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.