to break even. The "not great" part is due to the fact that it's not meeting the rosy projections of a 2004 feasibility report that had predicted that LUS would be doing better than just ok, that they would be doing great by this point in the rollout. (The feasibility study was always sketchy and clearly a political document. See my first two blog posts on this issue. #1, #2)

Extras from my Notes: Caution: This is for the dedicated few who'd like a little more on the two and and a half hour session than a dry newspaper article has space for or fits the newspapers' idea of a budget meeting story.

Attendance: Theriot, Patin, Boudreaux (presiding) Shelvin (late), Castille,  Morrison Conspicuous by his absence: Don Bertrand who was a leader in the fight for fiber and certainly has a better understanding of all matters concerning LUS Fiber than any of fellow councilmen.  His participation would have really helped the rest of the council make sense of the arcane parts of the presentation—some of the questions asked showed a real lack of understanding.

Overall: Part of the confusion that reigned during the presentations was due to a new computer financials program and a new, much more extensive report format that was presented to the council. It was apparent that some had only read (at most) the summary sections and it showed in their questions. LUS Fiber is a big, new, different, retail establishment for the C-P to keep track of and understand and Toups seemed to feel that she was only just getting hold of it all.

Conservative Borrowing: A couple of times during the presentations it was apparent that part of the reason that LUS' numbers were tight was because LUS was being...tight. One example came up when Shelvin asked whether it would all look better right now if LUS had taken the whole 125 million authorized by the voters instead of only bonding out 110 million dollars. Huval hemmed, hawed, and said that they just didn't want to borrow more than they really needed. This was in the context of LUS having not yet taken the in-organization loan of 5.5 million that the council authorized. A lot of the noise we are hearing now is a direct consequence of LUS Fiber deciding to make do with the very least borrowing they can get by with.

Competition: LUS estimates that the citizens of the community have saved 5.7 million dollars—in part direct saving from LUS' cheaper phone, video, and internet services and in part as a consequence of Cox lowering its prices and giving out special rates. Those special rates were discussed in the meeting with Huval pointing out that Cox had petitioned for and received permission to treat Lafayette as a "competitive" area. That meant that Cox could offer special deals to Lafayette users and, as we all know, has offered cuts to anyone who tries to leave. Those "deals." as Huval pointed out to Patin don't include the rural areas of the parish where Cox has no competition.

Coalitions: Intriguingly coalitions with other communities that have fiber were mentioned and Terry indicated that this was involved positive attention from the White House. I'm pretty sure that this is the US Ignite project—a project initiated by the administration that will bring together communities that have next-generation fiber projects. Conceivably this could be a "big thing" and bring ideas, financing, and lend emphasis to the movement to develop big bandwidth applications that could be used across these communities. Lafayette's own FiberCorp has been a player in this effort.

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