Category: Competition

It’s Not News

For anyone in Lafayette it’s not news: Cable companies faced with real fiber networks like to pretend that they too have fiber-optic networks. The Me Too, Mee Tooo!! claim has long become tiresome here.

Now the rest of the nation is getting the same sort of misleading PR that Cox has been promoting here since they lost the fiber fight. (Before that moment they told us we didn’t need and didn’t want a fiber to the home network.) From an AP story datelined New York:

The picture on his TV would freeze now and then, and he had heard good things about FiOS. Then the 21-year-old student saw a TV commercial from Comcast that made fun of FiOS and claimed the cable TV company has a larger fiber-optic network…

But after asking around online, he found that nothing’s changed about Comcast’s service: It still uses coaxial cable to connect homes. It does use fiber-optic cable further away in the network, as it has for many years.

“From what everyone said … this is kind of misleading,” Axel said.

Axel had fallen for one of a series of commercials run by every major cable company that competes with Verizon’s FiOS. Besides Comcast, Cablevision, Time Warner Cable, Cox and Charter have all run ads belittling FiOS.

Verizon’s FIOS fiber-optic network which is very different from, and much more powerful than, the cable companies’ tradtional hybrid fiber-coax networks, inspired the spate of misleading advertising from beleaguered cable companies that have to compete with Verizon’s more modern network.

Summed up:

“Cable is deploying the rhetoric instead of the technology,” said Verizon spokeswoman Bobbi Henson.

That’s pretty much the whole of it.

The article outlines several ads that range from misleading and confusing to outright deceit (the cable companies have had to pull several when challenged). There’s one from Cox that says that Cox had fiber-optics before the phone company…which is goes beyond tricky wording into flat-out lying. The phone companies were the first to commercialize the telecom technology.

Take a look at the story. It’s a rare instance when a major news outlet does anything like aggressive reporting on misleading advertising…after all, the cynic in me notes, that’s an important revenue source.

Expect more of the same FUD in Lafayette as the ad war here heats up in anticipation of LUSFiber’s January launch.

Making the Most of LUSFiber’s Advantages

(Warning: Long…but thoughtful, I hope.)

LUS Fiber is going to have a lot of advantages going into the fray with Cox and AT&T. Capacity, technical sophistication, home-town appeal, and the fact that we fought a winning battle against the incumbents to get our network up all work to the advantage of the local utility.

But, unfortunately, a “build it and they will come” strategy is mighty risky. A more solid strategy can be built by taking your advantages and making them essential to your customers. LUS will have to encourage its Lafayette citizens to value what it alone can offer. The utility will also need to acknowledge its weaknesses and take steps to minimize those weaknesses that are inescapable.

Technical and organizational advantages:
LUS’ indisputable technical advantage will be bandwidth, bandwidth, and consistency built on having bandwidth to spare. (No one will have to wonder if the network is too “slow” to handle a given use “right now.” — As I regularly do on Cox when the kids get in from school.) So how does LUS find a useful advantage in all that bandwidth; or rather: how does LUS make sure its users find that bandwidth too wonderful to pass up? And how does LUS do that in ways that its competitors simply cannot—or will not—match? That involves making good use of its massive bandwidth and symmetrical connections.

But the massive bandwidth of fiber on a modern system unburdened by legacy copper and commitments is not LUS’ only advantage. Arguably, that’s not the major advantage. LUS also has the advantage of being owned by its customers. Other businesses have to compromise between what is best for its customers and what is best for its owners. LUS doesn’t have that conflict and can rationally choose to benefit its citizen/customers in ways that are simply not open to other companies. This makes it easy to take smaller profits and offer more services—the stockholders of LUS will, I assure you, not object.

But the advantage of community ownership goes beyond doing a better job of the standard business plan; LUS can do do more than offer better service at cheaper prices. A community utility does not need to pretend to be a slightly more efficient company slaved to a standard business model based on profit maximization. The utility model is based on service maximization…and that is not the same thing. Cox has to be able to show the profit potential in everything it offers its customers or be legally liable for mishandling its owners’ resources. LUS, by contrast, can do things that creates value for its citizen/owners without creating direct value for itself along the way. A utility can pass value through. A utility can take a remarkably generous attitude towards its citizen/owners.

That, potentially, is a vast competitive advantage. It means that LUS can pursue business models that its competition simply cannot emulate. And “value pass through” is not theoretical or forbiddingly abstract in practice: Passing the value through is exactly what LUS is doing when it lets its citizen-owners use the full 100 megs of intranet bandwidth and offers symmetrical bandwidth. Private corporations are loath to follow suit because doing so would mean letting customers use resources they might eventually find some way from which to profit.

Value pass through need not be limited to bandwidth infrastructure issues like symmetry or full intranet usage. It can apply to infrastructure at higher levels. LUS can provide—or support—all manner of infrastructure. On the purely video side it could offer “channels” to anyone local at ridiculously low prices (as Burlington, Vt. is doing) it has bandwidth to spare. Why not? On the richer internet side it can host neutral servers that any citizen/customer can use. The utility can host cheap applications that are open to anyone who has an IP address on the network. It can host free or cheap online storage. LUS would be wise to host (or sponsor) servers providing all manner of higher-level infrastructure capacities. It would be a trivial expense to host a server that provided users with the ability to multicast streams of video (broadcast) or to reflect a video to a specified set of users (“unicast”). Application serving, online storage, and facilitating advanced technologies would all increase the value of the network for the community of users and that, not simple profit-taking, is the goal of a utility company. Happily, it would also raise the percentage of people who’d take the service and thereby add to the bottom line.

(An aside: Google acts like a utility; and is hugely successful as a consequence….the business model of offering your customers “free” value to make richer use of your network is the basis for the most successful new business model of our era.)

If value pass through, massive bandwidth, symmetry, and high-level infrastructure represent key advantages for LUS and Lafayette then those advantages should be used to offset any inescapable disadvantages the local network will face when dealing with Cox (and AT&T, should it get its act together).


LUS’ disadvantage: Size
And LUS does have a key disadvantage: size. We are tiny compared to Cox. And even smaller compared to AT&T. Nor do we have, yet, a clearly visible wireless strategy and a wireless strategy will be considerably enhanced by the size of LUS’s competitors.

Large size makes a few things potentially easier, among them: regional content, regional network effects, and technical prowess. People want to communicate with and about local things. (Most phone calls are local, for example. Regional content like high school football has a larger area to draw from than the city of Lafayette.) So Cox will be able to establish valuable products like local calling circles and regional sports networks that LUS simply will not be in a position to match.

Large size also means that Cox and AT&T can afford to spend big bucks putting together sophisticated interfaces to their content and building devices that allow them to integrate wireless and wired, phone and internet, and generally to try and lock people into unified world where they can offer easy integration. —For instance they could work on making it easy to program your DVR from a phone or see a telephone caller’s name and number on the TV when the phone rings.

Advantages and Disadvantages. Lemons into Lemonade.
So regional network effects and the ability to spend on integration and interface issues favor large corporations. But home town loyalty, massive bandwidth, symmetrical bandwidth and, most crucially, a willingness to pass value through to citizen-owners favor local, municipally-owned competitors. LUS can build higher-level infrastructure that drives participation and adoption.

Capitalizing on Advantages: Broadband and Symmetry

LUS can do what no private provider will: encourage bandwidth usage. And kill the old broadcast model while doing so. It will be to LUS’ advantage to do so since it will lead to a place where the competition will simply be unable to follow.

The most obvious driver of bandwidth usage is video and LUS needs to be thinking about how to drive levels of use so high that Cox and AT&T cannot match local demand. The way to accomplish that is make it possible and easy to use video phones, simple to use security cameras casually, to send video’s of T-boy’s birthday to grandmama, to watch a live stream of the Tuerlings game broadcast by a fan, to talk to salesfolk at a local store, to sign into a video “channel” organized by the Chamber of Commerce…or the Wetlands Coalition, to attend class, to, even, view locally produced full-length documentaries. Local video needs to become a casual, normal, accepted, unremarkable way to communicate, share, and promote products and ideas. If that level of usage can be reached LUS’ network will be wildly popular…and the intimate local content will make other networks look weak in comparison.

Making video communication unremarkable is quite possible. But it will require active promotion on the part of LUS and the Lafayette community. We will have to break our own path—fortunately that’s something we’ve done before.

LUS has already made an amazing start. We’ll have true bandwidth, true symmetrical bandwidth. It will be cheap. It will be ubiquitous. Those are the necessary if not sufficient conditions to move to a visually rich communications system. With the lowest tier, even in the first year, being 10 megs there will be no one on our network that will have too slow a connection to regularly use a video phone or watch full screen HD streaming video. Even when we are communicating with the outside world. When we are connecting to our fellow citizens we’ll have the full capacity of local network available to us, limited only by the electronics on the wall of our house…currently 100 megs. And everyone here will have the same 100 megs of intranet capacity. Regardless of what they pay for their connection to the outside world. That sort of uniformity and capacity will make it possible to build networks–human networks of people talking, playing and working–based on the expectation that you can communicate with huge resources.

We’ll have a dense population of uniformly high-bandwidth subscribers in a small city. Once a tipping point is reached everyone will want to be on such a network. First in Lafayette and then, when others see what is possible, elsewhere.

Reaching that tipping point though will have to be a goal that we work toward. Having the necessary conditions is not sufficient.

Getting There: Supporting Higher Level Usage

Bandwidth and Symmetry give this community a huge leg up on the future. The future will be possible in Lafayette come January. But they aren’t enough alone to ensure that we make the shift ahead of other communities. The community will need more to make the jump. Luckily LUS is a public utility and it has already show that it thinks in terms of giving the community the most it can. That is why we have big bandwidth and a 100 meg intranet.

Public utilities can and often do pursue such a “generous” policy—and LUS has shown every sign that it understands the value of this. (For details see “On Really Getting It“) A generous attitude turns the ROI attitude on its head: anything that benefits the user is good unless it does serious damage to the bottom line. The owners must be pleased first, just as in any business. But since the consumers actually are the owners in a public utility scenario pleasing them includes giving them what they want, mostly–which is lots of reliable services for as little as is possible. That is what public utilities do. They “pass value through” to their community.

We’ll still have two sets of needs that someone will need to generously provide; they will be both social and technical. Social needs are essentially educational. Technical needs are essentially infrastructure.

Social Support
On the social side we’ll have to teach people how to use new tools. Dialing the telephone was once a daunting technical challenge involving unfamiliar concepts like codes that stood for locations and an elaborate set of rules about when to release the rotary dial. (Really) Use needs to be taught. In our era we’ll need to teach folks the rudiments of lighting, (backlighting is rude) how to upload video, a bit about politely providing a compressed stream to the poor people who view our stuff outside the city, and something about how to usefully tag our products. If that seems crazy and forbidding go back and look at the phone video I linked to above. In 5 years it will all be second nature–but until that time we’ll need to provide basic education.

Beyond basic communication we’ll also be undertaking to create media…to broadcast our kid’s soccer games, to hold business meetings virtually, and to create advocacy films and websites. We’ll need to learn how to do this well. The schools should be involved and we’ll need a community center, or several, to foster a new layer of people who are the equivalent of today’s photographers and newsletter writers…again, we’ll know this has been a success when nobody really needs to be taught this any more; when it is absorbed from the culture and every small group has its “Uncle Bob” who knows how to get it done.

AOC –Acadiana Open Channel, the PEG channel— who already does a similar task for TV production and film needs to be retasked to include these functions or some new organization created to serve these educational functions.

An AOC-like organization will also be needed to host Uncle Bob’s videos, to run the server, to vet the new “channels” and playlists made available by groups and individuals, and to keep the technical backdrop going. Community access channels will remain, if renamed in any new big broadband future that takes local communities seriously. Someone has to do the work.

Technical Support
There’s a level of infrastructure above the physical connection that really should be attended to. If we can set up some reasonable standards and provide some resources that are easy and cheap for us to do collectively the whole process of “getting there” will take place much more rapidly and the Lafayette network that LUS runs will be much more useful.

LUS and LCG could provide most of this—and perhaps should—but they could also simply support it by sponsoring organizations that provide the functionality.

Most basically, community support organizations should be provided with bandwidth; they are serving the network and making them pay for bandwidth would be both prohibitive and unfair. The community media support, the local portal, organizations that support nonprofits…all need bandwidth to serve the community. If they don’t make a profit they shouldn’t be expected to pay to use resources that are, after all, not scarce.

Server and storage space are the 21st century equivalent of a the TV studio–the necessary infrastructure to make community media possible.

LUS can also establish basic technical capacities that anyone can use. For instance LUS should turn on multicast features in their routers, They should help make sure that a multicast server and a server that supports multicast are available for broad use. That is much like reserving channel capacity for public channels on today’s cable networks. The new networks will also be served by fostering public media.

There are also a wide range of things that the community, in the guise of LUS and LCG could do to keep the network up to date and able to dynamically adapt to changing conditions. Because Cox and AT&T will have much more money to drop in developing integrated applications (like the phone/TV ones mentioned above) than Lafayette ever will it would behoove the community to adopt the broadest standards available and encourage developers to treat a protected portion of the network like a “sandbox”–a safe place to play that encourages innovation. In one example: it is clear now that in the near future the standard set top box for cable television will be based on a standard called “Tru2Way.” This is a published standard and allows anyone to write applications that can be used on any compliant box. If history is any guide cable companies in general will try and strongly restrict what people can actually do with their signal and what applications are allowed to run on their boxes. The companies will want to control the experience (and dollars) of “their” users. Innovation will generally be restricted and nifty new services will not make it to market. (Want to know why your HDTV can’t surf the net? It’s not because such technology wasn’t developed a decade ago in rudimentary form.) If the Lafayette network adopts only boxes that run this standard and adopts an open attitude about allowing others to add value we’ll likely end up with advanced integration and a better user interface than any of the larger, slower, more constraining network providers.

Conclusion:

This has been a long piece but the take-away is relatively short: The success of the new LUSFiber network is dependent upon maximizing the advantages it gives its citizen/customers and finding ways to compensate for the networks inescapable weaknesses. Bandwidth, symmetry and the ability to pass-through value due to the network being community-owned are fundamental advantages. Size is any local network’s fundamental disadvantage. LUS needs to focus on making its advantages essential to the community; a process which will require both education and building another layer of infrastructure above the fiber itself.

Even if LUS has an advantage in a standard face-to-face commercial matchup (and it clearly does) it would be wise to play a deeper game; one that focuses on making the new network central to how we live and play in Lafayette. That means helping citizens find rich ways to use the network; especially help using the network to communicate locally. In that arena Lafayette’s network is free to adopt policies which will make it overwhelmingly more useful to community members—policies which its competition cannot match.

The Lafayette community has already demonstrated that it is up to the task and LUS has shown that they have right generous spirit to pursue their part of the effort.

What remains is to settle down to the hard work of making it happen.

Humor: Cox, Eatel, & LUS

Kevin Blanchard does his usual exemplary job of capturing the little ironies and quirks that make following the news so interesting.

In this morning’s story on yesterday’s big TechSouth Governor’s award luncheon he covers the highlights of the event. If you’d like to find out more about the technology behind LITE and how BP uses in oil exploration the story is a great starting point. Our own Ramesh Kolluru comes in for well-deserved praise as well.

But if, like me, you’re starved for a little knowing smile skip down to the end and read the bit about EATEL winning its Governor’s award for best “Technology Company of the Year.”

And just so you don’t have to even click for your smile:

Gonzales-based EATEL was presented the Technology Company of the Year for its phone, cable and high-speed Internet service delivered over an entirely fiber-optic network.

EATEL President Robert Burgess thanked Cox Communications — a major sponsor of TechSouth — for its “formidable” competition.

“Because of (Cox’s) size, capability and market strength they force us to be at the top of our game every day,” Burgess said.

That competition has “helped” EATEL succeed, Burgess said.

Burgess than made a joking reference to Lafayette Utilities System’s fiber-optic based telecommunications service, expected to start up early next year — also in competition with Cox — saying he’s sure LUS would appreciate some help.

“We’ve had more than enough assistance,” Burgess said, drawing laughter from the audience, which included LUS and Cox officials.

“Please, any attention you give to us, please give it to (LUS),” Burgess said.

What Kevin does not have to say out loud is that lead sponsor Cox (with its name on every piece of promotion and occupying the suite of booths spanning the entrance to the affair) has recently been locked in an unusually public and expensive battle with EATEL. Cox is offering a super special that amounts to a 12 month 50% discount on its triple play package (with HBO!) but is only advertising it in the small area south of Baton Rouge where local telco EATEL is eating market share with the same FTTH technology for which they were receiving the technology award.

That’s rich.

EATEL, as faithful readers of this blog will know, responded by taking out a series of full-page ads in the Lafayette Daily Advertiser which promoted, in vivid red and black, the deal in Lafayette as well. Louisiana law forces Cox to make the deal available throughout its service area but does not force it to promote it as evenly. So EATEL stepped up to “help” Cox out. So, on EATEL’s account the two companies are engaged in an exchange of “favors.” (That’s rich, too.) After an initial confusion among Cox’s operators, who initially denied the price reduction was available in Lafayette, the company trimmed its sails and made the best of a bad matter by allowing Lafayette residents in on the deal. Lafayette is a much larger market than East Ascension parish and extending the deal to Lafayette surely makes the attempt quash little EATEL with long-term price specials MUCH more expensive.

(Wanna know how you can get in on the deal? As a little fillup you’ll be using a unified technology whose protocols will be similar to LUS’ even if the capacity of LUS underlying infrastructure is vastly larger. After you get used to an all-IP household you can flip over to LUS’ faster, locally-owned version. The Cox deal does not require a contract but is guaranteed for 12 months.)

/irk on/
As a little added fillip: Cox is sensitive on this matter—I wandered by the Cox booth at TechSouth (they give great floor prizes) and one of their booth guys struck up a conversation trying to encourage me to try Cox. I told him I already had cable and internet from them. He switched to urging me to try their VOIP. I couldn’t resist at that point. I told him I was considering the “half-off” deal advertised in paper. 😉 He paled a little (though that might be my imagination) and said it was a good deal. As it is. But he then overreached by claiming that Cox had always intended to offer it to everyone. That it was only being “test-marketed” over there. Now that is just plain silly—and insulting. It was no accident that it was being offered in the only place in this market that Cox currently faces a local, FTTH-based competition. By all accounts EATEL is gaing substantial market share. I tried to point that out and that offering that large a reduction for 12 months had to be a bit more than a casual promotion. He countered by saying that Cox had done it elsewhere. I scoffed. He said he’d been working for Cox in Northern Virginia where they did the same. I doubt he expected anyone in little ole Lafayette to smile and point out that this proved my point about fiber competition—that is where Verizon’s Fios FTTH network is going head to head with cablecos and is producing some of the highest speeds in the country. It’s fiber taking market share, I said, that caused the long-term “specials” in both places. He wouldn’t back off the company talking point that it was all just normal marketing and that it was just a coincidence that his company offered a 50% reduction in the one small place where they had fiber competition—and, oh yes, where they compete with fiber in Virginia. By the end I actually was insulted…Cox is, as EATEL says, a formidable competitor. They are shaping up to be the Verizon of cablecos—willing to really invest in the future of their network even at the cost of today’s profits. That’s both impressive and worthy. But their Achilles heal is their contempt for their communities, their customers, and even for individuals who walk up and talk to a representative at a trade fair. They need to learn how to be honest with folks. It’ll go much further than hype, FUD and self-serving dishonesty.
/irk off/

Post Scriptum:
Blanchard is setting down his pen soon to go back to school and change professions. I, for one, will miss him and gently intelligent toss-off articles like this one.

“Cox Responds to EATEL Ad”

Sharon Kleinpeter of Cox tells the Independent that folks in Lafayette definitely can get the 75 dollar triple play deal (about half off!) as long as you don’t currently have Cox phone service.

It’s a good deal and the first sign of real price competition in Louisiana attributable to locally fostered competition.

Cox’s Kleinpeter tries to finesse the question of whether they are targeting EATel with this promotion even while admitting that they are only advertising it in Ascension. The implication is that Cox just happens to be “testing” it in Ascension. Sure…it was entirely coincidental that the ONLY place that it was actively promoted was in the ONLY place where a local fiber to the home project was up and running and costing them market share. And it was only a coincidence that it was ONLY offered to folks who were switching phone service to Cox from a local phone company that recently started offering cable tv service over that fiber. Cox really shouldn’t try to mislead people so transparently. It will make people outside of Lafayette think that Cox isn’t honest about such things. (People inside Lafayette already know this.) Really, it shouldn’t be embarrassing to actually admit to competing on price…regular companies have to do it all the time—and do it fairly.

The package a deal…and apparently there is no contract involved. Just a guarantee of the price for 12 months. It’ll do till something better comes along.

(Thanks are due to EATEL for uncovering this and to the Independent for following up with such alacrity—the weekly had to ask “embarrassing” questions of a major regional advertiser. They did it, and are running the results, apparently without flinching. It should be noticed. Kudos.)

No Broadband Price War….elsewhere

One of the reasons that LUS has relaxed a bit about making its pricing commitments is that it is increasingly obvious that there will be no national price war on broadband. So LUS can confidently see that with its much longer pay-back time and with no need to chase large profits for impatient stockholders and investment firms it can easily undercut the pricing of corporations who have, essentially, decided to milk the customers of their established monopoly cows for the indefinite future. As AT&T and Verizion roll out broadband services that provide no advantage over cable for the same levels of speed it is increasingly obvious that the two industries have decided not to compete on price.

The latest in this “we-are-competeing-vigorously-but-not-on prices” noncompetition competition between the colliding telco and cableco monopolies in the broadband arena was AT&T’s decision to raise prices on its broadband DSL customers…except in former BellSouth areas where its prices were previously higher.

That wasn’t what “competition” between the cablecos and the telecos was supposed to bring. You may recall that when AT&T was trying to transfer local municipal property rights to the state level so it could get around the locals’ insistence that AT&T serve all of a community with their new services in return for using the community’s land they claimed that relieving them of that obligation would yield cheaper prices for the favored few that actually got “competition.” Even that half-a-loaf is NOT the way it is working out…and both the cablecos and the telecos like it that way. Two competitors are simply not enough to establish a competitive market and reality is taking its toll on that tale. A few are even noticing that we’ve been taken:

The announced price hike didn’t sit well with some observers.

Routers, modems and other equipment used to deliver bandwidth are dropping in cost as rapidly as bandwidth demands are rising, said Dave Burstein, who operates DSLprime.com, an industry newsletter. “Total cost to the company for the bandwidth it delivers is about $1 a month per customer,” Burstein said. “AT&T is raising its rates because it can. It has the market power to do so. Increased costs aren’t the reason.”

AT&T still has to pay off the enormous costs of trying to absorb BellSouth, among others, a consolidation that our regulators allowed because it was also supposed to lower prices.

The only real price competition we here in Lafayette can expect to see will come from LUS. BellSouth and Cox exist to serve the interests of their stockholders and that means that we should pay as high a price as the company can extract from us. The industry is learning right now that they don’t have to compete on prices to maintain their margins–and so they won’t. Anything less would be irresponsible. LUS also exists to serve its owners…but their (our) intersts are best served by low prices for high levels of service. Both types of owners will, inevitably, get a company pricing policy based on their interests. But only LUS will actually be motivated to compete on price. (Six month specials like those you’ll see from Cox in both today’s Advocate and Advocate don’t count—that’s marketing, not pricing.)

2009, after the launch of Phase 1, will be an interesting and, I’ll bet, a satisfying year for Lafayette consumers of broadband.

The Year in Review

The Year In Review @ LafayetteProFiber

2007 was the year Lafayette’s fiber project emerged from the wilderness and people began to dream in earnest. The final delaying lawsuit was dismissed, the bonds sold, and contracts let for construction. Dreams followed the announcement of intriguing new features like a wireless addition and the 100 megs of intranet bandwidth and people began to dream of what we might do with it it to close the digital divide or provide new ways to strengthen the community.

January……..
At the year’s beginning we were still awaiting a decision from the State Supreme Court on the last lawsuit holding up the bond sale. The Fiber to the Schools project advanced, ensuring a parish-wide fiber backbone and early hints of a wireless project were realized when LUS put out a bid for a municipal wireless network — one initially designed to provide government services. The competition was clearly still out there as Cox introduced Video On Demand, upping the ante on what Lafayette’s network needed to provide in its initial offerings.

February……..
In early February Durel’s “State of the City” address lauded the fiber build but failed to slake our appetite for new news on the wireless component. The Advertiser’s attempt to move into an internet-centric future advanced in fits and starts but it emerged with arguably the best local video site in town, far outclassing the efforts of the local TV stations and proving that with the construction of new net-based infrastructure the race will not necessarily go to the established incumbents. An attempt to resuscitate the breathless prose of the fiber fight fell flat at the Advertiser as a story about the cost of defending ourselves against the incumbents produced no discernible ripple of concern from a populace immunized against such sensationalism by the long fiber battle.

Late in the month, after weeks of waiting, came the Supreme Court decision we’d been waiting—and hoping—for. The Court unanimously overturned the 3rd Circuit’s ruling and pretty roundly spanked them for their mistakes in letting the argument go on for so long. The final victory for Lafayette was widely heralded as one that would have consequences in locales beyond Lafayette or Louisiana. Cox, after years of vigorous attempts to delay or destroy the project, testily denied that it made any difference to them. Dreaming about what we could do with the shiny new toy starts almost immediately and LUS announced plans to solicit ideas from the community.

March……..
The first, and in retrospect apparently last, of the Fiber Forums is held and the community had plenty of ideas. (Cox and AT&T also attended and took conspicuously copious notes.) If nothing else the forum demonstrated that the LUS understood that a generous attitude will pay unanticipated dividends. And that simple insight is one which will do more to make the system a success than any elaborate business plan. Wireless hopes, big intranet bandwidth, symmetrical speeds and more were all promised and their implications discussed.

An old issue, the digital divide, returned, Lafayette was named a “Smart Community,” and the first high paying jobs attracted by the fiber arrived. LUS started to spend visible money on the networks construction, selecting a design firm to lay out plans for the headend building that would house the electronics and for a warehouse to store the masses of equipment that would be needed in the construction phase.

April……..
April brought a shower of small advances. The Digital Divide Committee was reconvened, the location of the headend facility at the intersection of I-10 and I-49 was set, and an engineer to oversee the construction and help make crucial decisions was chosen.

May…….
March brought a reblooming of the old FUD tactics from the incumbent corporations. Cox kicked off the festival with an embarrassing attempt to pretend its hybrid fiber-coax network was a fiber network in a venue where everyone knew better. Just a bit later we got a whiff of old push poll tactics when a new, apparently limited version was trialed in Lafayette. Then Naquin’s (AT&T’s PR team?) attorneys carried water for the incumbents by engaging in a rather transparently false threat to sue LUS just a week before the city went to New York to interview for the crucial bond ratings.

June……..
As the seasons turned Huval went to Councilor William’s “Real Talk” and talked—about the retail wireless plans, about a faster construction schedule, about a larger basic cable lineup than anticipated, about internet speeds where the slowest package would be faster than the fastest speeds available in most of the country. Oh yeah, and symmetrical bandwidth coupled with a 100 meg intranet. Enough to leave the most ardent proponent breathless. Lafayette Pro Fiber floated a dream about a “Lafayette Commons” that would take our commonly owned network and use it to make a place to share local information build community.

The bond sale was authorized and the bonds were put on the market. The first unit sold solidified the legal standing of the entire business plan since bond holders are constitutionally protected from any change in the plan no future legal challenges to the basic plan can be successful.

July…….
In July LUS’ Huval was honored by his national peers—he was both given an achievement award and made the chairman of the board of the American Public Power Association. The success of the fiber fight clearly raised his stock nationally as well as locally. The bond sale closed; meaning the money was in the bank and available to spend. The newly hired engineer’s men were in the field surveying poles—making sure there was plenty of room for the fiber to be hung.

August……..
Joey Durel took over leadership of the Louisiana Municipal and pledged to work “to give local governments more ability to control their own destinies while not placing roadblocks in the way of our progress.” Among other things, that probably referred to the infamous imposition by the legislature of the (un)Fair Competition Act. An LMA with aware leadership will fight such laws. The City-Parish Council approved the fiber funding plan. Dreaming about what might well turn out to be the nation’s best telecom system continued apace and a new Digital Divide report was made to the council.

September…….
Another small media tempest erupted as the kids headed back to school. The headend building came in way over budget and LUS had to scale back and issue a new set of specs to keep its price under control. The headend was one in a series of public projects whose price spiraled upwards in the wake of Lafayette’s post-Katrina/Rita building boom.

Cox fired its most effective shot yet across the bow of LUS by securing a long-term contract with ULL athletics for exclusive rights to telecast replays of coaches programs, sporting events and university athletic programs on its cable systems—and we can rest assured they’ll not be reselling such valuable material to the local opposition. For ULL fans this is a very big deal—such deals have lead to a lot of fan anger on both coasts where such deals are more common.

The Advertiser endorsed the dreams of bridging the digital divide in a supportive editorial and Huval spoke up on Federal broadband policy in his role of APPA chair saying plainly that the incumbent telecom corporations had failed American in spite of massive subsidies and called for letting “the public sector take the reins in communities where citizens want them to do so.”

October……..
Dreaming of a better wireless network provided a bit of fun in October. The surprise announcement that LUS would imitate Apple and open its own “fiber storefront” to educate and promote the brand was greeted with approval. And the construction news rolled on with Alcatel being picked to provide the electronic guts of Lafayette’s new system.

November……..
LUS signed a franchise agreement with the city-parish that was virtually a copy of Cox’s and immediately tried to reassure folks during its approval that the agreement wasn’t nearly all they hoped to provide the community. One of the few areas where LUS laid out a plan in their franchise agreement for going beyond what Cox had already done was in its support of AOC, the local access channel. That touched of some dreaming about what a 21st century AOC might really look like. Mike weighed in with some dreams about an asynchronous Lafayette in which AOC or a surrogate would play a major role.

If history repeated itself with the franchise agreement, an awareness of the recent fiber battle seemed completely missing from the minds of some candidates for the state representative seats up for grabs this year. Let’s hope their more aware colleagues educate them as to what a successful telecommunications utility could mean for the hopes and dreams of their community.

December……..
As the year wound down toward the holiday season the bid on the revamped fiber headend was accepted and the crews were spotted in a North Lafayette neighborhood moving wires on poles in preparation for hanging fiber.

The future is upon us. Since the plan is to light up a section of the city somewhere near the first of the coming year, with any luck next year’s edition of this missive will be able to say that fiber has been lit up in Lafayette and that we no longer need to wait for the future.

It’s a new year indeed.

Open Systems, Muni systems, and Lessons from Singapore

A Problem
Advocates of muni telecomm are often met with the blanket, essentially ideological, claim that municipal plans will fail because “everyone knows” that government-run enterprises will always lack the competitive advantages of private businesses. It’s hard to greet such claims with anything other than exasperation: anyone who thinks that the duopoly represented by corporations like AT&T and Cox has produced efficient pricing or any sign of innovation just hasn’t been paying attention.

Customers of telecommunications companies simply haven’t seen the benefits of “free enterprise” that competition is supposed to bring. The telecomm market looks like market-segmented, minimally competitive duopoly and produces results that look a whole lot more like staid, expensive monopolies than anything that might result from a real competitive marketplace.

Lots of folks have noticed this painfully obvious fact about the current telecomm market and in some places are even trying to do something about it. Lafayette has one solution. Singapore is trying another.

Singapore Tries Honest Problem Solving
Singapore is about to invest in a truly radical plan to build a world-class, high-speed network and to do it by encouraging real competition in the telecommunications market. (See 1, 2) Naturally they start by mandating and subsidizing the construction of a fiber to the home network. Beyond that it gets really interesting. Their plan takes yet another stab at inducing competition in the fundamentally natural monopoly wireline broadband market. Competition—when it works—provides cheaper prices and drives innovation. Lot’s of country’s have tried for that golden ring—and failed. (The American FCC’s attempts have been particularly laughable.) What is interesting about Singapore’s design is that it might work.

It is worth noticing how far they had to go to have a hope of developing real competition. Consider the starting point: Most networks world-wide are fundamentally vertical monopolies. One company owns the physical network, manages it, and sells retail services to end users. Think about your phone or cable company and you’ll get the basic idea. The minimal competition between phone and cable companies over the new internet services should not be allowed to obscure the fact that they are both basically monopolies with only a sideline internet business that has, at best, only one competitor—not nearly enough to develop a competitive marketplace that would yield the benefits of innovation and low prices. As digital services converge over integrated data networks it remains to be seen whether even the current inadequate level of duopoly competition will be maintained…and a lot of history that argues that it will collapse back into a simple monopoly.

But everyone wants competition and its benefits. Singapore wants competition. But Singapore wants it badly enough to try and get it realistically.

Being realistic involves admitting that the basic fiber, the physical network, is a classic natural monopoly. But beyond that evidence of clear-headedness Singapore also seems to recognize that operational layers of the network determine what sorts of application services can be offered at retail and that retail providers need to be able to count on a responsive middle layer provider.

<skipable bit>
<time out for a bit of background>
A typical large-scale network is built up of multiple, but integrated, levels. One way of looking at that is to see at the “bottom” a hardware base built up of the actual fiber and low-level switching. Up from that you have protocols and translation devices/routines that knit together the data from the low-level physical layer. Both of these are pretty much invisible to any end-user. On top of that you have applications that show their face to users of the network. Let’s call that 1) the physical layer, 2) the network operations layer, and 3) the applications layer. (This 3-layer description, as forbidding as it might seem, hides an awful lot of complexity. The canonical way of looking at network design is the 7-layer OSI description. That hides less of the complexity. Sophisticated readers should feel free to substitute OSI layer 1 for “physical;” layers 2-3 for “operational” and 4-7 for “applications.”)
</time out for a bit of background>
</skipable bit>

Singapore is separating the physical and operational level into two different, unrelated monopolies committed to selling the same services to all retail providers at the same price. The retailers would then be in a position of making all their profit from the quality and the quantity of services they could convince consumers to buy.

Structural Separation: Keeping the Monopoly Owner Honest
Singapore is structurally separating the physical, lower level from the upper operational and application levels by creating a completely independent network company to build and manage the physical network (cleverly called NetCo). That sets things up so the only way the owners can make more money is by providing more value to the wholesale renters of their physical capacity. If you can offer more value more efficiently you can sell more capacity for a better price. And that, to repeat, is the only way to increase your take. This is a simple, reliable, structural solution to the problem of a monopoly owner using their control of the medium to eliminate or forbid competitors. The physical network owner cannot be motivated to manipulate the network to benefit its particular set of retail services if it doesn’t own any such services….it will not be allowed, for instance, to sell phone or video services to end users and so has no motivation to structure its network to favor, for instance, cable TV at the expense of DV (Downloadable Video). By making the monopoly network owner’s profits depend solely on motives that are aligned with the public’s interest the task of regulation is much easier. All you have to worry about is enforcing rules that require everyone to be charged the same for the same service. (This is much of what lawyers mean when they talk about Common Carriage rules.)

Operational Separation: A Balance of Powers
The most unusual (and least clearly specified) part of the plan is separating out the operational division of the network into its own independent company. Most structural separation schemes make this the property of the network owner or allow retailers to install their own equipment at the operational level. The problem with the first solution is that investing all the control in the conservative utility would make it less likely that unproven but potentially innovative middle level equipment would be installed, lessening the hoped-for benefit from innovation. On the other hand letting the retailer install whatever equipment they want on fiber strands they have rented virtually ensures that incompatibility will emerge on the network and pretty much ensures that some classes of equipment will be wastefully duplicated—lessening the hoped-for benefit of lower prices.

Singapore’s solution is to provide for a monopoly operational company (cleverly called OpCo) that must maintain a separate existence, board, and identity but which retail owners can own pieces of. Presumeably the Singaporeans, being committed structuralists, think that such an ogranizational schema will eliminate wasteful duplication and will tie OpCo to the more innovative retailers. Now this isn’t nearly perfect: it would let powerful incumbents on the network control the provision of new middleware and help them keep out smaller new competitors that would threaten their developed markets….but while imperfect, this is a solution that at least makes a stab at controlling the worst defects of previous attempts to foster competition and encourage both lower prices and innovation at the middle level.

Retail: The Evolutionary Melee
The hope, of course, is that by minimizing costs at the physical layer by putting a free-to-be-careful and conservative utility at the physical level, and by structurally maximizing low pricing and innovation at the middle level the crucial retail applications level will attract many competitors who will have no choice but engage in a ruthless evolutionary melee in order to survive. Consumers would reap the benefits of low prices and innovative, powerful services.

It Might Even Work—At a Price
It is clever. It might even work.

In Singapore. As a National policy. And anywhere that the national government is willing to subsidize a full new fiber network to the tune of 25% of its total costs. Anywhere where it can dictate the terms of the new networks operation in order to ensure the incumbents don’t kill competition in its cradle. (The incumbent phone and cable companies are among the bidders for the new network.)

Notice that this plan involves the people paying a substantial subsidy for the development of a system that private corporations will end up owning. And those corporations will reap all the eventual profit.

That’s a deal only a authoritarian, corporate state like Singapore could love. It’s a high price to pay.

What people are seeking when they try something so draconian is to realize the promise of competition in a framework that has been fundamentally hostile toward competition. (And well, maybe, to provide a little grease for their friends…but let’s try to be generous). The hoped-for benefits are lower prices and a high level of innovation. Both are presumed to emerge “naturally” when you structure a natural monopoly so that the owners’ self interest is deployed in the service of the eventual consumers.

But there is another, simpler, surer, way to align the owners’ self-interest with that of consumers.

Lafayette’s way

You could make the consumers the owners, by the simple and time-honored device of making the natural monopoly a public utility. Then the owner-citizens would have no motivation at all to exploit the consumer-citizens…since they’d be one and the same. They could ask themselves for, and expect to get, lower prices and the sorts of services that appeal to them.

I can’t fathom why that can’t be a national policy as easily as giving away the farm.

LUS FTTH Storefront Planned

LUS has announced a plan for a storefront that will likely prove the face of LUS Fiber. According to this morning’s Advertiser:

Lafayette Utilities System is looking for retail space to set up a showroom for its fiber-to-the-home products.

“When customers come in and want to sign up, we’re going to have a showcase where they can see some of the products in action,” LUS Director Terry Huval said.

That sounds great–and it is the first concrete sign that LUS understands that it is entering a market in telecommunications services that requires a different sort of relationship with the public than that of a traditional utilities supplier. Putting out a technically advanced, low cost, reliable service (a fair characterization of LUS’ other utilities) is not sufficient. LUS will need to sell fiber. Aggressively. It will need to tell the consumer why FTTH is better and show them how our local utility can do an excitingly superior job.

A storefront “showoff” location is a great idea and a great way to introduce the advantages of LUS Fiber to the people. The committment to such a store shows that LUS is coming to grips with the idea that being a credible competitor involves the perception as well as the actuality of quality.

Just to be blunt: Cox gets it. (AT&T doesn’t, at least not locally) Since losing the fiber fight Cox has been pursuing a high-profile strategy of affiliating itself with local organizations and with ULL in an attempt to cut into LUS’ perceived hometown advantage. It has aggressively–using both the public media and its background chatter to “influentials”–tried to sell the idea that it has a “fiber network” when what it really has is a perfectly standard cable-style hybrid fiber-coax network like any that you would see more honestly described elesewhere. That is an attempt to cut into LUS’ perceived technology advantage. Cox has an uphill climb on both counts: LUS is owned by the people of Lafayette and Cox is a huge corporation run out of Atlanta and owned by a small family. LUS has an inescapable home field advantage. Cox’s hybrid fiber-coax switches from fiber to copper coax at a node shared by somewhere in the neighborhood of 500 homes (or more–Cox is cagey). LUS fiber goes straight to each home. LUS will provide more for less in every category using that more capable and cheaper-to-maintain system. Again, actual advantage to LUS. What Cox “gets” is that it can blunt those actual advantages by pushing a strongly as it can the perception of something near to equality. LUS’ task is to not let that go uncontested. The storefront will be a great forum for insistently demonstrating the local utility’s advantages.

I have to hope LUS will model itself on Apple’s storefronts. Slick, hightech, “cool” presentations of the best technology, coupled with a special cadre of “genuises” to answer technical questions and give reliable technology advice have made the Apple Store chain into an enormous win for Apple. Designed as much provide a reliable showcase for the company’s advanced technology as to directly sell products the Apple Stores are now regularly cited as an important factor in Apple’s increasing market share. It is easy to imagine an “LUS Fiber Store” (somebody needs to start the branding machine up!) that is filled with big HD flatscreens, computers, and phones all interlinked…the flatscreen serves as big display monitor, phone messages can be retrieved on the computers, caller ID that flashes on TV when the phone rings, linking in to address books on the ‘puter or online to place VOIP phone calls. A few VOIP video phones for fun. Some WiFi phones for the adventurous mobile user. Demos that show how to integrate iPhones, Blackberrys, fancy PDAs into the system’s hooks. Demos of cheap security cam integration. In-home wifi advice. Digital Video Recorders that you can program from work. …I could go on here for a long time but you get the idea. These are all things that really have to be shown to be compelling. But once shown they are compelling. (I’ll give up my TiVo DVR and home WiFi when you pry them from my cold dead fingers. 🙂 )

The storefront is a bit of a surprise to me. But I’m thrilled with the idea. I don’t know that of any other muni fiber provider that is doing this (I’d be happy to be corrected) and it represents yet another way that LUS can push home its advantages.

Fun! I’d line up for the opening. 😉

“U-Verse in BellSouth Territory?”

DSL reports asks whether U-Verse, AT&T’s cable-like video service, is every going to be seen in former BellSouth territory.

AT&T says: Yes…soon…in Atlanta.

The question arises because U-Verse has so far only been seen in former SBC territories–where it has been taken up by 100,000 users–not in any of the areas that were BellSouth territory before the merger. Denizens of the deep south have felt somewhat neglected.

AT&T’s offering is interesting chiefly because it is a pure IPTV play; it uses the language of the internet. Verizon, which is driving Fiber To The Home, is using what is really cable technology on its video side. AT&T had considerable trouble getting the technology off the ground but now appears to have a usable product.

The telephone company insists that its product will be competitive but considerable doubt (aired in the article linked to above) exists that this is true. The concern is bandwidth contrainst will keep it from competing adequately on the broadband side (where its speeds do not match even current cable offerings) or on the video end (where many doubt that it has the bandwidth to offer dual HDTV streams). The basic problem is its last mile twisted copper infrastructure. There’s only so far you can push old copper–and the phone companies are much closer to the practical limit than are the cablecos.

What most folks seem to expect is that bably Bells will follow the same pattern in video that they have with broadband DSL: offer a slightly inferior product for less–and offer it in some places where cable does not go. Unless they launch a really aggressive attempt to win market share by offering a superior product (as Verizon appears poised to do) the cable companies immediate fiscal interests are served by keeping their higher prices while loosing a few marginal potential customers to a low end phone offering. –Such is the nature of duopoly markets; competing on price is avoided where ever possible. Market segmentation is more profitable for both.

That (basically humiliating) strategy might work in most places to keep AT&T and the other phone companies afloat but it won’t work in Lafayette where AT&T will be a third-best, not second-best network. They’ll be trying to stand against a competitor in LUS who is clearly determined to undercut the market price of the incumbents using more capable technology. LUS clearly wants to be a broad-based utility and not a player in a segemented semi-monopoly market. Its market plan to lower prices across the board by 20% leaves no room on the bottom for an also-ran. And, incidentally, that same plan leaves no rich pickings on the premium tiers for Cox to use as a consolation for letting the bottom go.

AT&T makes no bones about the fact that it is NOT planning to deploy even the modest U-Verse to all its customers. Its plans work out to serving only about 50% of its customer base even if it mets its buildout goals. And the customers it will not be serving are its “low-value” ones….you and I can both guess how Louisiana shows up on such a ranking.

So the real question is whether AT&T will ever show up to play in the Lafayette market. Louisiana markets, like Southern ones more generally, are markets with lower per capita incomes and hence are marginal anyway under the AT&T game plan. The added challenge of coming up against a local, fiber-optic utility which starts out with prices low enough to destroy your margin may convince them to simply stay away when contemplating the extra costs of upgrading their local net to support U-Verse.

Cox has made its determination to compete plain. But in Lafayette Cox will play the unfamiliar role of the second-best network against LUS’ fiber. And LUS won’t be interested in taking up Cox’s place in a duopoly market…it will compete for the lower-end customer as determinedly as it is allowed to by Louisiana’s regulatory agency. (Only in Louisiana would a law be enacted that mandates only regulations that limit the cheapest price a utility can charge the consumer—erecting rules that prevent it from ever charging less—without hinting at limits on the most a utility could charge…unhappily that is precisely what the Cox/BellSouth-sponsored (un)Fair Competition Act does. Go figure. (Go figure that the incumbents understand their difficulty well))

LUS, in this one smallish city, is about to break open a cozy market duopoly that elsewhere in this country will surely solidify further as cable and phone networks seek to secure the best return possible out of their differing network capacities and costs.

I do hope the rest of the country posts a quiet watch on Lafayette. What emerges here will be a lesson in what, in a better world, competition in the telecommunications market could look like.

Cox & UL Athletics

Cox has rolled out the first really big shot in the upcoming war with LUS; KATC and a post to the Independent blog reveal that it has spent two million dollars to purchase:

…exclusive rights to telecast replays of coaches programs, sporting events and university athletic programs on any of its cable systems, affiliated regional sports channel or programming network.

In the land of marketing this is a big deal…a very big deal.

The contract also includes, less importantly in my judgment, some pointedly described fiber connectivity and renaming/branding rights. Look to see “Cox” perpended to “Ragin’ Cajuns” on buildings, shows, the scoreboard and wherever fine UL products are sold.

On the ground in Lafayette it means that Cox can control the video marketplace for UL sports. If you want to watch endless reruns and postgame analyzes of UL sports you’ll have to subscribe to Cox. In a city where the successful pro fiber grassroots organization emblazoned all its advertising with the red and black it’s one more element in Cox’s campaign to overcome the anti-Lafayette label it was tagged with during the fiber referendum. (Cox has shown an acute awareness of LUS’ local advantage in ways large and small; from hiring the locally connected daughter of the sitting governor to make its announcements, to sponsoring dinners for the local black chamber, to, now, grabbing the Ragin’ Cajuns aftermarket. Cox understands that their prior behavior has created their largest marketing problem—and they’re doing what they can to counter that history.)

What’s LUS to do? There’s very little that they can do. This is one of the places that Cox’s size and financial reach make a direct answer impossible. Cox supplies cable to all of Acadiana and can distribute the cost of this purchase over every cable system they own in the region. [The red blobs at the map on the right; click map for a larger version] No single-city provider, no matter how loyal a booster of the university, can afford to match what Cox can afford to pay if the university makes it into a bidding war for an exclusive contract. And, anywhere Cox is not competing with an alternative wired provider, they can take a little cost off the top by leasing it to that non-competitor.

The Backstory: The feds
They will not have to provide this programming to anyone that they don’t want to—and in Acadiana that means Cox will not sell it to LUS or the satellite companies. This sort of tactic has a pretty long history especially up east there have been bitter complaints against cable companies that secure exclusive rights to regional sports programming and refuse to resell it to competing wireline overbuilders (like LUS) or to satellite providers as a way of controlling the fan base.

It may (or may not) surprise you to know that this sort of thing was almost outlawed a year ago. The omnibus telecomm bill, that was only derailed when the net neutrality issue blew up unexpectedly, called the tactic anti-competitive and would have ended it. Cox is taking a bit of risk—a two million dollar risk—that the current congress won’t casually outlaw the practice. The short version of the story is that locking new competitors out by using regional sports loyalties is pretty clearly anti-competitive. [How long is this contract? No one seems to say. KATC tells me that the period is a lengthy 10 years of exclusivity…$200,000 dollars a year.] And sports fans are the sort who, rightly, get upset and complain when they understand that their local loyalties are being exploited for the business benefit of media machines. They’d like to get it declared anti-competitive and illegal.

In fact it has been outlawed for any satellite-provided material. The satellite companies successfully lobbied to force vertically integrated media conglomerates that owned both television or movie programming and cable companies to sell critical programming at a reasonable price. That is why DirecTV can buy HBO programming (which is owned by Time-Warner cable) for a reasonable price. But the tool that the feds used to regulate it was satellite feeds—the big cable companies only had to sell it to satellite companies if they used satellites to distribute the feed. The idea back then was that the only reasonable way to distribute serious programming was via satellite uplink and downlink so distributing the feed to satellite companies would be trivially easy. However, in order that the cable companies wouldn’t have to mess with demands to redistribute the many little shows that were locally produced shows (like those shown on AOC) that were transfered to regional affiliates over wire were excluded from the rule.

That made sense then. But things change and the rise of the gigabit internet has now made it feasible—and in some instances cheaper—to send massive amounts of video over the backbone, especially if you own regional fiber. (You can bet that AT&T won’t bother to invest in lots of little satellite download dish farms as it rolls out its video services.) The UL deal exploits is what is known in the trade as “the terrestrial loophole.” As long as cablecast regional sports “networks” (the tiger network, the ragin cajun network) use landlines to transfer the programming to local cable providers they can cut anyone out of the deal that they want.

But all that it would take to close that loophole would be the stroke of a legislative pen.

This is (another) one of those moments when Lafayette cannot simply go its own way and pursue its own interests. The federal legislature should act on issues like this and push the FCC, which under this administration, and frankly the last several administrations, has shown no inclination to police the media megacorporations that are the field on which modern politicking is played out. In a brief moment of irony Lafayette’s best hope for gaining access to UL programming is the hope that AT&T and Verizon will be successful in their ongoing lobbying to close the terrestrial loophole.

UL?
The real question for me is: What is going on with UL? Cox is easy to understand. But UL has to understand that it is taking advantage of an opportunity that the people of the Lafayette community have created. Without the looming threat of competition from LUS Cox wouldn’t bother to pay much for a product that no one else was in a position to sell. Cox could have given UL a couple of million anytime it wanted to in the last decade or so—and didn’t. It is not generosity that motivates them. Cox chooses to do so today because it is looking for a way to staunch the inevitable bleeding that will begin the moment a popular locally-owned competitor rolls out a competing video product. But from UL’s point of view they had to choose between 1) an exclusive, very lucrative contract with Cox this year that will, in all likelihood, result in limiting viewership by the 50% in their hometown that choose to buy from LUS and 2) Two non-exclusive contracts two years down the road–both likely well above what they’re getting now but likely not equal to the pot that Cox is offering now–that would serve the entire loyal fan base they’ve developed in their hometown. The choice was between cash and developing their local fan community.

The University opted to trade cash for loyalty. It’s probably a good business deal. But is doesn’t serve the fan community—or other local university loyalists—well.

If you thought the horse farm deal and a determination to sell off that property before a new president arrives showed a lack of community of awareness bordering on hostilty toward Lafayette on the part of the outgoing Authement administration, the Cox deal will only confirm your suspicions. A new university administration can’t come soon enough for Lafayette.

Update 8:10: I ran down an announcement of the deal on the ULL website. It’s remarkable for two things—one which does and one which does not appear: