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Lafayette Dealing with Expected Headaches
Competitors will pay less for programming than you do, and in turn play hard ball by lowering rates for customers. Good luck keeping up with technological advances, expansion needs and growth costs; it's a risky proposition for a public entity used to maintaining rather than adapting. Your opportunities will be limited because you can't provide services outside the city limits. You'll be criticized for offering programming such as adult movies, and you'll be told you really should be focusing on your core business: running power, water and wastewater plants.Terry Huval delivered that message in 2000, long before Lafayette committed to building their community fiber network -- a network that delivers some of the fastest speeds in the nation at the lowest rates and has already delivered hundreds of jobs. Nonetheless, LUS Fiber is behind the take rate goals they had set in the business plan. The expenses are higher than forecast because Lafayette was unfairly denied entry to a coop that secures lowers rates for television contracts for members. The only discernible reason for rejecting Lafayette is that Cox joined the coop after Lafayette committed to building its network. There is little doubt that Cox was influential in denying Lafayette's application, likely increasing LUS Fiber expenses for offering cable channels by more than 20%. This is just one of the many ways that the telecommunications market is rigged to benefit incumbents at the expense of all of us -- residents and small businesses alike. We will not have real choices in competition until government policy treats telecom like the essential infrastructure it is. Mike Stagg, a long time supporter of the network is quoted in the article, challenging LUS Fiber to improve its marketing:
Can they do better? Probably so. Part of it is the fact that, just from a mindset standpoint, LUS is a utility and utilities generally do not compete," Stagg said. "I think that has been an issue that they have had to grapple with and can get better at. I think there was just this perception inside LUS that everybody knew about the service and how good it was. But they didn't. I just don't think they have been aggressive enough as marketers in pushing their service and highlighting the advantages. They have a great price. There are no tricks in it. It's straightforward. You can't live anywhere else in the U.S. and get this kind of bandwidth."Marketing can be very difficult, particularly for public entities that are not used to revising their approach on a regular basis to quickly fix what goes wrong and improve upon what works. Big companies like Cox will saturate the market with advertising and promotional rates - communities have to find their own ways of responding by capitalizing both on their technical advantages as well as being the local provider with better customer service and non-gimmick pricing. The "crossroads" article is odd because the "crossroads" is somewhat a headline fabrication, as explained by John at Lafayette Pro Fiber.
The theme of the front page story, LUS Fiber at a crossroads, is that some sort of decision needs to be made soon about whether or not to commit to the project or dump it. But nothing in the story itself warrants such a theme. There's nothing in the story that should make any reasonable reader think LUS Fiber is anywhere near failure and plenty of evidence that it is over the hump and is well on its way to success in what is hugely capital intensive business that nobody ever thought would make money in the first years. But more to the point: frankly the choice of whether or not to go forward has already been made: back on July 16th, 2005 when the citizens voted in the new public utility. The community now has the system that the citizens wanted. The discussion is no longer about "whether;" the discussion is now only about how to make sure it succeeds—and having succeeded how to make sure it is run so as to most fully benefit the community. Those are not trivial questions and I don't intend to underplay them. But pretending that there might be a choice, well, it might make a better headline but it doesn't help inform the real project at hand.We recently evaluated the LUS evaluation and our conclusion has been that while it has not fulfilled all of its high expectations, it has greatly benefited the community already. Sometimes we have to remember why Lafayette built this network. Once again, John reminds us:
What's disappointing is the claim that the system is rudderless, that it lacks clear goals. That's just silly. Of course it has a clear purpose and one that its leaders clearly honor:LUS Fiber is a public utility and its purpose is to put an essential service under the control of the community, to provide a first rate example of the service, and to provide it as cheaply as it is possible. That is i's fundamental purpose and I submit that there is no question but that it is meeting that standard. LUS Fiber is, for every service, cheaper than the private alternative. It is available to each and every citizen of the city; something no private provider would promise. The services are high quality—the video and phone services are at least as good as the former monopolies and the internet is unarguably not only cheaper but better.And another recent article in Lafayette reminds us that Lafayette's build has come during a debilitating recession:
Rosenbalm [President of BVU, which operates a muni fiber network in southwest Virginia] said LUS Fiber's struggles as a new business venture were likely multiplied by the fact that the system launched during the worst economic time in recent memory. Although Lafayette did not feel the effects of the recession as strongly as other parts of the country, there was an impact that may have led to some potential customers opting not to change, or that affected price points. "You've been through, arguably, the second-worst economic time in the history of this country," Rosenbalm said. "They came into the business at a tough time, and the early years are hard within themselves. They just have to keep pushing though, and I think their growth from here on will be far more than it has been already."These networks are very hard to build -- especially in the first 3-4 years. While it is important to ask tough questions and ensure the project is on track to meet community expectations, it is also important to take a broad view of the network's impact. The network has lowered prices, created jobs, improved access to education, and many second, third, and fourth order effects. LUS should take a hard look at its business processes to make sure it is sufficiently nimble to operate against an opponent unafraid of fighting dirty. But it should also make sure that someone is telling the LUS story. Where are the charts showing community savings as a result of more competition? Who is shouting out the success stories? Who is calculating how much more money stays in Cajun Country because it goes to Lafayette Utilities rather than Cox Communications? This isn't just LUS's responsibility -- after all, it is a community network.
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