Broadband on the Bayou
By Vladimir Posted in User Blogs — Comments (8) / Email this page » / Leave a comment »
The municipally-owned utility in Lafayette, LA (pop. 110,000 give or take) has proposed a "Fiber to the Home" project that would connect all of the city's homes and businesses to a municipally-owned fiber-optic network. Lafayette Utility Systems (LUS) currently provides water, sewer, and electric service to virtually all of the city's residents. Their proposal would extend their offerings to voice, internet, and cable.
Socialism? Gee, I dunno.
PRO:
CON:
A vote is scheduled for Saturday, July 16.The initiative is led by Republican Joey Durel, Mayor/President of the Lafayette City-Parish Council. It is opposed by BellSouth and Cox Communications, the local telephone and cable TV providers, and by citizens who fear that the ultimate $120 million pricetag is more than the city can bear.
As a lifelong conservative Republican, of course I had my concerns about government intrusion in an area that we would all be more comfortable leaving to free enterprise.
Given our local situation, I've come around to supporting the LUS proposal. I'll leave it to the above links to debate the pros and cons, but these are the points that Mr. Durel has made that resonate with me:
- LUS is municipally owned because it had to be. 100 years ago, local leaders brought electricity to what was then a small country town a generation before private capital would have.
With LUS, all of the control and all of the decisions are local.
LUS provides water, sewer and power with relatively few complaints. Broadband is just another form of infrastructure.
LUS is a cash cow for the city (it sells wholesale power to other utilities). As such, it can back the required bonded indebtedness with its cash flow over a 30 year span. (The full $120 million cost only comes into play if the project is a roaring success.) By contrast, private capital will be looking for a near-term payout, so their economics are very different. (So far, the current providers have offered to run a lower-speed broadband "to the curb" to selected neighborhoods, a proposal which would probably leave out less affluent neighborhoods.)
It's easy to confuse "private capital with a monopoly" with "free enterprise". The local information monopolies' #1 priority is the protection of their monopoly status: they have done everything in their power to freeze out competition. As a customer, I'm extremely skeptical that they have my, or my community's, best interest among their top 5 priorities. Despite BellSouth and Cox's PR to the contrary, the initiative would never have gotten off the ground in this very conservative community if they had been more proactive about bringing higher technology communication services to the area.
A prominent tool of the opposition to the initiative is an obnoxious "push-poll" whose financial sponsor has yet to be publicly identified. It suggests, among other things, that LUS might ration phone service just like it rations water during a dry spell.
Probably most important to me, the LUS plan offers job growth. Maybe its a thread of a whisper of a prayer of job growth, but compared to what we've got now, it looks pretty good. {The template is the experience of Cedar Falls, IA (with a 10-year-old municipally-owned broadband system) vs Waterloo, IA (separated by a river, but with private information services). Job growth in Cedar Falls has been robust, outstripping Waterloo.} Louisiana's #1 issue is lack of job growth and outmigration; thousands of high-tech (and highly salaried) oil industry jobs have been lost to Houston in the last 20 years. Broadband just might make us competitive again.
Am I conflicted? You bet! This is a case of a medium-sized community struggling not to become a complete backwater in the information age. In my judgment, the current information providers will not offer a way out, and for that reason, the Fiber to the Home initiative has my vote on July 16. If RedState decides to brand me a socialist & ban me for life, I understand.
by the customers may be there, but the concentration of homes/businesses may not be. What I mean is that the people may be willing and able to pay the higher cost for high speed internet, but Bellsouth/cox may not be willing to update the infrastructure because the cost to do so is high and the time to recoup the cost is too long. In densely populated areas the cost per customer is lower than in less densely populated areas. Companies are hesitant to invest in upgrades that may take years/decades to pay off as in comparison to months/years. Arguably high speed internet lines are the same as basic electric lines in rural areas.
I have a relative who lives about 10 minutes from me. I have had high speed internet since I moved into my house. He has lived in his longer than I have and he still has no clue when high speed internet will even be an option for him. He would love to have it, and is willing to pay, but none of the companies wants to upgrade the lines to the area he lives in. He has called both the cable and phone providers about high speed service and both refuse to tell him when or even if lines might be upgraded to his house.
I guess I should have read the original post a bit more closely and noticed the population of Lafayette, but that doesn't change the basic argument I laid out in my post.
I didn't say that particular companies would jump in. I said someone could.
If government can start a new ISP from scratch, private business can, too (well, I have heard things about Louisiana corruption, and that might make it hard to start a business, but that'd hardly be a defense for growing government).
However, if the geography or concentration of interested parties would make the service too expensive to be worth the investment, then you just made my point. This is a simple case of taking money from some people in order to fund a pet project of others who are unable or unwilling to pay for it themselves.
The fact that some big businesses are not able or not willing to move quickly doesn't change anything, either. If you really want the service, pay for it. Go get a T1 or ISDN line or something. Don't expect your neighbors to pay for it for you, I say.
The fiber service is planned as a pilot in a few neighborhoods. Signing up will not be forced on anyone; they can stay with their current providers. Projected cost of the bundled services from LUS is 15-20% below current private rates, consistent with the experience from Cedar Falls/Waterloo.
Daetien's comments are right on point. Small to medium sized communities will always be overlooked by private investors because of population density.
Private capital "could have" built the interstate highway system, too, but it didn't because it wasn't "worth it". Governments can finance projects over 30-40 years because they don't have to be concerned with payouts and rates of return.
Of course the public at large will be paying for this. Where is the money coming from that will pay for running the lines?
How are they able to charge 20% below private rates?
It's because this is all goverment subsidy.
No socialism for me, thank you.
I am rural (much more rural than any size town) and there is no one offering to even run a decent phone line into my area (as I mentioned before, my speed is 14,400 bps, sigh). However, we will be getting WiFi within the next month (YEAH!!!!) and it will only be $40 per month, after an initial cost of about $140.
The way I understand it, it is even faster than DSL or cable. Is there something I'm missing as to why any small town wouldn't go this way?
but my impression is that the speed of WiFi suffers with volume. DSL and cable are already available locally. The selling point of fiber is an order of magnitude more bandwidth, 100Mbps.
Another point: as the local electricity provider, the utility already owns the rights-of-way, a significant barrier of entry to any newcomer.
If this project really were popular, it could be done privately. If the market were there, someone could jump in and fill the need.
There isn't one, though. Clearly, for whatever reason, people aren't able or willing to pay for such expensive internet access.
So, government is stepping in, and making people pay for it anyway. Wheee.