Thursday, December 06, 2012

Netflix, Disney and You; the Starz Realign

The LA Times (and everyone else) reports that Netflix has entered into a deal with Disney (including Pixar, LucasFilm and Marvel) to take over exclusive streaming distribution of its new films and its historic libraries. The current holder of those rights is the premium cable network Starz. Starz, for it its part, puts a brave face on the matter by saying that:
"Our decision not to extend the agreement for Disney output past that time allows us the opportunity to implement our plan to dramatically ramp up our investment in exclusive, premium-quality original series which will best meet the needs of our distributors and subscribers."
If you listen closely you can hear the faint workings of the gears as the stars realign into strikingly different patterns.

Right now you see a movie content-distribution system defined by Big Movie Houses, several Big Distribution-to-theatre networks that secure advertising on Major Media, roughly simultaneous late release to DVD and Big Premium Cable Networks. The Big Dog syndrome is deep in the DNA of the business—something that is the root complaint of indie developer.

Somewhere off in the future is that misty land where chokeholds on access to movie houses, advertising contracts, and the major cable networks no longer keeps "the talent" from controlling the creation and distribution of movies. Nirvana for creators. But it is also the promised land for fans who want access to products that aren't tied to a system where the broadest possible appeal is emphasized by those who control the big screens and where those who control the little screens of TV want the largest audience for advertising.

Starz losing out to Netflix pulls out a critical lynchpin that kept the current system running even after defections and new technologies have riddled the neat story about movie production that has been told since the 1920's and 30's. There will be NO premium cable channel involved in Disney's distribution framework after 2016. Disney has declared that is sees no important downside in skipping cable moving directly streaming; that, in fact, it considers streaming and premium cable to roughly be reaching equivalent audiences. That's huge.

Even more important is the dynamic this move sets in motion. Starz response is to double down on its move toward producing its own material—something Netflix and all the other premium channels have been driving toward already. (HBO has been stunningly successful with it; HBO movies and series have put it far out in front of other premium channels.) The big three channels of yesteryear have long since dissolved into the welter of channels that we see on cable. As "streaming houses" become substitutes for those channels we can expect the further expansion of indie production houses and ad hoc combinations of players who stay together for only a few productions. They can make money by selling into the vastly expanded, ever more specialized audiences built by speciality channels who will find their type of material widely streamed.

With the collapse of premium channel exclusivity streaming video is set to become a radically reorganized, chaotic, wide-open field where smaller and more specialized audiences can be "feed" profitably. The new pattern will surely be flatter and wildly more diverse.

And So?
The patient reader will likely think this "interesting" but wonder what it's doing on a "Lafayette profiber" blog. The answer is pretty simple and may be obvious: LUS Fiber and other small providers are selling a superior network and hometown control. Network superiority is a nice bragging point but having to play the same game as the big guys to get the movie content puts them at a dramatic disadvantage. It's never good to have to play a game that is defined and controlled by your opposition. The coming disintegration of the Big Cable chokehold on quality video distribution is nothing but good for the small network competitors. They will have superior networks for downloading streaming. Aggressively cacheing content on network can assure the highest quality, least compressed work is always available on their network at no access disadvantage to users. The demise of cable as we know it is visible just over this Netflix horizon.

It's a death to be devoutly wished for. Especially if you want to see local control of your communications networks succeed.

Wednesday, October 24, 2012

Why Communities Should Decide What Telecom Networks They Have - Forbes

Friend o' Lafayette Christopher Mitchell has a piece in today's Forbes ("the capitalist tool) titled: Why Communities Should Decide What Telecom Networks They Have. The title pretty much tells the tale. Chattanooga and Lafayette get starring roles in the story Mitchell tells. One nice pull quote:
Publicly owned networks overwhelmingly help public safety, schools, libraries and other community anchor institutions. While AT&T has been caught overcharging schools for their connections, Lafayette dramatically increased the capacity of school and library broadband connections at nearly the same price AT&T charged for far lower quality services. Lafayette’s network is one of the most advanced in the nation and has attracted hundreds of new jobs while saving millions for the community by keeping prices lower, as documented in our report Broadband at the Speed of Light. In response to Lafayette’s investment, Cox Cable prioritized that community for its upgraded cable network – compounding local benefits.
Give it a read, Mitchell constructs a clean and powerful argument that state legislators ought to hear.

Sunday, October 07, 2012

US Ignite Lauds Lafayette's "STEAM" Team

US Ignite's summer newsletter leads off with a bit about Lafayette's STEAM (Science, Technology, Engineering, Art and Mathematics) Education initiatives.
In Lafayette, the city's children will begin a journey focused not only on traditional STEM but rather STEAM (Science, Technology, Engineering, Art and Mathematics) education with the benefit of the 3D animation and modeling tools available through the leadership of the Louisiana Immersive Technology Enterprise (LITE), the public school superintendent, Lafayette Utility Services, University of Louisiana Lafayette, and FiberCorps. Lafayette has also completed its first US Ignite brainstorming event to foster the creation of applications for a “Living Lab for Health Innovations” program. 
Nice.

Wednesday, October 03, 2012

Corporate Sense of Entitlement

Unbelievable.

Poor, pitiful, put-upon communications giants AT&T and Time-Warner Cable are demanding, as a some sort of new-fangled "level playing field" right, that the Kansas Cities give them the same concessions that the cities gave Google.

Without, of course, giving the cities any of the advantages that Google offered in order to secure those concessions. You know: FTTH, a GIG of bandwidth, 5 years of free low-bandwidth targeted at the digital divide, school connections, etc. So now your competitors offering a better deal to locals and in return getting a better deal from locals is unfair? Poor, pitiful, duopolists! Real companies with real competition face similar "level playing field" problems. It's called getting beat when your competitors offer a better deal. Big new concept, that.

We here in Lafayette have heard a lot of high-quality BS about "level playing fields" and here the term always means tilting the field to favor the incumbent corporations AT&T and Cox. But the latest demands of the incumbents break new ground in clearly demonstrating that their sense of entitlement is not limited to some sort of ideological objection to the so-called advantages of small municipalities that dare to compete against the international conglomerates. No, they are entitled to have all of the advantages of anyone and everyone that dares provide them with the smallest spot of competition, regardless of whether they are muni utilities or new private entrants like Google.

These guys have completely forgotten what free enterprise is all about. You know, that competition stuff.

Friday, September 28, 2012

"Fiber Economics - Quick and Dirty"

"Fiber Economics - Quick and Dirty" is a primer for those who want to understand the raw economics behind any fiber build—Lafayette's included. The author, Dave Burstein, uses examples from Google's build in the Kansas Cities and Australia's national broadband initiative as anchor points but the logic is clear and straightforward. Almost as valuable is Burstein's judgment on the current basic costs—there's no one more knowledgable.

As a taste:
Bandwidth isn’t free, but it’s darn cheap. A moderately sized carrier pays less than $1/month/customer http://bit.ly/N3kVKS. Google pays much less, while small and rural carriers sometimes pay much more. Bandwidth use goes up only modestly with higher speeds; the industry rule of thumb is about 1/3rd more usage if you give the customer higher speeds. A Netflix movie will come in at 2-4 megabits whether you have 12 megabit service or a gigabit. You don’t get more email because your connection is faster.
That's actually very interesting. What it means is that Google offering every customer a gig of connectivity does NOT result in their using 100 times as much data as the average american user. Faster speeds don't mean linearly faster costs. Not even nearly. Which is something we here in Lafayette should think about.

Cox Complains in a Strangely Unsavory and Incredibly Hypocritical Way

If we were't already completely used to Cox's self-serving version of fair play and level playing field behavior we might have been shocked by the corporation's most recent claim on the country's sense of fairness. But this sort of stuff shouldn't surprise anyone anymore. It certainly doesn't surprise anyone in Lafayette.

The (Strange) Plaint
Cox is complaining to the FCC that the four largest video companies in the country (Comcast, DirecTV, Dish Network and Time Warner Cable) are soooo big that they can successfully demand huge discounts from content providers that are unavailable to the poor smaller and mid-size distributors. This puts the little guys at a disadvantage.

The logic is reasonable, the little guys are at an unfair disadvantage. As Cox says:
"As programming costs are shifted disproportionately to mid-sized and small multichannel video program distributors (MVPD), their customers are disadvantaged as higher costs make it more challenging for these MVPDs to develop the innovative services at competitive prices necessary to meet the offerings provided by the largest providers,"
What is unreasonable, is the idea that Cox is one of the poor, put-upon little guys.Cox is the fifth largest provider in the country immediately following Time Warner. Not a little guy at all. But more than that: Cox joined the National Cable Television Cooperative (NCTC) back in 2009 breaking a 4-year moratorium on new members and with its large size made the NCTC the second largest buying force in the nation! Now the scuttlebutt in the trade press is that Cox has not much used that buying power, finding that it could do better on its own except for a few special deals for material like regional sports networks where the smaller cablecos are more significant regional players than Cox happens to be in that area.

Which, of course, suggests the question: Why did Cox join a coop for little guys in the first place? It really wasn't intended for the behemoths the size of Cox; it was designed to protect the mom and pop, single area cable companies from the likes of Cox. If Cox doesn't get much advantage, why bother? And why lend its buying power to a set of small local companies on the backs of whom Cox has traditionally grown by purchasing when their size disadvantage in pricing made them vulnerable to take-over?

That's the interesting question. And the answer lies in a little history.

The (Unsavory) History

The fight for fiber that lead to LUS occurred in 2005. Lafayette won; Cox and AT&T lost. Shortly thereafter the NCTC instituted a moratorium on new membership that was to last 4 years. LUS and several other municipalities put in for membership at different times during that 4 year moratorium.

Also in 2005 Cox first ran up against a small, fiber-based Louisiana competitor whose competition was aided by access to the NCTC's cheaper content in 2005 when EATEL (a locally-owned rural telecom) in Gonzales launched its triple-play package. It wasn't any more a pleasant experience for Cox to face EATel in the rapidly growing Ascension area than it had been to lose its battle with Lafayette.

The NCTC moratorium ended on Jan. 1 2009 and its first new members were quite a surprise to the industry: it wasn't any of the usual small guys who'd been waiting in line—instead Cox and Charter, two of america's largest cablecos ended the moratorium by joining up. Cox was even rewarded with a seat on the governing board.

For the rest of those guys in line? Well if they were LUS Fiber and and the other new municipal players they were simply ignored—without explanation. The munis finally got together and began the process of appealing to the FCC who is charged with preventing anticompetitive behavior. Suddenly other munis were accepted and Lafayette was, again without explanation, left out.

It's hard not to think that Cox's experience in Louisiana didn't inform its decision to join the NCTC and the new NCTC Board's subsequent decision to exclude the only muni whose competition was now an NCTC member.

{This story has a semi-happy ending: the NCTC finally backs down after LUS continues its costly battle in DC. However, during the long period where they were denied access LUS signed all its initial contracts as an independent suffering, by most accounts, about a 20% penalty that would last for years until they could bring the coop's contracts with those providers into play. No explanation for the NCTC's actions and inactions were ever made public.}

The (Incredible) Hypocrisy
So Cox is not just complaining about an injustice. The are complaining about an injustice that they are happy to take advantage of themselves. But where Comcast et al. are simply taking using their size and resulting market power  to hurt Cox is willing to go much further: It is willing to use a coop that exists to protect small local guys like LUS to force costs on Lafayette's utility that it would not otherwise bear. And they have the brass to bring that complaint to the FCC who has heard exactly this reasonable logic before—when it was aimed at Cox and its allies.

That's just incredible. You can't make this stuff up.


(Hat tip to fact-finder Mike Stagg on this story.)

Wednesday, September 26, 2012

LUS Fiber & Saint Thomas More & The Modern Curriculum

LUS Fiber has an ongoing "affinity" program with St. Thomas More high school; that program is evidence of a willingness to use the community's network to open up new possibilities for education in Lafayette.

An Affinity Promotion
St. Thomas More a local Catholic high school will benefit from a new affinity program with LUS Fiber. From the St. Thomas More website:
LUS Fiber has recently announced a new program exclusively for STM students, faculty and staff. Any STM student, teacher or staff member that switches to LUS Fiber will receive $50 in bill credits AND will secure $50 in bill credits for STM as well! Mention the “STM Affinity Program” when you sign up for service. This program is available to new residential and business customers in LUS Fiber’s service territory. LUS Fiber is the state’s largest community-owned ultra-fast fiber optic network that provides service to residents and businesses in the city of Lafayette. Visit LUSFIBER.com for more information on the company and its services.
It is pretty clearly as small transformation of the popular "Refer a Friend" promotion — your refer a friend and if he mentions your referral you both get a 50 buck discount on your bill. In this version your friend assigns his 50 buck discount to the school.

It is easy to see why this is likely to be an effective promotion—its' a good way to activate both school spirit and community patriotism. But its a good bit more than that potentially; a partnership between LUS Fiber and the schools is a natural—and necessary—condition for moving education into a 21st century model. Let me use St. Thomas More as a practical, specific example of why this is so.....

St. Thomas More's Gigabit:
An interesting idea and one that could generate a lot of team spirit. St. Thomas More was was LUS Fiber's first gigabit customer—a fact that the school brags on in its parental information page:
LUS Fiber provides St. Thomas More High School with a 1 Gigabit connection over a pure fiber optic network to power the robust and innovative applications used to create an enhanced educational experience. LUS Fiber is the only community-owned, ultra-fast fiber optic network in the state and offers video, Internet and phone services to residents and businesses in the city of Lafayette.
The 1:1 Tablet Program & Instructional Model
The school needs that gigabit. In addition to the usual computer labs and classroom computers St. Thomas More also sports a 1:1 tablet program in which each student is supplied with a tablet computer for their 4-year program. The student has has use of the tablet in school and out. Continuous access is crucial to the "flipped" curriculum model St. Thomas More is using. The traditional school-day pattern is to teach all the students in the class the material and to apply, practice, and review as homework. The flipped model flips that (bet you didn't see that coming!). Students watch video instruction and read material at home which leaves more time in school for the teacher to engage in targeted review with students who are struggling with a concept and to develop application projects that ground the material learned. (Much of this was discussed by the principal at that the recent "Breakfast for Fiber" event.)

When 1,100 students and faculty able to go online at the same time they can soak up a LOT of bandwidth. Principal Audrey Menard said at the Breakfast for Fiber event that they outran their 100 meg connection within a month of acquiring it from LUS.

The Bottom Line
Yes, the school needs a gig, any school with an muscular, universal, always-on program of tech use will gobble down a huge amount of bandwidth. But even more: moving much primary instruction to the home means the home has to have a lot of bandwidth too. St. Thomas More classes often provide video of their classroom lectures—with the school provided tablet that's easy if, and only if, they have a lot of bandwidth at home. That applies to other online learning environments as well. Should the students want to try a different explanation of the transitive property or Boles law the Khan Academy, iTunes U, or Youtube is sure to be useful; and to suck down its own ration of bandwidth. In addition to classroom teaching materials St. Thomas More also uses the Moodle class software you'll more commonly see in university classrooms (including ULL) and an array of other parent and student accessible grade and testing material available off the schools website. LUS' 100 meg intranet ensures that every student on LUS' system will be able to get back to their school's server at usable speeds. 20 students logging on from home won't bog down the connection.

All this boils down to a pretty simple bottom line: a really forward-looking school, one that uses technology to its full extent, will need four things: 1) An always-on, stays-with-the-student form of access, 2) truly massive of bandwidth to the school, 3) a lot of bandwidth between the school and the home, and 4) a good pipe from home as well as the school to the larger universe of learning resources. In most places in this country this is simply too high a bar; most schools simply cannot afford to "own" the gig or more that they need to start with pervasive personal access—and very likely don't have it available at any cost. The families cannot all afford to be on a big pipe at home—and even for those that could afford it really big bandwidth is commonly simply not available to most homes.

LUS Fiber makes a truly modern curriculum model possible. Right now St. Thomas More has the resources to make one inexpensive tablet available to their students for a four year tenure. The school has a gig available for what would be a shockingly low price almost anywhere else in the US. And, like all citizens, students in Lafayette have easy, cheap access to residential fiber's low latency and high speed.

It's possible here. It is not possible in most places in this country. And for that advantage we have LUS Fiber to thank.

—————————
One school leading the way is admirable and laudable. But it is not enough. We are rapidly approaching a tipping point in Lafayette where the materials and methods being used at St. Thomas More are becoming more widely available and cheaper each year. Substituting a tablet for an large backpack full of expensive texts is already a sensible proposition—where the texts are digitally available. But other places will not be able to reap the sorts of benefits for which St. Thomas More is striving because the infrastructure will not be available to flip instruction into every home that needs it. Within the city we have LUS fiber and a central reason for extending it into the parish should be to serve every student. Having a local fiber net network that treats schools like schools and citizens like citizens rather than profit centers is the hard part. We've got that now.  The affinity program that St. Thomas More has is not just good business—it's evidence that LUS Fiber thinks about these things differently. We ought to be planning, now, for a sea change in education that leverages the advantages Lafayette fought for to make a better future for our kids.

Friday, September 21, 2012

LUS Fiber as a solution to the US' lousy service

What's Being Said Dept.

In a conversation focused on the poor service and high prices of American broadband due to the policies of monopoly providers Lafayette gets prominent—and favorable—mention.

David Cay Johnston, speaking on Lafayette's LUS Fiber on NPR's Fresh Air:
"They created a municipal electric system. Well, they also built a municipal Internet, and it is so high-powered and so fast that a lot of the work done for the Pixar animated movies is done not in Hollywood, but in Lafayette, La. Well, the response from AT&T, Verizon, Cox, Time Warner and the other cable and telephone companies has been to go to legislatures and say, 'We want a law passed that either blocks or makes [it] virtually impossible to build municipal systems. That's competing with our business interests.' And that's part of the whole strategy they have: 'We want to be monopolies without competition, we want to run the system in our interests, to maximize our profits,' with no regard for the overall economy of the United States."
 The Lafayette material starts at about minute 6:00; the whole discussion is well worth the listen. Some of the policies discussed are beyond outrageous.

(Hat tip to spotter Travis Gauthier!)

Laignaippe: I talked to Johnston in late 09 about these issues and his book. At the time he was presenting the theme as the costs to the middle class of public policies that favor corporations. Sounds like the book has finally made it into print as "The Fine Print: How Big Companies Use "Plain English" to Rob You Blind."

Wednesday, August 15, 2012

Official: LUS Fiber taking off

Yesterday's budget hearing focused on LUS and LUS Fiber was notable for the lack of acrimony and sniping at the young telecom utility. Most of the government-bashing that took place focused on the costs federal regulations impose on the electrical and sewerage units of the utility. Apparently even the most ideological of locals have decided that it is much safer to attack the traditional targets at the national level than to take on the popular, voter-backed local utility. 

Richard Burgess' story is a clean, straight-forward recitation of the history of the telecommunications utility and an update on its current economic status and possible benefits that can be extracted for the community. From the article:
The city’s fiber-optic telecommunications division might be profitable enough by the 2014-2015 budget year to begin paying into the city’s general fund to support other city services, City-Parish Chief Financial Officer Lorrie Toups said Tuesday. 
“I think the business is growing fast. It is looking successful,” Toups told City-Parish Council members during a hearing on next year’s proposed budget for LUS Fiber, the city-owned Internet, telephone and television service.
As LUS Fiber loses its novelty status and assumes the status of a fixture the most interesting characteristic is becoming its potential to supply income to city-parish. Or, more exactly, to the city of Lafayette. Make no mistake, LUS and LUS Fiber's income-producing qualities are what the politicians controlling the utility are now finding most attractive. (LUS currently provides 27% of the city's general fund! Imagine, for a moment, the reaction among the ideologues if taxes had to be raised 27% to fill the hole left by the (socialist) utility company. You'd think they'd be a little less negative and maybe even appreciative about LUS if they were actually, rather than merely ideologically, averse to raising taxes.)

Also: I see that the Advertiser has a story up that (again) takes a very different view of the council's activity than is seen in the Advocate. It's tale: "Clean air rules cost LUS millions." This is, again, a report shaped by Theriot's doggedly right-wing ideological take on all things. Several times during presentation Theriot tried to bring the discussion around to how much conforming to federal regulations is going to cost LUS' utilities. This is a perfect thing to get all hot and bothered about: it is an actual expense that you can do nothing about but getting people worked up about unfunded mandates neatly removes the issues of clean air and clean water. Strangely neither Theriot nor the Advertiser seem to notice the huge costs imposed on LUS Fiber by the state's (un)fair competition act even though that was cited repeatedly when this "odd" expense or that was queried by the councilors. Of course Theriot is not likely to want to notice that since a major part of what he wants to call "loses" of the community's fiber network are the "loans" from the parent utility which return to LUS Fiber the fake imputed taxes which were imposed by the (un)Fair Competition Act.

Lagniappe: From an earlier post in regards to imputed taxes:
Again it all goes back to the (un)Fair Competion Act. One of the things put in that act during negotiations is a concession that LUS Fiber would be able to borrow from LUS' other utilities just like any other corporation could set up internal borrowing arrangements. This is not a subsidy, it's a loan—with real interest. One of the efforts to raise an issue by Messrs Patin and Theriot centered around "imputed" taxes. Those are extra costs that Cox and ATT got the state to require that LUS include in order to force LUS to raise their price to customers (you!) above the actual cost. (Yes, really. See this. And these.) The idea was that LUS should have to pretend to pay taxes that it doesn't actually pay when setting its pricing—and include those fake costs when competing against Cox or ATT. PSC regulations (not the law) requires LUS Fiber to send those monies to the larger LUS. So LUS utilities is holding money LUS Fiber earned. LUS electricty, water, and sewer loans it back to LUS Fiber—at interest. The net effect of this is to subsidize LUS' other utilities on the back of the new utility, LUS Fiber.

Monday, August 06, 2012

Plain Spoken.

Investor powerhouse Seeking Alpha just loves Comcast and has no qualms about saying why in its story "We're Big Fans Of Comcast's Cash-Flow Generation: "
We're big fans of the firm's Video and High-Speed Internet businesses because both are either monopolies or duopolies in their respective markets. Further, we believe that both services have become so sticky and important to consumers that Comcast will be able to effectively raise prices year after year without seeing too much volume-related weakness.
Well....that doesn't need translation. And the implications should be equally clear.—

That, friends, is why every community should build its own municipal utility.

Wednesday, August 01, 2012

Joey Durel: The Power and Promise of Local Government


Joey Durel, Lafayette Parish President, has a brag piece on the Huffington Post. He brags about all the things anyone from the region would: food, employment, economy, culture, and food again. He also promoted two projects that his administration had a large hand in creating: LUS Fiber and the horse farm park. Readers may guess which I will emphasize here:
Our city has its own citizen-owned utility company, the Lafayette Utility System (LUS) that began in 1896 when the people voted to take control of their own destiny by voting to provide electricity. Again, in 2005, our citizens voted for Lafayette to expand LUS's offerings to include a Fiber Optic system -- now called LUS Fiber. The $125,000,000 investment provides Fiber Optics up and down every street in Lafayette, and the Fiber provides television, telephone and internet service. 
This project was done entrepreneurially, without taxes or grants. It must survive strictly by competing with a good (better) product for our citizens. Today, we have the fastest, most affordable Internet speeds in America. We can deliver a true, symmetrical gigabit for less than $1000! We also provide a free symmetrical 100mbs for Intranet to any subscriber to our service. This is local government owned and managed, but paid for only by the people that subscribe to the service. We are providing much higher speeds for much less money than is otherwise available. This will mean opportunities for companies to use Lafayette as a laboratory for what the next generation internet will do for the world. It will help provide good, clean, high-paying jobs for our citizens.
And the moral of the story? In Durel's words:
Local governments cannot wait for state or federal governments to make them great (but keep begging), they have to take control of their own destiny. 

Want Competition? Well...

If you want competition you're not likely to get it from the telephone companies. At least not if you haven't already gotten it. That's pretty much the point of a Gigaom story on the collapse of the telecom alternative:
During April-to-June 2012, AT&T & Verizon lost 94,000 broadband subscribers in total. While they continue to sign up people for fiber and higher speed broadband, they are losing DSL subscribers really fast which is good news for cable broadband companies.
Here's what's happening in a vivid graph—the telcos have lost. Cable is the only man standing. For most of the country competition in wireline broadband is a fading dream:

None of the incumbent telcos are planning on building more fiber to the home anytime soon (the last remaining bastion of competition for cable)...and worse is the fact that they are in the midst of declaring their remaining DSL subscribers dead weight and selling off the lines or outright abandoning them where they are allowed to do so.

Lafayette's LUS Fiber is looking better all the time. At least in our area we see a smidgen of competition.

Community-based projects make broadband Internet access high-speed and affordable

What's Being Said Dept.

Christopher Mitchell and Sasha Meinrath team up on an essay that points to the advantages of community-owned networks in the current day. Lafayette gets her mention, as she tends to do whenever the topic comes up in the national conversation.
In a few short years, Lafayette’s network has resulted in hundreds of new jobs, millions of dollars in aggregate savings for the community, and the economic boost that local college graduates will be able to take advantage of the digital economy without having to leave Cajun Country. 
Local municipal networks are crucial, but they aren't the only way to fix the U.S. broadband problem. Hundreds of other communities get access through cooperatives and other nonprofit approaches.
Given the recent policies of the big incumbent providers in the US, if you want world-class broadband at prices that are at all competitive with prices world-wide the only way to get there is to do it yourself.

Tuesday, July 31, 2012

Google Fiber—Thumbs Up & Thumbs Down

Note to the patient long-term reader: I'm going to attempt something a bit different in reaction to Google's latest announcements and put a series of related posts that come together tell a larger story. This particular post you can consider a "sidebar" containing interesting and related material but somewhat off the main story-line that looks at the lessons local communities can take away from Google's complex attempts to build something new inside the constraints of the US market. 


Look for the bunnies to find posts that are in this series. That and the tag "GoogleFiber"

Google's fiber to the home effort in the Kansas Cities is being reported as simple, straight news. Reports simply say here's what they are offering—and mostly they are simply digesting the Kansas City announcement presentation. That's fine but it's repetitious. The items linked to in this post are amount the few that take a hard look at the consequences of what's been announced and pass some sort of judgment on them—a Thumbs up or Thumbs down. Trying to divine the consequences a lot more interesting and often brings to the surface things that Google has left unsaid.

These stories are worth looking at and chewing over but I'm treating them as a sidebar to my series of posts on the implications of Google Fiber for Lafayette and other FTTH municipal networks.


7/27/12
3 disappointments from the Google Fiber launch
Stacey Higginbotham is one of the smartest reporters on the network beat (check out her take on the economics of this project if you have any doubts) and is generally positive about the Kansas Cities project. But in this story she lays out some disappointments—and a lot of the digerati share her misgivings.

Open Networking: Google has backtracked on its initial promise to build an open network; it now is doing what almost every network in the country where the state has not forced the networks to be wholesale only (municipally-owned ones that is) and closed its networks. You can't buy wholesale bandwidth on Google's fiber and expect to roll your own service. Google runs the services that are offered to the public over its fibers. (There's a raft of "good," or at least practical reasons for that but Google just might have had the muscle and deep pockets to defy them. That it didn't should be instructive.)

Google is not being open about how it did this: When Google first started talking about this project it was conceived of as a way to demonstrate that FTTH didn't need to be costly and to that end it said it would offer continuous information about how it achieved what it thought would be astonishing results. That simply hasn't happened. No one sees any details about what and how Google's build and thought processes are being played out. And there isn't much sign that they're going to be open about any implementation detail or understanding any time soon.

It gives Google a lot of control and information: Google is headed for more vertical integration in Kansas  City than even the telcos or cablecos now have. They control everything from the network to the user OS to the content and Google can track and cross reference user behavior at every level. For those that already worry about a business model built on advertising the new degree of vertical integration and the potential for privacy violations and simple manipulation are very daunting.


7/27/12
Google Fiber TV = the promise of Interactive TV
Marc Cantor has been in the interactive media arena since, well since he helped start it up via MacroMind Director in 1987. He sees the Google project as the realization of his dreams. I'm not so sure that it all maps to "interactive" in any of the ways that a program like MacroMind would have had in mind but Marc does offer a very nice list of the good things about the Kansas Cities Project.


7/27/12
BenoƮt Felten gives Kansas City a big "meh." He discounts the significance of an affordable gig and a free "average" bandwidth offerings and concentrates on some of the same issues that Higgenbotham raises. Felten's basic point is that all of this has been done before and the only thing exciting about this effort is who is doing. Felten, using his European vantage point to good effect, notes the similarities between items which look very innovative to US eyes and their European counterparts. These range from free bandwidth loss leader products (didn't work) to France's Illiad making their own quite innovative hardware (didn't seem to save much money). Well worth the dyspeptic read.


7/27/12
Google Fiber Is The Most Disruptive Thing The Company's Done Since Gmail
or so says this BusinessWeek analyst. Google Fiber may be disruptive, I certainly hope so. but I'm not particularly buying this line of reasoning. (Starting with the idea that Gmail was an innovative disruption.)


7/28/12
Let’s Not Get Too Excited About Google Fiber… Yet 
TechCrunch's take is pretty much that all this is only interesting until Google demonstrates that it can handle the problems that are immediately in front of it. To wit: "THE ROLLOUT PROBLEM." "THE INSTALLATION PROBLEM." "THE CUSTOMER SERVICE PROBLEM," and "THE CONTENT PROBLEM."

The author's point is that these are not trivial issues and that no one should assume things will roll smoothly. The point is well-taken as anyone who has watched Lafayette's efforts will attest. Google's launch date is already later than it initially said it would be, rollout will take 18 months even by Google's estimate. Getting trained install techs is not a trivial job; they'll simply have to be imported and Google has taken on considerable inside work that differs from that with which industry techs will be familiar. LUS Fiber initially wanted to avoid any inside work. But that was unrealistic and interior work can bog down a crew in myriad unpredictable ways...it's a specie of remodeling and nothing ever goes as planned and every instance is unique. Google has a long-standing customer service problem. That must be successfully addressed; bad service is why people hate the cable companies and Google the giant corporation isn't going to be cut many breaks. Content: that's a bitch and getting the full range of content is a killer. Launching without HBO will be tough sledding.


7/30/12
The Economics of the Google Gigabit
Chris Mitchell of the Institute for self-reliance is coming from a position that this Lafayette Pro Fiber shares: What's most interesting to him is what the implications are for the sorts of municipal networks and broadband cooperatives that the Institute has been promoting. It's the gigabit—and a gigabit at such an enticing price—that rivets the attentions of other builders of city-size networks. How does Google do it? How can they offer a gig at such a low price? (Understand that in many communities a gig is simply not available at any price; where it is available it's in the multiple thousands of dollars a month; and a really fantastic price has been, oh, 300 dollars or so.)

Mitchell's basic take is that Google is not a city-size network, it is an enormous continent-spanning behemoth that generates and serves so much content that it effectively never has to buy bandwidth like the little guys do. (Slipped in there is the best explanation that I've seen of how ISP's actually buy bandwidth and why netflix inflating the peak during prime time matters to small operators.—And why large networks like Cox or AT&T probably are charging exorbitantly more for bandwidth than they could and, at the same time, smaller networks, even when they actually charge more per, aren't overcharging.)

Sunday, July 22, 2012

Forbes: If you want cheap, fast Internet, move to Lafayette, La.

In a Forbes article titled Complacent Telcos Deliver Americans Third Rate Broadband Service At High Prices Lafayette's home-grown fiber network gets a nice call-out in the very first sentence:
If you want cheap, fast Internet, move to Lafayette, La., or better yet, Paris. The New America Foundation released on Thursday “The Cost Of Connectivity,” a global study comparing triple-play bundles (broadband, video, voice) in a few dozen cities worldwide. Not surprisingly, it underscores just how badly America lags the world in broadband speeds and prices.
Yup, if you want fast, cheap internet move to Lafayette; and yup, the US doesn't stack up so well in a global study except for the few bright spots like LUS Fiber.

The full study that Forbes cites is, at least in my judgment, not very well constructed but I can't argue with the New America Foundation's conclusions that the US lags badly in broadband services, that the problem is a distinct lack of competition, that the country's poor competitive status is due to policy decisions at the federal and state levels, and, most saliently for Lafayette, that the most obviously remedy would be federal legislation to free any municipality to build their own network.

Tuesday, June 12, 2012

AT&T Working to Kill South Carolina Community Broadband - Despite Being Largely Uninterested in Serving Those Customers

What he said dept. 

Karl Bode goes on a tear. Go read it. Worth the screen time.

The part I like best:
Anti-municipal broadband bills are protectionist nonsense crafted by predatory bullies and passed by corrupt political halfwits. It doesn't matter whether you like the idea of community broadband, and indeed there's often much to dislike in implementation -- but regardless of your beliefs -- local infrastructure decisions should be up to the local community, not a disinterested corporate giant half a world away (especially one that has already failed that community on the connectivity front). Those who support these bills support protectionist rules and government erosion of rights while professing to loathe regulation. They also support the very broken government-for-hire corruption they claim to protest.
Yup.

Friday, June 01, 2012

Cash flow positive—Media Roundup


Well all the media that's gonna respond to LUS Fiber's yesterday morning press release has now had a chance to do so and here's your media roundup. What struck me was just how much of a reflection of the character of media outlets themselves the various version were—if you didn't know better you'd be hard put to be certain that they were talking about the same event. (This continues a recent theme; see my post focusing on "Audit:")

We've got, in order of their appearance: The Independent, KATC, KLFY, and the Advertiser.

The Independent version: "LUS makes case for Fiber" is oddly devoid of much of any reference to the points the press conference was intended to announce. Instead we are treated to a story that focuses on media back and forth and political positioning. The story that reprises the points I made in the "Audit" post referred to above and makes some very astute points about the political timing. To wit: the Ind holds that this press conference was called as preemptive strike against the anticipated attack on the Fiber utility at next weeks city-parish council meeting by William Theriot. Since Theriot has requested a report from Huval, director of the utility, after expressing dismay at the portion of the Auditor's report concerning LUS Fiber.

KATC's take: KATC presents a generally upbeat story drawn directly from the presentations marred by just not getting the basic facts right. They reported that LUS fiber had turned a corner and salted that with Huval's complaints about the large legal fees that have held back the new utility drawn from a post press conference interview. Sadly, they get two central facts just wrong. Three times in the piece they refer to borrowing from or paying back monies from the city. The money they are talking about was NOT borrowed from the city. That money was, and I thought that was something everyone in Lafayette understood, bond money borrowed from Wall Street guys. None of it came from the city. They also seemed to indicate that LUS Fiber was profitable...not so, the point of the press conference was that the utility is now cash-flow positive, a very different thing.

KLFY sez: KLFY focused on telling a story about the inconsistent versions of the audit coming out of last week's council meeting and this weeks press conference—noting with some confusion that same auditor was at both meetings. Getting the gist of the news right they also focused on Toup's assertion that LUS Fiber had the potential to help the city-parish with its current budget problems—something the other stories passed over.

And, finally, the Advertiser: Well, the title pretty much encapsulates it— "LUS Fiber cash positive, but still deep in debt." Or "There's good news but we are gonna immediately say bad things to neutralize it." On the upside there's real reporting in this piece (unlike some we've seen recently). All the principals associated with the story from Theriot to Huval to Toups are interviewed. The reporter even calls in real economic expertise in the guise of a Tulane professor. And there's a concerted attempt to actually educate the public on what a phrase like cash-flow positive might mean and how it differs from profitability. All those are things to applaud.

But. The story also goes to some length in the first half to bracket every positive statement with negative ones. I can't escape the feeling that it's defensive writing that is too conscious that the new facts presented contradict the implications of earlier stories in the series. My recommendation is if you've been following the issue you skip forward to the second half which actually introduces interesting material.

Thursday, May 31, 2012

LUS Fiber Declares "Financial Milestone"

LUS Fiber called a press conference this morning to trumpet the fact that the startup business is now cash-flow positive, calling it "a financial milestone" and pulling in the city-parish's auditor, LCG's CFO, Lorrie Toups, and Terry Huval, utility head to make the case.

The Gist
The gist of the story is pretty straightforward: LUS Fiber has, since February of this year, been bringing in more in revenue than it spends each month. That's what's colloquially known as "successful." The utility is no longer dipping into reserves to pay for day-to-day expenses. All current purchases, salaries, and "notes" are being paid for out of current revenue. The caveat is that this isn't, not exactly, "profitable." Any well-run business has to also save some money—for replacing worn-out equipment, for expanding the business, for setting aside cash to pay for unexpected 'disasters," and finally for handing over profit to the owners...this last bit gives "profitability" its name and pleasant implications. LUS Fiber is now starting to put money away—just not yet enough to completely cover depreciation and planned upgrades. The kicker here is that LUS Fiber is not being run to generate a profit...so it won't ever have to be profitable in the sense that many private companies need to. A good utility makes enough money to set aside reserves for planned upgrades and the inevitable, especially in hurricane alley, rainy day. But it does not have to send any of its hard-earned income out of the city to satisfy far-away investors—instead LUS Fiber as a community-owned asset can return value to its citizen-owner-customers by keeping the service reliable, robust and cheap. Lafayette's citizen-owner-customers take home their profit in the form of more reliable, faster, and cheaper services.

The Longer Story
Huval started the press conference with a small bit of context—pitching LUS Fiber as a utility, not the sort of government that consumes money. Instead LUS Fiber is supposed to pay its own way from the fees that user hand over to pay for the services it provides. This is the way that the current electric and water services work.

Financial Highlights: click to enlarge
The big announcement was that the fiber division is currently able to pay its mortgages, all daily expenses and begin to set some money aside. By the end of the fiscal year, according to Huval, LUS Fiber will have about a million dollars in cash on hand. By 2014-2015 LUS Fiber will be fully profitable, able to completely fund any upgrades and replacements from its reserves.

Huval, and later Toups, used a car analogy to point out that, though depreciation sits on the books looking like a loss no outflow of actual cash is involved. In Huval's version a $25,000 car depreciated $3,000 dollars in value the moment you rolled if off the lot. An unsympathetic commenter could say that you've just lost $3,000 dollars. But that big initial bump is a book keeper adjusting for what you could get if you sold it on the open market—not what its value is for getting the job done. That value hasn't "depreciated" at all. Yes, you have to save up to buy an new car down the road. But only the accountant thinks you've lost money today.

The conversation then got pretty number-heavy with charts and graphs and numbers embedded in an orange-themed power point presentation. You can take a look for yourself...It shows actual numbers and downstream projections that support the basic tale: LUS Fiber is making enough money to be above water and need do nothing but continue to add customers at the current rate to be stable indefinitely.

Huval closed with a more general appeal to the public that they consider LUS Fiber a community resource, and now that it is clearly on the road to success they should get out and support it.

Lorrie Toups, LCG CFO, basically reiterated the story Huval told, fleshing it out with additional numbers and projections and a more extended variant of the car metaphor that focused on a taxi driver's business. She wanted to reassure the public that her office had staff that monitored he fiber business on a daily basis; the fiber division does not go unsupervised.

Toups gave way to CPA Kolder, the same accountant whose intemperate "$45,000 a day loss" remark lead to a similarly intemperate Advertiser headline. That number, unsurprisingly, was not mentioned today; instead Kolder emphasized that he agreed with Toups that the new utility was still in start-up mode, was on track to full profitability and emphasized that he'd said as much in his presentation to the council. Kolder pretty clearly overstepped best practice when he sensationalized LUS Fibers anticipated losses in a way that embarrassed the client and overshadowed the more substantial critiques he had a responsibility to make. Those critiques focused on Lafayette Consolidated Government's declining reserves and the need to either increase revenues or cut services. What was different today was that Kolder emphasized a point both Huval and Toups had earlier mentioned: that profit from the current LUS utilities fund a substantial portion of LCG's general fund. LUS Fiber will, if it continues on its current path, grow enough to contribute substantially to funding local government—and keeping Lafayette's tax burden relatively small. LUS Fiber is a part of the answer to LCG's current fiscal predicament; not a cause of it. 

The Takeaway

The intended takeaway was clearly that LUS Fiber is on the predicted path; it has turned a major corner and should be considered a tentative success by the community—one with huge downstream potential.

Saturday, May 26, 2012

"Audit: LUS making progress"

Here's a striking contrast.

Stories on LUS Fiber that start with "Audit:" the Advocate's new story "Audit: LUS making progress" and the Advertiser's "Audit: LUS Fiber lost $45,000 a day."

We're talking the same audit. I've already commented on the Advertiser story—and on an Advocate story that actually focused on the core of the audit and was published on the same day. I felt (and feel) that the story out of the Baton Rouge paper focused on the whole audit and accorded LUS Fiber its appropriate space while the Advertiser went for an inflammatory headline.

Now, several days later the Advocate does a follow-up story that highlights the LUS Fiber portion of the audit story. What's instructive is that Burgess, the reporter for the Advocate, goes back to the auditor for a followup story, the city's chief financial officer and Terry Huval, head of the new utility. A very different story emerges. From the story:

Kolder said in an interview Thursday that despite his note of caution, he did not intend to present a “doom-and-gloom” scenario. 
He said that based on his review of LUS Fiber’s finances, he agrees with City-Parish Chief Financial Officer Lorrie Toups that the service could break even by late 2014 or early 2015. 
“Normally, most start-up businesses lose money the first three to five years,” Kolder said. “... It would be expected.”
And:
Toups noted that the $28.8 million deficit cited in the audit for LUS Fiber at year-end 2011 includes about $21 million in accumulated depreciation since 2009. 
Depreciation is not the loss of actual cash but rather writing off the value of equipment and infrastructure as it ages. 
Huval comments:
Huval said that when the depreciation expense is factored out, LUS Fiber, as of April, was making enough money to cover all operating expenses and to set money aside to help repay the more than $100 million borrowed to start the enterprise.
That's what's commonly known as "cash flow positive." And it is a big deal for any startup. It means that you no longer have to borrow new money—or dip into the money you've banked at startup—to pay for day-to-day expenses or debt service. With a debt as large as LUS Fiber's the latter concern is a large one. It's not the same as profitability, of course—to claim that you also have to be able to pay for expansion, replacement, and upgrades. In LUS' case there is no further expansion beyond the city in the works; there won't be much in the way of replacement beyond new trucks, tools and the like; and upgrades will be common enough—but since LUS Fiber is, by dint of being fiber, well oversupplied with capacity most upgrades in the future will be merely to replace older equipment with newer, more capable, and almost certainly cheaper equipment.

LUS Fiber is over the hump. Every additional subscription from here on out adds to the cushion that will  predictably allow the utility to say that it is profitable. Being cash flow positive means the business plan has proved out and the great mass of costs are being absorbed the current subscribers and the (notably low) prices that LUS Fiber is currently charging. There won't be a need for a radical restructuring of the business plan, merely the usual periodic adjustments to account for increased costs — issues that by and large the utility's competitors will also face.




Lagniappe: Interested readers may wish to travel over to the KPEL site where they can get many of the points made in this story directly from the horses' mouths. The radio station has posted an audio stream of an interview with Durel and Huval that the two gave in response to the initial Advertiser story.

Friday, May 25, 2012

"Durel – Huval Defend LUS Fiber Earnings"

 Yesterday morning, the day after a questionably crafted story:  Audit: LUS Fiber lost $45,000 a day ran in the Advertiser Durel and Huval got up early and went to KPEL's ‘Mornings With Ken & Bernie’ show to dispute the report.

The online recording shows Durel opening the segment by saying that the "headline was so misleading and distorted" that he felt compelled to clarify. The audit took place early in the new ventures life; when LUS Fiber was about 2 years old and long before there plan called for a break-even point. The audit was the 2010-2011 fiscal year starting  on November 1st so the data in was between 18 and 6 months old when it was presented to the council so things have changed. Even working with the old figure Durel and Huval point out that 2/3rds of the scary 45,000 dollars was in "basic depreciation." They explained it by analogy to new car depreciation— the value lost through depreciation is an accounting tool that deals with what you can sell the asset for; it does not mean that the actual assets are worth any less to the user or that that much real money is being poured into the business.

Part of what has changed is that LUS Fiber has continued to grow since the auditor closed his books. The new venture is now raking in 57% more revenue and has 50% more customers on its books than it did last year at this time. Those are the kind of growth figures that any start-up would be thrilled to have in year 3.  And that sort of growth has important consequences: without depreciation LUS Fiber has turned a very real corner and as of the April books is taking in in excess of 2 million dollars a month and can pay both debt service and operating expenses out of current revenues. Pause for a second: this is very big news.  It means that there is no further drain on borrowed money. From here on in they simply have to keep expanding and start saving for the inevitable periodic upgrades. Baring an unlikely contraction in the user-base the community can consider that their new utility has turned the corner. To quote Huval: "We did what we said we were going to do..." and LUS Fiber is "On the path of being a very self-sufficient business."

This whole process is not a new one for Lafayette. Huval, at one point in the interview, read from a 1901 newspaper article—6 years after LUS' electrical utility was launched—that bemoaned the constant drain on the city's coffers but offered encouragement about the services and savings from which the community benefited. Starting up a capital-intensive utility has always been a tough business.

In a short aside Huval also mentioned that of the 25 million dollar loan portion of the total debt that LUS Fiber took from the larger utility business that almost all of it was a cost forced on the utility by state law—it was a transfer of fiber already bought and paid for by LUS to the new division. Only 5.8 million was anything like what we conventionally mean by a loan and even a portion of that covered the same law's "imputed taxes"—a state-imposed injustice of which regular readers will be familiar. The Louisiana legislature's subservience to corporate interests was not a new feature developed during the current legislative session.

Durel wrapped up the discussion with his take on what drove some people to oppose the fiber plan: basically "ideology." He said: "There are people driving this that just want LUS Fiber to fail." But he claimed that not only was the fiber network going to pay for itself but it was going to make money, save customers money, and put money into the general fund. That's certainly been our experience with the electrical and water utilities.



*Do take the time to listen to the interview on KPEL. There's even a great radio pic of Durel and Huval. But be aware that the audio is locked up in a pretty nasty Adobe wrapper that will not let you access it directly or start and stop the feed. Just let it play; I went through several irritating restarts of the lead-in music when I tried to pause the download to take notes. Beware. Be patient.

** I'm going to take a moment to complain: today's good news that the utility is going cash flow positive is really, honestly, GOOD news. LUS Fiber has turned a very important corner and from here on out the chance of failure is vanishingly small. But the public is not getting the message that it should. LUS is simply not handling its PR very well. This should have been announced at press conference where the city and our utility could present it cleanly as the high point that it actually is. Having it come out in an early morning radio session under the shadow of an article like the Advertiser's is poor message management. Frankly I think that is mostly due to an excess of silence; those running the utility are engineers, not marketers (and thank heaven for that) but their instinct that not talking about the utilities successes or failures is always to be preferred simply leads to situations like this one.

***Early on I criticize about the Advertiser article that touched this off. You can find that article on the Advertiser site until it goes behind a paywall and you can find my longer critique on the blog.

Wednesday, May 23, 2012

Theriot Attacks Fiber Obscuring Council's Role in Larger Fiscal Debacle

The Lafayette City-Parish council heard a disturbing report from its auditor last night, the core of which was that Lafayette City Government had run out of the savings it had been coasting on since 2008 when the budget last actually balanced and was now faced with a fiscal crisis. 

So we get this headline: Audit: LUS Fiber lost $45,000 a day. Say whaaat? 

The Advertiser has returned to the days of coverage that sacrifices informed, informative reporting for sensationalism. 

This sort of story misses the real news to focus on sensational headlines and personality politics. Honestly, the real story is contained in the last paragraphs—that LCG as a whole has been living beyond its means every year since 2008. Not mentioned in this story is that the core critique was that LCG lost 9.7 million dollars in the last fiscal year which finally depleted reserves. The audit notes that LCG should be keeping a minimum of $14.5 million in a reserve, 'rainy day,' savings account but that the City-Parish is down to 3.8 million.

Durel, no doubt knowing this audit was coming, has been upfront about this in last few weeks saying that the crunch was coming because the city-parish council (which has responsibility for the budget) has run out of savings.

That Theriot, who is an officer of the council, should froth and foam about LUS Fiber rather than deal seriously with the actual problem that the council faces is predictable. He'd rather attack the supposed fiscal mismanagement of a public utility than face his own role in the fiscal mismanagement of LCG. He'd rather his ideological allies and followers do the same and skip lightly over his own failure to fix the very sort of problems he was elected to fix.

Focusing on LUS Fiber's "losses" is the most obvious sort of misdirection. Anyone who has followed the story of LUS Fiber knows that it is supposed to be losing money now. It's in the business plan, for gosh sakes. You borrow seed money via the bonds in order to build the physical assets that you expect to pay back the loan. Business 101,  Building a fiber-optic network from scratch requires enormous upfront capital. The plan presented to the public made it crystal clear that the division would lose money on paper for years, that was the whole point of borrowing 125 million dollars to buy construction bonds. The story even mentions this truth—in passing. Even Theriot, blinded as he might be by his own ideology, surely understands this basic bit of business management.

 Theriot, the only person interviewed for this story, gamed it all very nicely. He's getting to be quite the politician. Expect a follow-up make-good story that interviews Mayor-President Durel and utility director Huval tomorrow. That's the one where the community leaders have to explain, again, what bond money is and what it is used for. And that story will put off, for yet another day, the real story that the Advertiser should be writing: Audit Finds LCG has Run Out of Savings.

Update: Right after posting this I settled down to read the rest of my morning papers...and found that the Advocate's Richard Burgess had reported the story and reported it well. The title: "Budget cushion dwindling." The story focuses on the real problems the audit revealed and mentions LUS Fiber in the final paragraphs, clearly providing the context needed to understand its fiscal picture. Theriot is not provided a platform—nor is Durel or Huval.

Update #2, 5/25/12: Durel and Huval have responded to the Advertiser's article during an interview on  on KPEL. I covered that interview in a separate blog post.

Tuesday, May 22, 2012

"Lean Networking" and the Utility advantage


Martin Geddes, one of the brighter guys in a field full of smart people, writes intelligently and simply about what a modern telco company need to do to succeed. It's not easy to write both intelligently and simply about anything, especially telecommunications business models, but Geddes achieves that in an essay entitled "Lean Networking."

The basic trope he uses is to describe modern telecommunications companies as crucially similar to classic, massive, industrial manufacturing plants—they are centrally concerned with keeping the expensive plant running at full capacity all the time. They want to keep their networks full all the time and central to that is not overbuilding and viewing both network queues and QoS devices as fundamentally a way of keeping the pipes full. Quality, in guise of loss and delay, is is conceived of as something that happens after you've assured basic network efficiency, in the guise of full pipes. (You may now have an inkling of the underlying conundrum that AT&T' has created for itself.)

In contrast modern, "lean," manufactories are focused on what constrains the production of quality goods and in eliminating those constraints. Quality, conceived of as low defect and high user satisfaction, is the first focus of lean manufacturing. Efficiency is something that you work up to once you've got the quality where it needs to be to satisfy your market. So keeping the factory running at capacity at all times is not the first priority and is achieved by ruthlessly eliminating any constraints on supplying quality goods as they are needed even if that means plant downtime as the demand ebbs periodically. Maintaining some excess capacity is part of the price of viewing manufacturing in this way. By analogy, the lean network of the title of the essay is one which views minimizing loss and delay by focusing on those parts of the network that constrain the network—chiefly contention—eliminating those, and dealing with ebbs and flows by network planning allows excess capacity in accordance with anticipated large flows.

Geddes take-home idea is that the only way to have both efficiency and quality is to ensure quality first. Focusing on efficiency first results in the big, bulky, plants that have to run at full capacity all the time. And that sort of full capacity can only be achieved by methods which compromise on quality. But if you go for quality first you can adapt to the ebbs and flows exactly by minimizing queuing and other tactics which actually ensure contention. Only the quality-first route can take you to the very most efficient network.

Ok, you may say, but why talk about something so arcane in a blog focused on a local municipal network. Well...

Lafayette—and other fiber municipal or small networks.  
Geddes is focused on advising enormous,vertically integrated creatures like AT&T. As he notes the chief constraint on quality, contention, is worse at the local edges of the network. The solution is to both being willing to refuse to allow new entrants at peak times and to build more capacity to reduce the frequency of such moments. (Like lean manufactories.) The old telephone network that AT&T and its brethren built worked this way: like most utilities it was luxuriously over built and, in those rare moments of contention, new calls were simply refused; you were told "all circuits are busy" on those rare occasions when capacity was challenged. Interestingly, cable companies had their own version of this: they devoted discrete capacity to each channel, classically, each channels full info flowed past your tv's receiver all the time. It was hugely wasteful in terms of efficiency since you could only watch one channel at a time.

The advent of Internet Protocol (IP) and associated protocols changed all that; the key term is "best effort"—IP networks are not "all or nothing" networks like the old phone service or the classic cable model; instead they can trade quality for capacity. It's more efficient overall. And there is a strong engineering and financial push in the direction of efficiency; the two mindsets are in agreement on this issue.  The cost-savings occurs at the very edges where Geddes notes there is the most contention. This is at least partly because it is the most expensive part of the network in which to upgrade capacity. It's where the compromises are most profitably made. Old technologies that are more expensive in the long run are given spotty and gimmicky upgrades to extend their life and only the relatively inexpensive core lines are given the newer, more capable, and more easily upgraded fiber treatment.

That (finally!) is where entities like LUS Fiber come in. If the big guys can't see their way toward fixing the edges local folks can...and the end result can—if LUS focuses its bandwidth purchases on ensuring contention-free links at the regional level—result in a user network like the one Geddes would recommend: a network which is built to minimize contention first, and build efficiency on top of that.

It's a utility mentality. And with its LUS Fiber utility Lafayette is a "back to future" sort of place where the local supplier of the most constrained part of the network returns to viewing service as a quality issue and is willing to oversupply capacity in order to get quality...which, if Geddes take-home idea is right, is the only way to get to real quality and maximum efficiency.

LUS' biggest advantage in the modern business environment may well be its oldest attribute: a commitment to running the network like a utility.

Tuesday, May 15, 2012

"Stuller, LGMC, FiberCorps launch telemedicine clinic"

The Advertiser covers a new telemedicine project at Stuller today. The project at Stuller is the first fruits of a more complex project built on LUS Fiber—LUS' internal 100 meg intraconnection makes the two-way HD video that is the central feature of such a system simply not an issue; any off-the-shelf equipment can be used. Any medical practice that wants to make use of the infrastructure and any business that has LUS broadband can come in at a minimal cost. The hope of the program is to develop more and more varied clinics that rely on off-site expertise using the infrastructure that Stuller is piloting. A company the size of Stuller makes a great anchor tenet for such a project. Once it's up and running reliably and well-staffed adding additional virtual sites is easy—smaller companies coming onboard incrementally won't stress a system that starts with 12000 employees. That's an impressive base number especially since this is not meant to replace your general practitioner or specialist physicians. This is all about palliative care of minor illness and preventive medicine. Expanding the numbers in the program is only sensible business practice; the larger the base, the smaller the overhead maintenance will be.

 There's a perhaps not yet realized potential for the school system as well. New superintendent Cooper has made it clear that he wants to expand the already overburdened school nurse system into something much closer to community clinics either onsite or attached to schools. Telemedicine is one way to practically bring specialists and the children's primary care physicians into the loop without breaking the bank. And the school system is on LUS Fiber at 100 megs per node throughout the parish.

Senior care centers would likewise be prime candidates for expansion of the idea. Patients and caregivers could have much easier and more timely access to advanced care.

There is lots of room for good things to emerge from the ease with which advanced services can be offered when the capacity of the basic network and policy of unconstrained internal bandwidth means that ALL the potential users have easy, cheap, direct access to all the capacity they need. If Lafayette emerges as a leader in practical, widespread telemedicine it will be because all the basic infrastructure is lying here ready to use. The big pipe is open. We only have to connect the dots.

See also: The Advocate article which provides a fuller background.

Friday, May 04, 2012

Chattanooga’s smart streetlights include a wireless network

Nifty idea from fellow fiber city Chattanooga: install a wireless network with your actively managed LED street light upgrade. Save money on lighting by using cheaper, longer-lasting lighting and by using the dimming function dynamically to save an extra fraction. Plus you can use it to piggy-back a wireless network for more general use if you want. Why not?

Before & After. Nice color temperature too! (via Sensus)

Once you've got the basic infrastructure in and under your control you can do some amazing things on top of it.

"New Video Explains Community Broadband"

The Institute for Local Self-Reliance has posted a new video that succinctly lays out the case for local broadband. It's not just faster. It's not just cheaper. It's also, and perhaps most importantly, about local self-determination.




And, while you're thinking about it, download their latest and greatest case study of three leading municipal networks: Broadband at the Speed of Light. Yes, LUS Fiber is one of the three examined.

Thursday, April 19, 2012

"ALEC Wants You To Pay 750 Percent More For High-Speed Internet"

What's Being Said Dept.

The Independent puts us on to an article that uses LUS Fiber to illustrate the the malign nature of ALEC. (The American Legislative Exchange Council is a secretive, corporate-funded organization that exists to create model state-level laws that favor corporate interests.) In  "ALEC Wants You To Pay 750 Percent More For High-Speed Internet" ALEC, which has been in both the national and the state news lately, is taken to task for sponsoring state bills that attempt to outlaw new municipal networks or cripple them once the exist. An ALEC bill was the basis of the infamous (un)fair competition act which would have, in its original form, made Lafayette's home-town network impossible to build. ALEC state president, then the (ig)Nobel Ellington (R, Winnsboro), embarrassed himself during debate by repeatedly having to walk away from the podium to confer with lobbyists in order to explain a bill he supposedly "authored." Only a veto threat from the Lafayette native who was then governor, Blanco, altered the bill enough to allow LUS Fiber to launch.

This article is in the way of piling on—ALEC has been pilloried in the national arena for having sponsored a series of "stand your ground" state gun laws that culminated in the Florida death of Trayvon Martin. The corporate-sponsored group has also come under attack for promoting series of laws restricting access to voting which range from shortening the voting day to restrictive voter ID laws. ALEC has responded by disbanding the committee that pushed laws not directly benefiting their corporate sponsors.

Lagniappe: The headline's sensational "750% more for High-Speed Internet" referenced LUS Fiber's advantage over Cox and substantiated the claim by referring back to an article on this site but I couldn't find anything that was very close to that figure in the post. The nearest I could find was price per Mbps for the two companies lowest tier of internet usage—where Cox's price per meg was 8.7 times LUS Fiber's price, or 870%. I'm not sure why the article was so nice on that one....

Wednesday, April 11, 2012

"How Chattanooga, Bristol, and Lafayette Built the Best Broadband in America"

Christopher Mitchell has published "How Chattanooga, Bristol, and Lafayette Built the Best Broadband in America," an in-depth case study and analysis of how the three named cities have, well, built the best broadband in America. It is indeed in-depth; weighing in at 65 pages the study digs into the history, the current status—with an emphasis on unique features of the networks—and the benefits that each community-owned network has developed. There's a little something for every interest in the studies. If you want to know how to get a network started there are three successful models to review. The types of opposition and local preparations are discussed at length. Widely different business plans are revealed. Each network's unique services and approaches are highlighted.

This is exactly the sort of study of community-owned broadband success stories that has long been needed. A structured set of case studies both gets at the common features of successful municipal networks share and the very real differences between local circumstances and strategies. Both the Institute for Local Self-Reliance, Mitchell's home base, and the Benton Foundation, who supported the work financially are deserving of thanks.

Lafayette readers of this blog will be most interested in how the study deals with LUS Fiber. Mitchell does a good job—and put in the time necessary to get a good handle on the area's unique features. He visited all the cities covered and hung out in Lafayette, interviewing the principals and rooting around in local privately held "archives." (By which I mean folk's old card board boxes and saved documents.) I reviewed an earlier draft and think he's done an excellent job. You can't do better for a succinct catch-up on the history and development of LUS Fiber.


Recommended without reservation.