“People want broadband service by local provider”

In what is at least partially a response to Tim Supple’s recent guest editorial a letter in today’s Advertiser lays out a clean set of reasons for not handing over Lafayette’s investment and potential income to private companies who have been unwilling to build this infrastructure for themselves:

I disagree with the claim that folks don’t care who provides their fiber services, or that we should provide an “open infrastructure” to allow Cox and BellSouth to further profit from taxpayer dollars…

Both Cox and Bellsouth have truckloads of cash to build their own fiber systems. They don’t, because they don’t have to. They’d rather wait around and force us to spend our tax dollars, then waltz in and demand access to our network, to offer the same service they are now unwilling to provide.

This is but a preview of the sort of reaction that I suspect would be widespread if the city tried to change over to a “public/private” deal from the setup the people approved. I have to say that I share this reservation. I didn’t work for a municipal network in order to make it easier for outsiders to take more profit out of this community.

Consider this: Were an “open systems” scenario in place I wouldn’t expect Cox and BellSouth to participate–at first. But we are rapidly moving toward a Downloadable Television (DV) alternative that will radically alter their current business model.

Just this week Apple started selling major movies on iTunes. Pay close attention to this move; it has an interesting and important history behind it. Apple revolutionized the “album” market–by destroying it. People now talk in terms of owning songs, not albums. Much of what is offered on iTunes these days has never been on an album and doesn’t resemble songs that could have made it to market in the days that a few big record companies controlled the channel to our ears. Every little band that wants to can post it best songs to iTunes and more and more do so. Or you can download podcasts and video podcasts. Or audio books. Or a buncha other hard-to-describe bits of alternative media. The album market is dying and the the companies that sat astride the narrow channel that controlled distribution are facing a bleak future.

It is not hard to predict that something very similar will happen with TV channels and the broadcast/cable model of video. DT is coming and TV will die. Expect, as with the “album” market, the new distribution system to spawn more and different sorts of video, some of which you pay the producers for directly and some of which are free. If you’ve not check in to things like youTube and various sites providing channels streams (for example BBC or al Jazeera) do so. You’ll see the face of the emerging alternative to the TV model.

Companies like Cox that depend upon controlling your access to “channels” will have to adapt or die.

When that day comes the new services will depend upon intermittent access to huge bandwidth and easy IP-based integration into a plethora of other new services that are unrestricted by carrier meddling. LUS, or rather LUS,’ network will be in the catbird seat.

On that day Cox (and BellSouth) will be eager to take advantage of our network to provide lucrative high-end services that its own network cannot support. If we put ourselves in the position of in effect “subsidizing” that service what will they do with their low-end network in our town? They will surely use it to undercut the old-fashioned cable service that LUS will be offering to those folks who continue to want “TV.” That market will continue to be essential in paying back the bonds for our fiber.

Lafayette would be providing a refuge for competitors that would subsidize their competition on the high end while giving them every incentive to engage in predatory pricing on the low end.

This does not make good business sense–or good public policy. Richard Thornton is right.