LUS Fiber Financials Covered in Local Media (and more)

I posted earlier about the LUS Fiber budget hearing yesterday. There I focused on the annoying return of the idea that LUS was (somehow) being subsidized — I suspected that Patin had successfully revived a truly dumb idea. Credit where credit is due: Neither the Advertiser nor the Advocate‘s reporters chose to take the bait and emphasize that foolishness. Instead they largely reported on the issues raised by the Councillors and Tim Supple. Take a look at both articles, they are worth the read though, frankly, the Advocate is better on the technicals possibly because Burgess was here during the fiber fight and has a deeper background.

Executive Summary: LUS’ financials are confusing. Financials just are confusing. Always. But LUS Fiber, being a semi-autonomous arm of the semi-autonomous LUS utilities (which is owned by the city but semi-run by the city-parish) is especially confusing. This is exacerbated by a sick state law designed to raise the prices that customers pay that causes LUS Fiber to give money to LUS utilities so that LUS utilities can loan it back to LUS Fiber—at interest. (Which means there is a subsidy: of LUS utilities; not the other way around.) Got it? Confused yet? Anyway:

The Important Stuff: LUS Fiber is doing ok, not great but ok. The “ok” part can be seen by its more than doubling its installed base in the last year; recent statements by Huval confirm that the utility has made over the bump and has the minimum number of users to break even. The “not great” part is due to the fact that it’s not meeting the rosy projections of a 2004 feasibility report that had predicted that LUS would be doing better than just ok, that they would be doing great by this point in the rollout. (The feasibility study was always sketchy and clearly a political document. See my first two blog posts on this issue. #1, #2)

Extras from my Notes: Caution: This is for the dedicated few who’d like a little more on the two and and a half hour session than a dry newspaper article has space for or fits the newspapers’ idea of a budget meeting story.

Attendance: Theriot, Patin, Boudreaux (presiding) Shelvin (late), Castille,  Morrison Conspicuous by his absence: Don Bertrand who was a leader in the fight for fiber and certainly has a better understanding of all matters concerning LUS Fiber than any of fellow councilmen.  His participation would have really helped the rest of the council make sense of the arcane parts of the presentation—some of the questions asked showed a real lack of understanding.

Overall: Part of the confusion that reigned during the presentations was due to a new computer financials program and a new, much more extensive report format that was presented to the council. It was apparent that some had only read (at most) the summary sections and it showed in their questions. LUS Fiber is a big, new, different, retail establishment for the C-P to keep track of and understand and Toups seemed to feel that she was only just getting hold of it all.

Conservative Borrowing: A couple of times during the presentations it was apparent that part of the reason that LUS’ numbers were tight was because LUS was being…tight. One example came up when Shelvin asked whether it would all look better right now if LUS had taken the whole 125 million authorized by the voters instead of only bonding out 110 million dollars. Huval hemmed, hawed, and said that they just didn’t want to borrow more than they really needed. This was in the context of LUS having not yet taken the in-organization loan of 5.5 million that the council authorized. A lot of the noise we are hearing now is a direct consequence of LUS Fiber deciding to make do with the very least borrowing they can get by with.

Competition: LUS estimates that the citizens of the community have saved 5.7 million dollars—in part direct saving from LUS’ cheaper phone, video, and internet services and in part as a consequence of Cox lowering its prices and giving out special rates. Those special rates were discussed in the meeting with Huval pointing out that Cox had petitioned for and received permission to treat Lafayette as a “competitive” area. That meant that Cox could offer special deals to Lafayette users and, as we all know, has offered cuts to anyone who tries to leave. Those “deals.” as Huval pointed out to Patin don’t include the rural areas of the parish where Cox has no competition.

Coalitions: Intriguingly coalitions with other communities that have fiber were mentioned and Terry indicated that this was involved positive attention from the White House. I’m pretty sure that this is the US Ignite project—a project initiated by the administration that will bring together communities that have next-generation fiber projects. Conceivably this could be a “big thing” and bring ideas, financing, and lend emphasis to the movement to develop big bandwidth applications that could be used across these communities. Lafayette’s own FiberCorp has been a player in this effort.

Refer a Friend: LUS begins Social Marketing Push

Ok, now that’s what I’ve been wanting to see! LUS has begun a real marketing push that leverages its home town advantage.

The “Refer a Friend” program recently launched by email announcements to current subscribers and promoted on the web offers both current subscribers and their new subscriber friends 50 dollars each time a friend joins up…

It’s brilliant. Folks who’ve got the service are always the best advertising…and are already doing most of the marketing that’s getting done. (Notice the distinct lack of LUS media marketing to date? I have. Where are they getting their good numbers? From the word of mouth of friends and neighbors…) This puts a little juice into the deal and rewards those who are advocates of the local service.

If I were LUS I’d do two things: 1) blast this from billboards and 2) emphasize the local angle even more. It’s our network. Everyone who comes on is one more person who’s making our network a success…as more and more of the community comes aboard the cost per each user drops, we pay back the bond holders quicker and LUS can lower our prices yet more. It’s a good deal all around. And the 50 bucks deal is just a good example of the larger process: we all save when our friends and neighbors join up and support the community resource.

P.S.: Anyone need a friend? 😉

“LUS sacks Cox with Saints vs. Cowboys game”

From the Independent blog:

“If you’re paying $39.95 a month for LUS’ 83-channel expanded basic cable service, breathe a sigh of relief. You’ll watch the undefeated Saints take on the Dallas Cowboys (8-5) on Channel 38 Saturday night at 7:20 p.m. But if you’re one of Cox Communications’ approximately 100,000 Acadiana customers who subscribes to expanded basic, 72 channels for $52.99 per month, it’s going to cost you more.”

Couldn’t have said it better myself. —You can sign up with the local guys or you can pay more for less and still not get what you want from Cox. It’s a choice that ought to be easy. What do you think Lafayette?

The Saints Mania that has taken hold here (and across south Lousiana) has made people more than a little crazy and I’ve got email this week asking whether LUS will have the game. I had a hard time understanding what folks were anxious about since it is on expanded basic, and expanded basic is pretty much the default level for most folks. Now that I see that Cox is only carrying it on a more expensive tier I have to suspect that the truly fanatic were hearing about that and worried that the same would be true of LUS…there was a big blow-up in the Baton Rouge media earlier this week and apparently Cox worked hard at getting it set up there even though BR wouldn’t normally be allowed to see it. I’m sure they’d like to have been able to do the same in Lafayette—if only to avoid the unfavorable contrast with LUS Fiber.

It’s not really just about this game and single, immensely popular show…it is more about the contrasting corporate policies that Cox and LUS Fiber pursue. Cox has, time and again, moved “must have” weather, French language, TV guide, and sports channels off the basic tiers and pushed them up into the upper, more costly, tiers in unpopular if financially understandable, moves. After all they are in it to make money for their owners. LUS Fiber, on the other hand, really doesn’t have nearly the same pressure to “upsell” its customers since those customers are its owners. Keeping your owners happy means entirely different things to a large corporation and small town utility.

And that’s the real lesson of this story.

WBS: Lafayette Attracts Talk

WBS Dept. In my catchup from being in B.R. series…two more

One of the more interesting (and, ok, personally gratifying) things that have resulted from the fiber fight and the creation of LUS Fiber is that Lafayette has gotten a pretty iconic status in the admittedly small (select?) world of high speed internet mavens. Lafayette is seen as something of a touch-stone…people watch and people compare what they’re getting to Lafayette.

People watching includes Benoit Felten in France who runs a well-respected fiber-oriented blog called Fiberevolution. Benoit’s day job is as an analyst tracking this sort of thing in Europe for the Yankee Group so he’s pretty much up on this stuff. After reading the recent Ind article he says:

When I look at the delays of the French commercial FTTH deployments, what LUS is facing is, at this stage, fairly insignificant and certainly doesn’t seem to compromise the operation (despite what a number of telco/cable lobbyists seem to be implying if I read the comments below the article…)

Those comments are not from lobbyists—they are just lobbyist-inspired…

Lafayette also comes up on dslreports when Cox launches its 50/5 meg package in Arizona. The news is, that for the first time, someone else is getting the 1/3 off deal Cox gave Lafayette when it launched the new tier. From the write-up:

Cox is offering the service in Arizona for $90 for the first year, the same low price they’re offering customers in Lafayette, Loisiana, [sic] where Cox does battle with dirt cheap municipal fiber. Other markets aren’t so lucky, with customers in Northern Virginia paying $140 for the tier, and customers in Rhode Island paying $145. Behold the benefit of actually having competition in your local market.

Qwest, the west’s equivalent of AT&T or Verizon, recently launched a fast new 40/4 mbps tier at a cheap $99.99 and the new service, and lower price are responses to that development. —Cox’s deployment strategy with its new 50/5 meg tier seems to be reactive rather than proactive. It offers the tier where it has competition that is much faster than its regular offerings and only lowers the price where the regional competitor has a much-cheaper-than-US-standard pricing structure.

Set Top Box Follies: Cox and LUS

The executive summary: Cox is acting like Cox.

The short version: LUS has asked for an exemption from an FCC rule mandating the use of cable cards in set top boxes. Cox, joined by the Consumer Electronics Association, objects.

The essence: Cox would like to throw a kink, into, to again delay if possible (or to impose additional costs on LUS if it is not) Lafayette’s FTTH project by using the FCC to force LUS to deploy technology that doesn’t exist. It seems, I suppose, like an clever way to try and use the feds to cause trouble for a competitor. The bitter irony is that the technology doesn’t exist largely because Cox and its cable brethren have refused to obey the law and develop the technology to comply with what Congress mandated 14 years ago.

If none of those short versions satisfies you’re going to have to settle in for a long, history-laden tale replete with bureaucratic battles, crippled 3rd party set top boxes, a long, successful rear-guard action by incumbents determined to keep consumers from controlling the boxes attached to their cable network and dueling technologies favored by self-interested players in a three-sided match-up. It’s one of those stories that nakedly reveals “the way things really work” in a way that doesn’t say much good about any of the major players.

Ok, first there is the cast of characters:

  • FCC: the federal communications commissions playing the part of the pitiful big guy all the tougher kids enjoy messing with.
  • The Telephone Companies: playing the confident old-timer with generations of home field advantage; the telcos have traditionally dominated the FCC game, but breaking into the video big time with IPTV-based set top boxes instead of the older cable tech requires all their lawyer’s talents.
  • The Cable Companies: playing the fiesty tough kid from the sticks the cablecos have fought a successful delaying action against federal regulations that try to impose teleco-like requirements that would allow mere consumers to attach their own devices to the tough kids’ network—and rob those tough guys of their traditional set top box charges.
  • The Consumer Electronics Association has wandered in from left field wanting to make sure that the big consumer electronics companies have a big single, unified market for set top boxes that keeps them from having to develop separate toys to control satellite, cable, and telco video set top boxes.

oh and:

  • LUS, the lonely little new kid on the block in the supporting role of the outsider whose seemingly innocuous question sets off a major battle. (This is the character whose fate is so unimportant to the plot that it’s never resolved…and only the friends and family of the actor notice.)

The background story, the setup for the latest battle:
Gather round kiddies, this story goes back to that dim time before the internet, 40 years ago, a time when things were different…Back then the FCC actually had the power and the will to break up huge monopolies like AT&T (really, it was broken up before the modern FCC midwifed in its rebirth). This all starts with the almost mythological Carterphone: a device that was to morph into the analog sound-based “modulate/demodulate” device that in turn became the digital modem of recent history. That’s right sprouts: without the Carterphone there would be no internet for anyone today. And we almost didn’t get the Carterphone. I won’t tell the long version of the story (but it’s a goodun.) What interests us today is that the FCC told the telcos that they had to let any device connect to the telephone network as long as it didn’t damage the network. Ma Bell (what we used to call AT&T) howled. But the FCC stood its ground and soon all manner of phones that hung on the wall or had push buttons, or were wireless, or were pink replaced the phone company’s black table-top rotary-dial ringer that had produced such a nice steady stream of income for Ma Bell. Though nobody knew it then the internet and VOIP and all manner of things that were to humble the once-invincible phone company flowed from that single brave decision to tell the phone company that it was only the owner of the network and had no right to tell legitimate users how they used the connection they bought.

—No, nobody knew back then but the story is oft-retold now… and the fiesty cable guys who’d once been little local municipal video providers but had coelesced into monopolies fully capable of taking on the telcos—and the sadly diminished FCC knew the implications of the Carterphone decision. And they had no intention of losing control of their network to consumers the way that the old AT&T had. Back in 1996, at the dawn of the internet era when the country was flush with enthusiasm for the new communications network, Congress passed a new telecom act which among other things, tried to reproduce the success of Carterphone by requiring that cable companies open their lines as well and specifically that they allow

“other converter boxes, interactive communications equipment, and other equipment used by consumers to access multichannel video programming and other services offered over multichannel video programming systems, from manufacturers, retailers, and other vendors not affiliated with any multichannel video programming distributor.”

In other words, Carterphone for cable. Congress passed the task of enforcement off to the FCC confident that they had done their part to insure a brighter future and turned to confusing other issues. Alas, the FCC of 1996 was not the FCC of their grandfathers and, long story short: this never really happened. The cable companies successfully argued that they had to retain control of “security” and the FCC responded by requiring that the necessary proprietary security be separated from the rest of the box and located in a device that could be used in either the cable company’s or a third party company’s box. The cable card. Delay followed delay. The FCC’s enforcement was pitiful indeed. So pitiful that it tolerated delays that meant that the first generation of cable cards was outdated by the time it was available and cable has still approve a card that is able to give third party producers access to their networks. This dithering about had damaging consequences: it left the producers of products that were clearly superior (in that people were really willing to pay for them); products that had usable interfaces and pioneered Digital Video Recording either bankrupt (Replay) or barely hanging on (TiVo).

Fourteen years later the FCC rule still stands and nobody is expected to actually follow it. Everybody has garnered an exception of one sort or another. All the players have their own version renewed occasionally on ever-varying grounds. The only constant is that the networks have never had to let their customers attach the equivalent of shiny new pink digital phones to their networks.

The consequence is that the much-anticipated digital convergence still hasn’t happened. You can’t surf the internet on your TV (well, there is an exception we’ll get to), you can’t do video telephony using your TV as a monitor, setting up recordings over the net or from your smart phone remains an uber-geek activity….and on. We could have used a cable version of the Carterphone. Instead what we got was a slightly faster version of the same access that the telephone companies had been forced to accept over their lines designed for voice. Faster internet, not access to a whole new communications network designed for video and much larger capacities.

The satellite companies never really had to comply with the law—the cable companies successful defense meant that satellite never really had to come up to bat since big brother cable proved capable of fending off the very idea. So satellite got an exception until cable could figure it all out…and cable wasn’t about to. As workable cable cards finally neared market acceptance cable whirled around and managed to get the day put off a bit longer by instituting a new non-hardware based software standard which would be oh-so-much better. They got an extension of their exception to work on that. When the telephone companies finally started to get into the provision of video over their networks it was built on the back of the new internet (the one that their lose in Carterphone days helped create), implemented a version of IPTV—and taking a leaf from the well-worn book of cable have claimed that their special technology wasn’t compatible with the old cable-card technology either. And (you see where this is going?) they got their version of an exception.

Who does that leave who does have to comply?

Surely you remember the lonely new kid on the block who asked the uncomfortable question? LUS? Apparently the argument is going to be that LUS should be the only guy in the neighborhood that has to follow the rules. This argument comes from none other than Cox Communications whose own exemption to the rule is still in place. Cox doesn’t argue that the technology exists to allow LUS to follow the rule. (And it doesn’t) Cox just argues that LUS should comply with a rule that it has never, ever, over 14 years done anything but fight itself. Citizens of Lafayette will be amused to learn that they are arguing that they only want to provide a “level playing field.” Again. Like the state’s (un)Fair Competition Act, you can be sure that when Cox says it wants a level playing field what they really mean is that they want the government to impose limits on Lafayette that it has never had to abide by itself. What is fair about asking your small local competition to abide by rules you yourself have successfully evaded? Of course this isn’t about fairness. It’s about advantage. In a halfway sane world the FCC would laugh in the face of an effective monopolist like Cox that tried to impose rules on a brand new competitor coming in from the outside any of the major sectors to provide the very high-speed, fiber-to-the-home, low priced competition that the FCC has been sniveling about wanting for the entire 14 years it has failed to enforce the law….but we don’t live in a halfway sane regulatory environment.

To pile on the insult the latest is that the Consumer Electronics Association (CEA) has weighed in. Understandably frustrated after all these years, all the companies that want to make the magical media devices that record all and control all in your living room have demanded that the FCC quit making exceptions and enforce its rules….on a small municipal provider that is actually providing an innovative, powerful, cheap alternative that the FCC says it wants and that is the model of everything the CEA should hope happens to US broadband. Just for the sake of completeness I should note that each of the three-telco, cable, and CEA–have their own candidates for a new technology to enable video network openness. Each of them would dearly love to control that technology and no one can doubt that the one they’d come up with would 1) advantage them, 2) disadvantage their competitors, and 3) enrich the owners of the tech. Nobody’s hands are clean.

LUS, of course, doesn’t have the wherewithal to develop a new technology itself. The set top box family deployed in Lafayette is apparently the only one that is usable with both the Alcatel equipment the community is using and with IPTV. The fact that the network is all IPTV (translation into analog for analog tier users takes place on the wall of the house) opens up vast new areas for innovation. The 100 meg intranet “campus” is a good example of what a really innovative community-oriented network can do. Neither Cox nor any other cable provider is providing free unthrottled in-network bandwidth to its users. Even more on point: LUS offers our community an internet connection through the IPTV set top box. That the box is natively IP is crucial to that very desireable feature. Subscribers that don’t even own a computer are able to surf the net. That’s something that IP enables…and something, again, that I don’t see that Cox or any of the other guys who have set top boxes have done. Really opening up the set top box is something that Congress was right about. There is huge room for innovation. The FCC’s failure to enforce, and Congress’ failure to provide adequate oversight to see that the nation’s laws are enforced have cost the country dearly.

LUS points out that every other IPTV-using network has already received this waiver and that all they are asking for is the same waiver that Verizon and other established IPTV providers have already secured. To ask new entrants who are actually competing and using the new technology to offer a cheaper, faster, more innovative system is to bear a burden the established corporations do would be stunningly counter-productive.

Let’s hope the FCC can find the courage that the FCC forty years ago had, do the right thing here and refuse to reward the bullying of a large corporation who has evaded the very rule that they hope to impose on a cheaper, local, competitor. A competitor who, incidentally, is actually demonstrating the value of innovation on the set top box that the rule is designed to achieve.


It’d be funny if it weren’t so overburdened with irony.

Those of us who still get a daily newspaper will have been amused by Cox’s latest attempt to “me-too” (“fiber is nothing new” cough, cough) the LUS network’s offerings. As my wife was going through our morning ritual of removing the 3/4 of the paper that is glossy ad inserts and sections we never open out slipped an 8 1/2 x 11 Cox flyer with the screaming bold headline “LUS Fiber HYPE.” The irony, of course, is that the hype and FUD is entirely being performed by Cox. Have you seen any LUS advertising “hyping” —or even promoting— LUS Fiber in the major media yet? I haven’t. And I watch. Now no doubt the day will come when LUS will hype its network. When it is offering the service to a large enough base that it makes sense to advertise in the paper or other local media. But that day has yet to arrive. My guess is that this flier is the best evidence available that LUS’ “controlled roll-out” is beginning to significantly cut into Cox’s base of subscriptions; painfully enough to buy an insert which will be distributed almost solely to people who can’t—Yet—buy LUS services. Now the motivation may be to just try and insert the headline into the “LUS fiber HYPE” into the community unconscious. If so that shows a pretty profound misunderstanding of this community. Cox has played the game of playing fast and loose with truth with Lafayette before and it’s proved embarasssing. Who can forget the disastrous story of the “local blogger T. J. Crawdad” or the infamous “push polls? Even more than embarrassing…folks got to saying tha “you can’t trust anything they say.” This flier is in that (ig)noble tradition.

The thing Cox forgets is that to be truly effective attack advertising has to be true. And it has to be about something that people care about. Otherwise you just end up looking desperate. Cox is hyping its “digital TV,” claiming to have more digital channels than LUS…and is using that hype to sell what’s on the backside of the flyer: it’s lowest triple play tier. For 89.99. For 12 Months.

“It’s a day late and a dollar short” as the old saying goes. You’re supposed to assume that the claim on the front supports the offering on the back. That you’ll get more with Cox’s cheapest “digital TV” offering.

But you won’t.

Take a gander at the slideshow below; it’s from Terry Huvals presentation at the recent (and fantastic) F2C conference. The relevant slides are numbers 31, 32, and 33 which detail the “expanded basic,” “digital basic,” and “digital basic plus” tiers for both companies.

What Cox wants you to buy, on the basis of their claims on the front of the sheet, is the product on the back of the sheet, that 89.99 (for 12 months) sale offering. If you go to Cox’s “Greater Louisiana” website & drill down you’ll get to a page that shows you get their “expanded basic” cable tier with that deal. So surf on over to slide 31 on the display below….

Terry Huval style=”margin: 0px;” width=”425″ height=”355″>

View more presentations from f2c

You’ll see that in truth LUS offers more channels in their lowest tier combo deal than Cox. If that strikes you as strange soldier on to slide 32. There you’ll notice that LUS offers more channels in the middle tier too..only at slide 33 the highest tier do you find Cox offering more channels that LUS. So the (hyped) claims on the front, while not entirely untrue at every level, do not support the product they are selling on the back. A little bait and switch, that.

And LUS’ low tier combo deal is cheaper too: Cox’s “Good” comes in at 89.99 (intro price) vs LUS’ “VIP – $84.85” (allathetime price).

(And, while we’re at it you also get 30 megs up and down with LUS but only 10 megs down and 786 k up… with video shifting to the web and more and more people doing their telephony through 3rd party VOIP that’s going to be more and more significant. I already do a healthy amount of my TV viewing over my shiny new computer-TV hookup.)

Now THATS a National Broadband Plan

Broadband advocates here in the good old US of A have been getting a little giddy at the sight of the federal government’s machinery groaning into low gear to actually start the process of formulating a National Broadband Plan. (Yes, that explains why we haven’t appeared to have a plan. We haven’t.) Why just yesterday we started the planning process. First, in the distantly snide tone only the WSJ can pull off: the FCC “approved a broad set of questions designed to solicit opinions from consumers, telecom companies and state and local governments, to name a few.” The FCC is gearing up to gear up because Congress has delegated to them the task of being the big thinkers on the 7 billion of the stimulus plan dedicated to broadband that is to be administered by bureaus within the Commerce Department and the U.S. Department of Agriculture. The FCC is supposed to devise the “national broadband plan” that will guide the decisions these bureaus make. (It’s all in the law.)

I’ve been feeling pretty hopeful about the process…hey, it’s a start. And a big step up from facing toward Fort Knox, closing our eyes, bowing low, and repeating the mantra “the market” 20 times as a substitute for telecom policy. Now I know that the money is actually being distributed in bureaus elsewhere and the people making those real decisions are all the way across the District of Columbia from the FCC…and it won’t be ready in time to make a difference with the current stimulus money anyway, but still…to have something on the books that is supposed to be rational and comprehensive would be helpful, won’t it? At least a start?

But all that feel-good sorta melted away when Austrailia announced its broadband policy: FTTP; Fiber To The Premise. At 100 megs. For the whole country, or 90% of the population anyway. (The most rural 10% will have to make do with a minimum of 12 megs—but everyone is offered real service.


And the way they’re gonna do it! The government had been negotiating to fulfill a campaign promise to expand broadband access with the incumbents and some foreign corporations who, of course, wanted to be made lords of the domain for the next 50 years or so if they were to deign to do anything very useful. That part sounds familiar. We’ve got campaign promises and lords of the domain too… But the Austrailian government did something that it is hard for Americans to understand: they took a look at the I-want-it-my-way suggestions of the big corporations and grew a spine. They told ’em that they weren’t offering a “good value” in return for the public’s investment and that rather than accept any of their self-serving plans that they’d rather do it themselves.

They announced that they were intending to fund a Australian 43 billion dollar (30 billion USD) National Broadband Network (NBD). The government would get no less than 51% of the company and effective control; private investors would be allowed to buy in to 49% with the previously rejected telecom corps strongly urged to buy in…and to contribute their network assets to pay for their share. Take it or leave it. And if the telcos want to leave it: be aware that the Aussie national government fully intends to issue a new set of regulations enforcing structural separation that would effectively force open access on the current network assets they retain. The new National Broadband Network will be open as well. The old way of doing business is over; there is no comfortable monopoly—vertical or horizontal—to go back to.

Australian broadband advocates are pretty much stunned. (Imagine the US government saying anything remotely like this to Cox, Comcast, AT&T and Verizon? You know: “Take your greedy plans to feed at the public trough and shove it. We can build our own advanced network for the price your asking buddy, thanks plenty.—and by the way, no more local monopoly for you either, we’re going back to real regulation of you guys.” Oh You can’t imagine it? Neither could the Aussies. Until now.)

We in Lafayette are in a particularly good position to see how much sense this all makes. We were happy to build it ourselves when told by the incumbent lords that we did not need and were not competent to run a modern FTTH system ourselves. That system is up and running and serving customers today—and doing so quite well, thanks. Since making that committment we’ve benefited by consistently being spared rate increases placed on other communities and, most recently, by getting a second 50 meg provider (albeit only 50/5) at a price that is 1/3 off what they plan to charge the rest of the country for that speed. And we got that before any of the big markets Cox serves or even the larger cities in our own market. Almost any other part of our country would kill for that sort of service and absolutely no place has it for as little as we pay. It pays to stand up for yourself in public as in private life.

Good on the Aussies. There’s is a real national broadband plan. It will fix what’s really wrong the current system. The current Aussie system, modeled in part after the mistakes we in the US were making, had resulting in a market with even more of the markers of monopoly dominance than ours. Aussie markets were more monopolized. The equiavalent of AT&T/Verizon, the telecom Telestra, was at least as insistent on maintaining its virtically integrated monopoly position and the cable sector was much weaker. Australians paid even more for broadband than Americans and an even smaller percentage of them were capable of getting really world-class speeds.

Going forward this will no longer be true. Australia will have a truly world-class network running at stunning speeds and capable of massive upgrades at minimal costs. Where homes in places where the villages have less than a thousand people don’t have direct fiber they will have fiber-fed wireless. The final few deep in central desert will get satellite at no less that 12 megs. This is a public policy (and a stimulus) that will bear fruit for generations. When people talk about “forward-thinking” this is what ought to be meant.

While we cheer on the Australians (“Go for it, mate!”) we on this continent have to feel a little bummed and whiny. Why can’t we have a rational telecom policy, too? The up side is that the unthinkable is now finally thinkable. An English-speaking continent has taken the plunge and told their teleco monopolists that the current system is broken and then put forward a credible plan for fixing it that doesn’t grovel and plead before of those that have failed them. Maybe we can do the same. Or at least talk about it!

In fact, not all is yet lost on these shores: One of the guiding lights of the Austrailian success was Paul Budde, long an advocate for a smart national plan in Australia. To read his blog these days is a real joy. He’s as stunned as his fellows but is rallying nicely—telling the doubters in one example “Yes, we can!” in a deliberate reference to the hopes for a positive change that are now dominant in the U.S. Even more encouraging is the fact that he’s also been in consultation with the Obama administration since before they took office and has no doubt been an advocate for much of this before our own leaders. I’d guess that until a few days ago his ideas, while judged rational in some sort of ultimate way, were not considered “pragmatic”—a key desiderata for the new administration. That judgment may now have changed. Indeed, on Budde’s blog he remarks in the comments to his well-worth-reading analysis that:

I also received envious but very supportive comments from the Obama Team, they are very interested and several of the experts are eager to participate in our work group to contribute and to learn.

Not to get your hopes up but, perhaps, just perhaps someone here will say: “Yes! We can!”

If you want a bit more, yes I’ve got the fun references: Budde’s Blog, The NYTimes, ZDNet Australia, Tasmania rollout to start in July, The Netherlands: Telecommunications Breakdown, France’s Fiberevolution, or try your own Google News search.

Lagniappe: New Zealand, who recently announced a great plan too, is also jealous now: “Newman said that while the NZ National proposal looked visionary a year ago, it now looks comparatively limp.” Aussie Envy; it’s the latest syndrome to afflict the digerati.

LUS Fiber News Flyer

The Google Internet Machine this morning dredged up what looks to be a promo flyer from LUS Fiber. Since it is not officially released (to my knowledge) it can’t be taken as a promise. But, on the other hand, LUS paid somebody to lay this out professionally so I’m guessing that it represents an honest intention (click the image for a readable image-based version or go for the pdf :

It touts the top 5 reasons to switch:

  1. prices
  2. innovation
  3. customer service
  4. local folks
  5. economic development

The flyer offers details on the service, most familiar but some interestingly specified. For instance HD, Video On Demand (VOD), Pay Per View, and Digital Video recording will apparently all be part of the initial launch. Most innovative is the “Interactive TV Web Portal.” What that, precisely, might be is unclear. It could range from a broad, net-based, google widget-like interface to something more narrowly tied to the IPTV box and its interface. I’ve advocated the former (related) and suspect the latter as this feature is included in the “TV” rather than “internet” box. Remember back in the day when the coming thing was going to be “interactive TV?” Then the web happened. It’ll be fascinating to see how this version works.

The internet portion of the page focuses on the breath-taking speed—both to the internet and within our unique intranet. LUS Fiber will also promote a competitive array of email addresses, online storage, webmail access, and personal webspace. I, like Mike, have been bumping up against bandwidth constraints recently and I am looking forward to LUS’ speeds.

All in all an interesting peek into the near future.

Home Networking, Verizon, and Lafayette

Food For Thought Department
[What follows is lengthy and starts out with arcana but I think the implications are significant—perhaps especially for Lafayette. I ask that you stay with me…]

According to TelephonyOnline Verizon is radically upgrading the gateways it installs in homes served by the fiber-to-the home-based FIOS service. —FIOS customers can buy a triple play internet/cable/phone package from Verizon based on technology that is very similar to that being constructed in Lafayette by the community’s Lafayette Utility System.

The new in-home devices have a number of interesting characteristics; they will:

  1. bump “speeds over coaxial cable in the home from 75 Mb/s to 175 Mb/s”
  2. “have double the processing power” compared to the current gateways
  3. allow “users to create up to four separate wireless networks, each with different security settings”
  4. allow “remote Verizon technician management”

Understand that an upgrade like this is costly. Customer Premise Equipment (CPE) is costly. Putting a piece of relatively pricey equipment in every home (on top of the set-top boxes you’ve installed for video and any VOIP equipment) really adds up. CPE is where every company tries to pinch pennies and extend the life of its equipment. So upgrades are rare. And they are never done without a damn good reason.

So why would Verizon invest in new hardware with the hopes of using the new capacities in “the next three to four years?”

My best guess: to ride the wave of big bandwidth in the home…Big bandwidth inside the home has recently emerged as an issue. (I’ve just recently caught on. See my recent post, FTTD (Fiber To The Desk, for some background musing on how really big in-home transfer might be accomplished. What Verizon is doing validates the idea but is pretty small potatoes compared to what is coming. Don’t miss the comments–good stuff there.) Verizon clearly thinks that its current model which provides 75 mb/s will prove inadequate for in home use in the next 3-4 years. Pause to let that soak in please: the next 3-4 years. Tomorrow.

That is a near-future time frame. Nobody spends the amount of money that Verizon will spend even gradually moving over to new equipment without a very compelling plan to make back their investment. And Verizon knew what it wanted in these boxes. These are not off-the-shelf pieces; they’ve been designed to Verizon’s specs and the company has contracted two independent providers that meet those specs in order to assure itself of supply.

So the difference between the previous standard and the new equipment should strongly hint at what Verizon thinks folks will do that makes the upgrade pay out. Let’s unwrap those specs looking for clues:

The Analysis
—Faster speed, from 75 to 175 mb/s, means that Verizon is expecting a lot of internal traffic on home networks. That is lot-—especially since Verizon won’t offer you more than 50 megs of connectivity to the internet itself so it’s not video downloads they’re trying to accommodate (of course not 😉 ).

So for what do you need massive amounts of in-home networking speed? Take a gander at the processing power for a partial answer.

—”Doubling the processing power”–if you dig around a bit (1,2) you’ll see that that phrase refers to moving from a 32 bit chip architecture to a dual core 64 bit chip. That’s the way my fancy laptop is built. That’s real processing power even if the clock speed turns out be a bit lower. It allows the onboard computer to coordinate more in-home devices. Most obviously multiple set-top boxes for the cable video service are in the mix; it takes a lot of bandwidth to push HDTV around especially if one or more set top boxes is acting like a DVR/video server and pushing video out to secondary screens. In fact the “doubling” phrase clearly understates the added computational capacity. On top of chip architecture the gateways can serve out eight (8!) Quality of Service (QOS) controlled channels. At a minimum that means that Verizon can push 8 separate protected streams to multiple TVs. But eight seems like more than homes really need. Of course there are Xboxes, and Wiis, and Apple TVs and the like in addition to a raft of reasons that users or companies selling to users might want a protected stream…So eight makes sense. . . If (and only if) you are planning to do something beyond video.

Ok, its faster and more powerful…

—What’s with that feature: allow “users to create up to four separate wireless networks, each with different security settings?” Well, that allows you to set up a buncha different networks, some with QOS, some without, some that are slow, some that are public…..hmmn, whats with that? Again, it seems like overkill for current services. Wireless is hard to maintain for the QOS that video requries. They are probably wisely sticking with wires (coax) for that function given the eight protected streams on the wired side. By any measure the capacity for 12 separated streams is pretty astonishing.

Faster, more powerful, many separate streams, eh?…

—Finally: allow “remote Verizon technician management.” That means that Verizon can modify the thing from their headquarters. That alone isn’t too new—most “modems” can be upgraded by the company or at least reset to clear glitches and given the clearences it needs to access the ISP’s network. But in this context “remote management” surely means the ability for Verizon to enable and assign all those streams and to install some management software or special access codes on unit. And, sell that capacity to third parties who would like to use the in-home network that Verizon’s fancy new gateway creates.

Faster, more powerful, many separate streams, that can be controlled by the network owner…extending its control of the last mile into your rooms.

Chew on that for awhile. I did.

The Conclusion
Some folks might think all these bells and whistles are just over engineering. I can’t believe that a traditional telco like Verizon, one that is already straining its financial capacity to pay for a fiber build, is investing that kind of cash unless they really think this amount of capacity will be valuable to them within 4 years and pay for itself rapidly at that point.

My guess is that Verizon wants to control your home network and all the things that you are shortly going to want to run on it. Things which you might want today if only it weren’t so hard and costly to get the service up and running.

What Verizon wants to sell you directly is only the base. Video and video serving is likely only the beginning from Verizon’s point of view. The corporation has two profit centers currently: data and wireless. (Video shows promise but isn’t there today. Old style telephone lines are shrinking.) Convincing you to buy more data capacity and their wireless service is a proven cash cow. Wireless’s Achilles heel remains coverage and the most persistant irritation. In-house and in-building coverage is a big problem and one that is hard and expensive to solve by popping up more cell towers. The emerging solution is to use “femtocells” —to set up a small base station inside the building that is hooked up to a wired network and provides a mini “tower” that dramatically improves service. An in-home gateway like the ones described could help service and manage the bandwidth and protocols necessary to easily deploy this service to those that need it. And potentially radically reduce expensive customer turn over.

But, as popular as video and wireless retention has to be with the accountants who like old services and guaranteed returns, the real goal is likely broader: providing a platform for other, secure, protected services. Services which people can be sold but for which each provider currently has to figure out how to provison. A truly capable gateway like the ones that are described would let a lot of service providers play without installing their own in-home network and/or controller device.

All Verizon would want is, say, 20% off the top.

And providers would probably find that cheap compared to installing their own network.

Here’s an unordered list of things which would be much more commercially viable if the infrastructure/platform were already installed in the home and could be activated and managed remotely:

  • Gaming can eat local bandwidth too.
  • Virtual Private Networks (VPN).
  • Video telephony and intercomms.
  • A local high school sports “network’s” video stream and pay per view.
  • National professional and college sports “channel” versions of streaming video and downloads direct to your DVR.
  • Sophisticated security networks and security cameras.
  • “Telepresence” and other video conferencing/telephony.
  • Allowing all your electrical devices AC, refrigerator, hot water, etc to communicate and lower energy costs.
  • “Smart home” sensor and activity networks.
  • “Satellite radio” channels.
  • A myriad of music rental services could play directly through your connected sound system.
  • And many more…..add your own in the comments

Many of these “long-tail” sorts of uses will be “gotta have it” for some subset of users. The 2 dollar USL sports network will lock in users who will spend the next 200 monthly dollars on Verizon. Suppose only 1% of users has gotta have each of the above functions. That’s 11% of the market right there. Locked into your company from the start. I think Verizon could make a pretty penny by controlling the gateway device that made such home functions easy to buy, install and provide.

I think any network could.

The Take Home
Understand that the current incumbents know very well that the only thing that keeps them from becoming cheap, commodified transporters of other people’s expensive bits is their monopoly-based control of the last mile architecture. If we had six connections to the outside world all networks would be running cheaply and competing on how fast and reliably they could provide us with bits. (But that ain’t in the cards…which is why wise communities will follow Lafayette’s lead.) The incumbent’s stranglehold on the last mile is crucial to their profit profile. With it they are Gods of the network age. Without it they are the guys who sweep the roads and fill in potholes—and will be paid appropriately. They’d rather be Gods. That last mile control is the key to being invited in to control the network in your home too and the key that will give them huge new sources of revenue by controlling the toolbooth that they hope that new gateway will become.

It’s a pretty damn good plan.

No Lafayette Pro Fiber blog post would be complete with a comment on the local implications. IMHO this is another place where Lafayette could lead the way.

Verizon is poised to extend its fiber-based advantage into the home by controlling access to big bandwidth inside the home and by easing the entry of services that critically depend upon accessing a robust home network. In some places the cable company has already partnered with security firms to provide robust networking that rides on the coax installed for cable. Other incumbents surely will see the writing on the wall; they’ll have to follow suite or watch companies like Verizon generate the revenues that will enable them to become more and more dominant. Verizon has the big bandwidth advantage in fiber. But that advantage is purely theoretical until the public can see that the more capable network can provide not only “more of the same” but actually “different and better” services. The gateway can be the key that unlocks that potential.

A gateway or something similar can do the same for Lafayette’s network.

I’ve been hearing a lot of background buzz lately about trying to encourage tech development in and for Lafayette. Meetings in various places, varying level gurus flown in from various places to attend the meetings. Dinners in posh private homes. Talk about establishing an “x-prize” for Lafayette. An attempt to organize a meeting for developers. Desultory attempts at secrecy. (My list is surely incomplete.) The usual influentials’ names are bandied about. You know, the works. No one knows whether any of it will come to fruition. But the point is that Lafayette is beginning to wake up to the fact that it will be well served to actually do something to encourage development. A “build it and they will come” attitude only works in the movies. In the real world if you want something to happen you’ve got to do something special to encourage it. Building LITE and LUSFiber and ramping up LCG’s example are great starts but they won’t, alone, be enough to make Lafayette the mecca many of us would like to see it become.

So far most of the Lafayette discussion on this topic has been couched in terms of somehow convincing (or bribing) developers to make us something special. As much as I like the idea—and hope it succeeds—I think we’d have better chance at success if we instead tried to do something special ourselves.

Like Verizon is evidently doing.

The heart of Verizon’s apparent plan is to make it possible, even easy, for developers to do something great and different. They are poised to eliminate the barriers to “getting things done” by providing the platform over which these things can be accomplished. Verizon lays out all the tools on the table (albeit tools that lock you into their network) and will surely even handle billing for you. But they won’t pay you. Instead they’ll charge you…and your customers. Frankly, that’s a better way. Opening the door is always a better plan than subsidizing the battering ram!

The right box in the house could do for Lafayette what Verizon’s gateway is poised to do in the homes of it FIOS users. But Lafayette’s could be based on ethernet and open IP standards instead of the clunky cable-oriented and proprietary network hardware and protocols that serve Verizon but are unfamiliar to most developers. Lafayette could do a better job of facilitating access to the Local Area Network (LAN) that is the home than any of the competitors is willing to do.

But Lafayette could go further. It could do the same for its MAN (Metropolitan Area Network) by building in the resources that make access easy. Make available storage. Make available the kind of computational power represented by LITE and Abacus. Embed modern protocols. Pack up some servers to enable within network serving of various kinds of data (streaming video, for instance).

In short Lafayette could make its networks, both inside the home and inside the city, playgrounds for the easy, fluid kind of development that developers love.

And we might, eventually even make a few pennies off it. But quickly and surely we could make Lafayette a tech mecca, give LITE a clear purpose in the community, and make LUSFiber a roaring success.

You want to be that shining city on the hill? The path is open.

Debating Municipal Broadband

Geoff Daily has interviewed Christopher Michell on municipal broadband and the discussion is well worth the less than 20 minutes it takes to view it.

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It’s an interesting discussion because, well, it actually feels like a discussion. Most of the stuff we hear on Municipal Broadband relies on a set of myths about muni-broadband that mostly go unquestioned. The format here allows Daily to bring up the traditional objections to municipal broadband and Mitchell quietly and directly show that the assumptions are untrue. To some extent Daily, as a broadband partisan, is playing the straight man to Mitchell–but Daily’s comments on his blog demonstrate that he is serious about some of his concerns and hasn’t quite absorbed the implications of his own remarks that “whoever owns the pipes controls the pipes.”

Do give it a look. Sensible talk. The conversation does a rationalist’s heart good.