Friday, February 08, 2013

Crawford: High Prices, Slow Speeds for U.S. Internet Users

What's Being Said Dept.

Found this bit of a gem in The Valley News out of New Hampshire which ran a nifty review of Susan Crawford's book. (That's the same Susan Crawford that's a dark horse candidate for FCC chair.) The opening paragraphs of the piece set the tone for the review and reveal what the author thinks will set the hook for readers is the story of Lafayette's successful battle for fiber.
(Excerpted from Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age.)Terry Huval is a large, friendly man with a lilting Southern accent who plays Cajun fiddle tunes in his spare time. He is also the director of utilities in Lafayette, La. “Our job is making sure we listen to our citizens,” he says.  
In recent years, the citizens of Lafayette have been asking for speedier Internet access.In 2004, the Lafayette utilities system decided to provide a fiber-to-the-home service. The new network, called LUS Fiber, would give everyone in Lafayette a very fast Internet connection, enabling them to lower their electricity costs by monitoring and adjusting their usage. 
Push-back from the local telephone company, BellSouth Corp., and the local cable company, Cox Communications Inc., was immediate. They tried to get laws passed to stop the network, sued the city, even forced the town to hold a referendum on the project — in which the people voted 62 percent in favor. Finally, in February 2007, after five civil lawsuits, the Louisiana Supreme Court voted, 7-0, to allow the network.  
From 2007 to mid-2011, people living in Lafayette saved $5.7 million on telecommunications services.
The article then goes on to discuss the problems with cable's monopoly power as Crawford sees them.

Tuesday, February 05, 2013

Opinion: FCC’s plan for faster Internet is a sign of progress

What's Being Said Dept.

An opinion piece in the LSU Reville takes on the US' abysmal progress toward international internet competitiveness. Here's the take-home message:
In order for the FCC to achieve these new goals, telecommunications companies must look past their immediate shareholder returns and work toward improving the country or competition should be returned to the market in the form of municipal broadband providers, Internet access services that are funded by local governments.
Lafayette’s LUS Fiber is a municipally owned broadband provider that provides ultra-fast speeds at competitive prices. Since the introduction of LUS Fiber, Lafayette has seen a surge in interest from technology-related companies and Cox Communications, one of the city’s main private providers, has slashed its rates for some across the city, according to USA Today.
It is a testament for what fast, affordable services can do for a city in today’s connected age.
If Baton Rouge — a city already teeming with bright, young individuals — can position itself as Louisiana’s gigabit community, then it can potentially open itself up to similar new innovation and investment.
Of course Louisiana already has its gigabit-available city in Lafayette and we're "teeming with bright, young individuals." But we have no objection to Baton Rouge joining us.

Susan Crawford for FCC chairman

Occasionally, very occasionally, something appears on the horizon at the federal level that would actually make a big difference to advocates of local broadband. The emerging grass-roots advocacy of Susan Crawford for the chair of the FCC is one such event. An op ed in the Washington Post lays out the case for Crawford and along the way says:
Crawford would preempt the unfair and uncompetitive state laws that infringe on the rights of local communities to expand broadband access. To support local efforts to build out fiber-optic networks, she proposes creating an infrastructure bank that would provide long-term, low-interest financing.
That's huge. The FCC could assert its control under a number of federal laws to simply outlaw state laws in that ban or anti-competively restrict community-owned telecommunications networks. Their mandate is very broad. What is lacking is the political will. Susan Crawford is the sort of person who has the will. She certainly has the background in internet activism, founded OneWebDay, served as President Obama's Special Assistant for Science, Technology, and Innovation Policy, and co-chaired the FCC transition review team during the Obama transition. (See her short wikipedia bio for more.) If you're doubtful scan a few of her occasional blog entries. Oh, and she's written the book on the subject: Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age. (Public Library) That title alone should tell you that she sports the no-nonsense boldness needed for the job.

I'll be frank: She's ideal. The perfect mixture of intellectual background, civic activism, and consumer orientation. So ideal that many will say, regardless of her ties to the Obama administration, that she has no chance of being nominated. And, that if she were nominated, she'd have no chance of overcoming entrenched corporate objections to her Senatorial approval. That may be true. Elizabeth Warren's travails are illustrative: she was the ideal candidate for the job of the first head of the Consumer Financial Protection Bureau; hell, she pretty much designed the agency. And even with administrative support and logic on her side she wasn't appointed. But on the other hand: Elizabeth Warren might be just the reason to support her candidacy. Elizabeth Warren's rejection was painful for the bought-and-paid-for senators. It made their true allegiances all too painfully obvious over an prolonged time and made her a hero to a national constituency. That in turn led her to an insurgent campaign for senator with huge funding from the national pro-consumer constituency that her long battle in Washington had built. Now she is a senator and she sits in the seat of power that had once rejected her. That's got to be disconcerting to the senators who dismissed her and will now have to deal with her intelligence and expertise on a daily basis.

Maybe trying, and failing, to get Susan Crawford appointed to head the FCC wouldn't be such a bad thing.


Lagniappe:
Synchronicity? While tweeting a link to this post I scanned Crawford's stream for an appropriate hashmark for her candidacy and found the following in a LSU Reville story she'd read and recommended:
In order for the FCC to achieve these new goals, telecommunications companies must look past their immediate shareholder returns and work toward improving the country or competition should be returned to the market in the form of municipal broadband providers, Internet access services that are funded by local governments. 
Lafayette’s LUS Fiber is a municipally owned broadband provider that provides ultra-fast speeds at competitive prices. Since the introduction of LUS Fiber, Lafayette has seen a surge in interest from technology-related companies and Cox Communications, one of the city’s main private providers, has slashed its rates for some across the city, according to USA Today.
She not only gets it; she stays on top of the discussion to the point finding good material in LSU's student newspaper?  Gee.

Monday, February 04, 2013

Business Briefs

Don't usually dig down deep into the business section but here's two business briefs from the Advertiser that might be of interest to readers:
Colorado company moving to Lafayette  
Tapes Again, a company started in Boulder, Colo., more than 20 years ago is moving to Lafayette next month. The decision to move is attributed to the bandwidth capacity available in Lafayette through LUS Fiber, according to a news release. 
The company's clients include musicians and others that have a need for media reproduction and packaging. Much of the company's interactions are through the internet, so the time that it takes to upload and download large files has a direct impact on daily production schedules.
That's a pretty natural fit: music and bandwidth.

The second short announces CajunCodeFest 2, with an emphasis on healthcare. The best bits:
The Center for Business & Information Technologies at the University of Louisiana at Lafayette is seeking innovative thinkers and programmers of all types that want to change the world and improve health care outcomes....Participants will organize themselves into teams, and for 27 hours will build prototypes and tools for improved health care....
The first-place team will receive $25,000. Additional prizes will be announced in coming weeks as sponsors are confirmed. All participants must register. Registration is free, but space is limited. For more details, visit cajuncodefest.org, email info@cajuncodefest.org or call 337-482-0627.

Cox Boosts Speeds, Offers 150 Mbps - 5, 25, 50 and 150 Mbps Flavors

BroadbandReports reports that Cox has radically raised its speeds; effectively lowering its price for internet access. A quick check of "Louisiana" Cox site reveals that it has done so in the Greater Louisiana market (New Orleans—Baton Rouge—Lafayette) as well.

Cox gets serious about the internet
Here's the monthly prices Cox is offering in Louisiana as of January 2013 and a comparison to the 2012 speeds and prices:

  • Essential: 5 Mbps down, 1 Mbps up @ $44, in Jan. '12: 3 Mbps/384 Kpbs @ $39
  • Preferred: 25 Mbps down, 5 Mbps up @ $56, in Jan. '12: 15/1.5 Mbps @ $53
  • Premiere: 50 Mbps down, 10 Mbps up @ $68, in Jan. '12: 25/2.5Mbps @ $65
  • Ultimate: 150 Mbps down, 50 Mbps up @ $100, in Jan. '12: 50/5Mbps @ $95
My snap judgment is that in jumping their speeds in this way Cox is declaring itself first an internet service provider and then a cable company in a solid way. All the cable companies have been making noises in that direction. And the "noise" is well-founded; providing internet service is much more profitable these days than providing cable; the time is past to begin acting like it. These speeds say that we are willing to take the hit on the cable side; we are willing to run the risk that cord-cutters will drop cable or scale back on their packages if we give them fast, affordable internet. It says that even with the limited competition we have we want to go after those few residential and business customers that might choose DSL or wireless in lieu of our landline internet product; we are more worried about losing internet customers to other competitors than we are worried about cannibalizing our own much less profitable cable video product. That's smart.

Then, right after that adulatory snap judgment the cynic in me rears his head: The dirty little secret in broadband provisioning is that the cost of provisioning a 100 extra megs to a formerly 50 meg household is minuscule. It really hardly effects the bottom line at all. Above about 15 or 20 megs adding more potential speed only very occasionally serves to significantly limit the bandwidth use any individual household uses. This is probably less true for businesses but even there I'd imagine that 50 megs is the limit for all but really large businesses engaged in a very narrow range of video or graphic business lines. The cynic says they've run the numbers and watched previous "bumps" in speed very closely. Cox no doubt knows that few people notice actual differences in their experience and even fewer bother to change the tier they have purchased to a newer less costly but only possibly adequate level of service. It is all about the first purchase decision and ARPU. That's Average Revenue Per Unit. (You are the unit.) They need to ensure that their average income per "unit" doesn't go down—and they've cleverly arranged to do little damage to that sacred number. Notice that in my list above that no one who purchased a particular tier last year would be getting better service than they thought they needed a year ago. The tiers are carefully arranged so that downgrading your speed doesn't actually give your a better experience than you wanted a year ago.  Yes, that's probably smart too.

It's smart whether you are a fan of or a cynic about Cox Communications.

LUS Fiber: How does this effect Lafayette?
It means that for the first time LUS Fiber has real competition for their internet product. That is, it has real competition for the most important and profitable leg of the triple play of internet, cable, and phone services. LUS, much more dramatically than Cox, needs to ensure that it doesn't lose customers and that it sustains its current ARPU. LUS Fiber is still pushing to move from cash flow positive to fully profitable.

Still, there is no question but that LUS Fiber must respond.

[Yes, I know, LUS Fiber is NOT offering the same product as Cox and, frankly, LUS' service is superior even aside its speed. Yes, LUS offers symmetrical bandwidth: yes, the service is more reliable; yes, jitter and latency are stunningly low. Yes, price per meg has been lower. Yes, we have a nifty 100 mbps between each of us. But those, to be frank, are geek issues. Perhaps they should be important to regular folks since they make a noticeable difference in user experience. But right now these matter to only to the few. Simple speed and the cost differential between tiers are what reasonable but untutored folks base their decisions on. Even more: LUS is community owned and controlled. The money you spend with LUS stays to enrich our community and build our capacity, not Atlanta's. That probably matters to more people than jitter; but it doesn't allow LUS to stand pat.]

It seems to me that LUS has little choice but to respond strongly. It must regain its leadership in the crucial internet portion of its business, and maintain its promise to the community to offer cheaper services than the competition. What might that look like?

Here are the figures for LUS Fiber a year ago and today:
  • Jan. 2013 3x3 for $20 (only with a special intro package); Jan:12 no equivalent
  • Jan. 2013: 15x15 for $35; Jan '12:  Fast 10/10 for $29
  • Jan. 2013: 40x40 for $50; Jan '12:  Turbo 30/30 for $45
  • Jan. 2013: 75x75 for $100; Jan '12:  Extreme 50/50 for $58
  • Jan. 2013: 100x100 for $200; Jan '12: Ultra Extreme  100/100 for $200

What you'll notice is that tier for tier, after the name and speed changes LUS had restructured its tiers so that each of the "real" tiers it has actually raised prices (except for the 100x100 speed) even if it also reduced the price per megabyte. Though only new customers have to buy the new tiers (old ones could stay with the old tiers and prices) this had the effect of likely raising the ARPU.

This time we'll have to take a page from Cox's book, at the minimum they need to raise speeds in a way that beats Cox but does the least potential damage to their ARPU. More on the morrow as I reason that through. But suffice it to say: LUS Fiber has been issued its first real challenge.