Category: Rates

Fiber Plans:Deployment, Tiers, Pricing, Digital Divide and More

LUS Fiber is here. Welcome to your future. That was the message as LUS director Terry Huval stood before the City-Parish Council and laid out the near-term deployment plan and the basic products that will be offered by the new community-owned network. Joey Durel, in his introduction, took visible pride in the system, saying that they had under-promised and over-delivered—something which he’s a bit paradoxically claimed was his startegy from the start. If that was the plan; they’ve met their goal. The network’s first offering of services is more than I’d have said possible or likely when we were first thinking about it. —But not more than I and others fought for as ideas about the community’s network matured. (One of the huge advantages of owning your own network is that you can make suggestions, fight for them and sometimes help open the door to new directions. Local, public ownership, frankly, is an innovation as important as any technology to LUS’ success.) It’s a world-class network that we’re building. We’ve every reason to be proud.

I’m goining to hit the highlights here but if you want to see the goods for yourself visit the LCG Auditorium channel at ustream.tv and watch the archived video there.

As always, the LUS presentation was tightly and logically structured: Huval broke the power point into news about the rollout & construction, pricing, unique features, and customer service.

Rollout & Construction
First and foremost, the January date for lighting up the first customers is holding. Just who, when, and how many remains vague but the system will launch with paying customers next month.

Fiber will rollout first at the two ends of the “phase 1” area building out from fiber huts—”hubs”— located on the grounds of the power substations at each end of the build area. The first customers will apparently be signed up in the area around the Acadiana Mall at the southwest end of the build area and those in the Northeastern segment served by the “PEC” substation will also start seeing availability. (See my Google map, or LUS’s version to get an ideaof the geography involved.)



click in to examine your neighborhood or View Larger Map

When fiber becomes available on your street every address will get a nifty piece of mail announcing: “LUS Fiber is here. Welcome to your future” reversed out of a light blue background. Watch closely for that distinctive piece of mail. And then call.

Pricing & Tiers
The big announcement today was was the service plans and prices. The short story is that more-for-20%-less promise is being kept. And in some situations it MUCH more.

Here’s a list of the pricing bundles. In some ways it’s misleading to call it a bundle since bundle’s usually mean some complicated formula for discounting the price of the services if you buy an approved bundle. LUS’ packages won’t work like that. There will be no penalty for mixing and matching service levels like there are in the incumbent’s bundles. All the service are offered for a single straightforward discounted price. Clean and simple and easy to understand. And no attempts to entice you into spending more for service levels you don’t really want in order to get a price break for something you do want. (Why? Hint: you’re being treated with the respect accorded an owner.) So you could order the top tier internet and the cheapest Video and Phone, or NO video and phone, without penalty.

VIP (Video, Internet, & Phone, get it?)

Video: expanded basic: more than 80 channels $39.95
Internet: 10 Mbps Up and down. $28. 95
Phone with services: 15.95

VIP Silver

Video: over 250 channels incld High Def $63.31
Internet: 30 Mbps Up and down. $44. 95
Phone with a long list of services & 5 cents a minute long distance: 28.95

VIP Gold

Video: over 250 channels incld High Def plus Premium Movie suits $98.09
Internet: 50 Mbps Up and down. $57.95 (wow)
Phone with a long list of services & unlimited long distance: 43.95

More for less. —Now some will try to point to the cheapo bundles that Cox is already offering (and for whose existence you can thank the threat of competition) but those aren’t “real” prices, lock you into a set of services for a year or more that you might not want, isn’t customizeable, and is a LOT less product. How much for an internet tier to compare with LUS’ 30 or 50 meg tiers? There really is no similar product from Cox or AT&T. For value the LUS prices can’t be beat considering the number of channels or speed of the offering. But there is no truly cheap, low end offering. Cox offers a 768 kbps thing they call “high speed internet” for goodness sakes. That’s cheaper than LUS’ 13 times faster 10 meg low tier…but not, I think, much of a value. Of course, LUS really low price for internet is access free…and probably works at at least 768 Kbps—see below.

Unique Features: Digital Divide & 100 Mbps Intranet
These are the bragging points—and pretty impressive they are too…taken together I think they are truly unique to Lafayette.

LUS’ response to the Digital Divide question is to enable the internet capacities of their digital set top box. Using a limited browser a user will be able to read email and do basic web surfing on their TV. And Lafayette is going to do it For Free. There is not surer way to get folks online than to package it into their cable service. Once the rollout is complete Lafayette will inevitably become the most connected city in the nation. Technically, at least. Now helping folks use that capacity fruitfully is a whole ‘nother matter. And properly something the community shold pitch into to do. (Any takers?)

The 100 Mbps intranet has been discussed on these pages for a long time. Suffice it to say that any regular customer will have access to blinding 100 meg speed over the internal community intranet. Want to download the 6 hours of one of those interminable contensious council meeting? In HD? No problem. It will come down in a flash. Video telephony. Shuttling those huge files will become trivially easy—if only inside our net. That will encourage businesses and tech-oriented citizens to locate inside the city…which might do more to encorage “smart growth” than any suggestion I have heard to date.

Customer Service
There’ll be two customer service centers down the road. The customer service people—both in the buildings and on the streets—will be your neighbors.

And….
Finally, I’d have to say that LUS didn’t talk about one of the greatest features of our network: the money you spend on LUS, the money that gets you more for less, will stay here in Lafayette and won’t be shipped off to some high rise in San Antonio or Atlanta.

Frankly, it’s all we asked for initally and more…it’s fiber to the home with its near-infinite expandability. It’s cheap. It will be offered to every last person and business in the area. We will own it and can do with it what we like — and both the 100 mbps intranet and the digital divide initiative are the products of local folks pushing for them and evidence that community ownership can make a huge difference right off the bat. Sure there’s more that I can hope for and fight for now. But on this day to have all the hopes that we held back in 04 realized is enough…It’s amazing. A dream realized.

Fiber Announcement at Tonight’s Council

Terry Huval will make a presentation at tonight’s city-parish council meeting. According to a council member the LUS director will lay out more details about the soon-to-be-launched system. The address will occur during the “President’s Address” segment of the agenda at the beginning of the meeting. This low-key, unannounced address will be the most comprehensive and authoritive description of the network’s products in Video, Voice, & Internet. I expect a status report on the state of the channel lineup, the extent of Video on Demand serivces, service tiers, pricing on tiers, the probability of caller ID and emergency data shown on-screen, Internet speed tiers, digital divide plans….and more.

The council is, in effect, the “board of directors” for LUS and it is appropriate enough for them to hear the proposed details first. The nice thing is that we, the public “stockholders,” get to listen in.

At 5:30…

To Attend In Person:
@ 705 W. University Avenue, Ted A. Ardoin City-Parish Council Auditorium (City Hall)

To Attend via Cable TV:
@ AOC Channel 16
Asychronously rebroadcast:
Wednesday at 5:30 p.m.
Saturday at 1:00 p.m.

To Attend via the Internet:
@ http://www.ustream.tv/channel/lcg-council-auditorium
And Asynchronously, anytime
@ http://www.ustream.tv/channel/lcg-council-auditorium

Cox Marketing in the Field

Cox, as the Independent notes in this week’s issue, is in the field with a marketing survey. I started hearing about a survey about 3 weeks ago and I gather that something had been in the field a bit longer than that from subsequent discussions.

The current survey is, by all accounts, a straightforward marketing survey that is unabashedly aimed at figuring out how to get and retain customers in the face of competition from LUS. (This is in pretty marked contrast to the push polling that set the citizens of Lafayette’s teeth on edge during the fiber battle.1,2) As it is recounted to me the most interesting questions were “hypotheticals” about how best convince Lafayette’s citizens to sign contracts to lock them into Cox before LUS’ competition actually appears. One question asked if giving a 10% price break would lead a customer to sign up for a 12 month contract and another asked if doubling internet speeds for the same price would convince the user.

The story, which is illustrated by Sharon Kleinpeter standing in front of an empty server rack, gets at least one fact seriously wrong and a quick trip to the internet would have prevented the mistake. The IND compares LUS’ cheapest, slowest speed (10 mbps up & down!) to Cox’s second highest of 4 tiers: 9 mbps down and a measly 786 kbps up. Cox’s cheapest, slowest tier is actually 786 kbps up (that is .786 mbps.! –the numbers don’t start till after the decimal place!) and 256 Kbps down. That’s a better than 10:1 contrast in download and a whopping 40:1 in upload.

That gaffe aside there are interesting tidbits in the article. LUS will have 3 internet tiers to Cox’s 4. Levels 1 and 2 will both be more than 20 megs…Cox’s highest speed is 15 mbps. Huval also touted the 100 meg intranet (my favorite feature) and:

“We’re not going to require a contract,” Huval adds. “We’re not going to bind anybody. Somebody takes our service one day and decides to swap then that’s what they’ll do. We’re trusting that the people of Lafayette are going to see the benefit of what we bring to the table, which is going to be more than a pricing benefit. It’s also going to be the capability and the and the clarity.”

Real competition might actually be coming to Lafayette and it’s ironic proof of the pro-fiber position that Cox is so unfamiliar with real competition that it has to run a survey to figure out what might work against a superior network. As soon as the marketing department figures out just what it should offer expect a new round of 6 month specials…especially in the first build area.

LUS has its response in place and it’s surprisingly low key:

As for pricing, LUS is still shooting to offer its triple-play package of phone, cable and Internet service for 20 percent less than Cox’s standard rate, which remains about $105 a month. This puts LUS’ price at around $85 a month. While Huval suspects Cox may be able to beat that price with some of its promotional plans, LUS is counting on many Lafayette customers looking at more than price. “I think there are going to be some people who are looking at price and price only,” Huval says, “who are going to fall for [promotional offers]. I think most customers, most people in Lafayette, realize the only reason why Cox is offering any of this now is because there’s a competitor in town. And we’ve gotten a lot of support, both at the polls and otherwise in the community for our project.”

I’m not signing any long-term contracts…

(A thanks goes out to Nick who first alerted me to the survey.)

Promo Pricing Unwise

Well, the “experts” have weighed in, and according to an article in Telephony Online the sort of promotional pricing that we’ve seen from the local incumbents and especially Cox are said to be unwise:

“I personally think the U.S. broadband industry and U.S. mobile industry need some sort of mindset change – which is the hardest to achieve – to get away from thinking that new customer acquisition will solve all your problems,” Weber said. “At the end of the day, it is the existing customers that provide 80% of the profit but they only get 20% of attention.”

And, of course, it is the good, solid customers who pay for promo pricing. If a company has to have its 30% margin it simply figures out how much it has to charge the 80% of its loyal customers to offer a raft of deals to the 20% that aren’t going to stick with them anyway.

One of LUS’ long-time commitments is that it isn’t going to float a raft confusing, 6 month package super specials that entice people to buy more than they really want and lock them into much higher costs down the road. That’s a strategy that carries risks when you’re trying to break into a nearly saturated market but the promotional strategy creates real problems of its own as this article notes. To wit:

The typical approach is to offer new customers a special price on a triple play bundle or a new phone for free or at low cost in exchange for a service contract. When the promotional price expires, and regular prices kick in, customers have incentive to look elsewhere for the next new deal. Service providers may not like this price-shopping behavior – which was the death knell of the long-distance voice business in the 1990s – but “they have educated their customers to behave like that, so they can’t complain now,” Weber said.

Of course what will happen in Lafayette, or so I anticipate, is that as people hit the end of their promotional period they’ll be hit that sudden big bill and suddenly LUS’ 20% cheaper price will look good. Moving over will make sense and the trick then will be to keep ’em with real local support and great services. I don’t think that will be all that hard. But the “expert” in the article makes one more suggestive remark re keeping those loyal, revenue producing customers:

One more intelligent possibility is to offer existing profitable customers special promotions or price breaks on new services . . .

Hey now, that would be cool. Offer your loyal customers the extras other companies charge for (ridiculously, I might add). The way that LUS has talked about its services is to offer a simple solid set of base tiers in the phone, cable, and internet sides and then let folks choose to add on from a menu the set of, say, three “extras” they want (e.g. call waiting, caller ID, etc.) These are dirt cheap in truth. At the end of the first six months the loyal customer could be offered an extra service. And after a year, another. For being a good customer. For helping the community succeed.

I think it’d go over big. And would draw a bright line in the sand.

“What’s the Deal?” Cox & EATEL

The Independent picks up the EATEL ad in Sunday’s Advertiser we reported on earlier. Reporter Nathan Stubbs gets on the phone and tries to get the half price deal Cox is publicizing only in Ascension and southern Livingston parishes. Initially he’s given the runaround but after checking in with EATel’s Communications Manager gets the secret password: “Special Promotion R-123” he is offered access to the deal.

More fun: the Independent reporter was able to bargain the price down further by not taking phone or HBO….though Cox is certainly not required to go that far in order to meet its legal obligations to offer promotions fairly throughout its area. It certainly seems logical to allow this base price to be the starting point if you want to add on channels or tiers at the regular price as one would normally do.

And, what’s more Cox is claiming that you don’t have to sign a yearly contract. That’s nifty. The Cox phone rep tells the IND that they “don’t do conracts” and a quick review of the local website seems to bear that out. But Cox certainly does demand contracts for special deals in other parts of the country and has here in the past. (A Cox attempt to tempt small businesses into a 3-year contract with a paltry 3% discount was especially noteworthy.) So it’s interesting that they aren’t doing that any longer in this locale—where LUS has, from the very beginning said it would not require any kind of contract. It sounds like pricing is not the only concession Cox is making to the specter of local competition.

For those of you out there that take advantage of this deal, remember who to thank: the little local fiber competition that could, EATEL and LUS. Nobody is getting a deal like this in New Orleans. Or in Los Angeles, for that matter.

EATEL Joins Fiber Fight

The fruits of competition…

That image to the left is a full page ad in the A section of today’s Sunday Advertiser. Click on the image for a large, readable image…(caution, it’s a big jpg.)

EATel’s experience in their fight over in Ascension parish ought to inform ours. Clearly Cox “Greater Baton Rouge” is offering special deals only to EATel’s customer base—possibly only to those that have threatened to move to the local, more powerful, fiber to the home alternative.

That, as EATel is pointing out in this ad, isn’t fair pricing. You’ve got to offer the same deals to all. Otherwise you are engaging in a form of predatory pricing. —But you don’t have to promote the great deal everywhere…On the other hand you do have to be willing to give it to anyone who asks for it.

So EATel is engaging in the wildly unusual act of promoting a great deal from its competition so you can ask for it. Cox can refuse, of course. If it does you should tell EATel who is surely preparing a lawsuit alleging unfair competition if this deal isn’t offered fairly. Or Cox can honor the offer. Which would be hugely expensive if any number of people take it up outside of EATel’s relatively small service area on the south rim of Baton Rouge.

It’s a good deal. (And will cost Cox real revenue whenever and wherever it keeps this promise. It’s evidence Cox is running scared.) But folks here in the city of Lafayette that are in the first build area would be best served to hold off. (IMHO) A better product is coming in nine months with hugely faster net speeds that will keep those dollars in local hands. (That 100 megs of intranet speed is going to make a whole lot of difference. I had two conversations at a party last night that revved me up on that score.) And even if localism and a superior product don’t make your choice as easy as mine will be wait a little while anyway. –The closer LUS gets to launch the better the deals for Cox’s standard alternative will become. This is only the first offering.

Folks outside Lafayette’s first build should look into this. If Cox is going to push the bounds of fair competition with their small local competitors they shouldn’t be allowed to do it secretly or cheaply. Fair Competition. That was what Cox wanted. They ought to be held to it. Call ’em and ask for the deal. What you want to do if they give you any guff is mention “Special Promotion R-123” — that detail is in the fine print at the bottom of the ad.

Cox was foolish to combine the Baton Rouge and Acadiana markets. Now they’ve got a two front battle on their hands and the contrast between little, local alternatives with a superior technology and the huge predatory out-of-state corporation with old technology will be inescapable.

Justathought: LUS should consider some coop advertising deal with EATel. I get the Baton Rouge Advocate and there’s no similar EATel ad in it today.

Why LUS Will Be Cheaper

Or at least one reason, anyway:

Randall Stephenson, the AT&T Inc. chief executive who replaced a respected long-serving predecessor last year, earned roughly $18 million in compensation…

The traditional “justification” for such nonsense is that the CEO’s take is justified by how much value they (they?) created for their shareholders. That doesn’t hold much water:

Since the start of the year, however, AT&T’s shares have been pummeled by fears that the sputtering economy will hurt growth in revenue. Shares rose $1.44, or 4.2 percent, to $36.09 Tuesday but are still down about 13 percent this year.

(From the Houston Chronicle.)

Could it be just compensation his consideration of and respect for his customers? ……..Nah.

Clarksville Servers First FTTH Customer

The Clarksville FTTH project is serving its first customers! Congratulations to the good folks in Tennessee.

We’ve been following Clarksville here at LPF (coverage) because the Clarksville project is very similar to our own but is somewhat ahead of our schedule. The stories about Clarksville are like a little peek into our own future.

It will be awhile before Lafayette gets our version of the feel-good story about the first fiber customer that citizens in Clarksville recently found in their Gannett newspaper, the Leaf:

This week the new network went live, as the first public residential customer was connected and immediately able to utilize the utility’s cable television and Internet offerings…

“You can’t understand the concept of what this means to my son,” Berardo said. “He is so advanced beyond my time.”

Berardo signed her 15-year-old son Zachary out of school early Wednesday so he could be around while their home became firmly wired into the 21st century.

“He wanted to be in the whole thick of things,” Berardo said.

Zachary does not claim to be an avid video gamer, but was nonetheless wide eyed talking about the prospects of a new Internet connection of 10 megabits per second.

“That’s fast,” Zachary said, with a grin that bordered on mischievous

Indeed, that is fast—and that is the lowest, indeed, the only, speed that CDE offers. Zachary will be getting a symmetrical 10 megs. That level of service costs only $34.95. Ahwoogah! Actually Zachary’s mother is shelling out no more than $30 dollars extra for her son’s 10 megs since she’s also buying cable. If she’s getting phone service as well (and why not?) only $20 dollars on top of the first two services buys her son some of the fastest symmetrical bandwidth available in this country. —And you’d never heard of Clarksville, had you?

In comparison: 7 megs from Cox is $41.95 in Lafayette so Zach is getting 10 megs for about 20% less than I get 7. (Is that %20 a familiar number?) 20% less cost for 30% more service? That sounds pretty good all by itself. BUT: the upload speed in Lafayette is only 512 k— only 5% of the speed young Zachary is getting!

When LUS launches here I expect a 10 mbps symmetrical tier to be their lowest offering. It’s gonna be fun.

Cox to Raise Prices

Cox Communications has announced a plan to raise prices this coming April 1st according to a business brief in this morning’s Advertiser. As far as I can tell from the brief article it means between a 3 and 10% jump for most subscribers depending upon services taken.

Most video subscribers will see a bump of between 2-3 dollars according to the article. The basic cable package (channels 2-20 in analog) which has had channels and services removed recently, will not experience the same increase. Internet subscribers will also be hit with an increase in the 3 dollar range. That makes for around a 6 dollar jump for those folks who buy both services from the cable company.

Cox claims this is the first price increase in 19 months and claims it is made necessary by channel costs. That makes surface sense of a kind but isn’t easy to reconcile with the fact that the number of bandwidth-eating HD programming channels included in the new packages is slated to increase. —Channel costs increase independent of pricing if you provide more channels and use more of your resources in doing so.

There is some unexplained confusion between the information presented in the article and what is offered on Cox’s website. For instance, the basic tier is described as being channels 2-20 but the Cox website for acadiana describes that level of service as covering channels 2-23 plus access to 3 more digital channels if you pay an extra hardware fee. Are 3 more analog channels being silently eliminated, effectively but invisibly raising the package price? It sure looks that way.

Subscribers to internet services will get a bump with their price increase, though the Advertiser’s write-up is also confusingly written on this topic (though it may simply be following a misleading press release). Consider:

Cox is also boosting the speed of four tiers of its Internet service, allowing customers to connect and upload content more than twice as fast in some cases. Cox’s Value tier, it’s second least expensive at $26.95 per month, will now offer 1.5 megs per second, a 486 percent increase in speed, for $3 more per month,

There are only 4 speed tiers and the “value” tier (about which some detail is given in the Advertiser) is now $26.95 with download speeds of 1.5 mbps and 256 kbps upload. I don’t see how “now” offering “1.5 megs” can mean a 486% increase in either the upload or download numbers. My guess is that the upload speed, which at 256 mbps is pretty pitiful, is being raised substantially. But that is only a guess. If that is all that changes most subscribers won’t feel that is worth a 10% bump.

A new expansion is pointed to that might actually be worthwhile:

HD Free Zone OnDemand will go up, allowing subscribers to watch popular basic cable programs whenever they want.

If “basic cable” refers to the basic cable tier, as its context in this article might indicate, then that would be real news as it would indicate that local stations and AOC were going to archive their news and other locally produced shows and allow Cox to rebroadcast them on demand. That would be a great thing for Acadiana and worth applauding Cox for showing some real vision. However, if “basic cable programs” just refers to “regular, widely available on lower video tiers cable shows” then this isn’t very interesting and is just a continuation of what is happening without any special price rise. I have to suspect the latter but can wish for the former…..

——–
In any case, this price bump will surely make it easier for LUS to keep its promises to offer a lower-priced alternative to Cox and AT&T. Prices for Cox are, in the end, driven by national factors and intra-company competition which don’t take into account local competition like LUS. The only way to compete on price with LUS will be to make the local Baton Rouge-Acadiana network the corporation’s least profitable division. Nobody, least of all local Cox officials, will want to let that happen.

Full Page LUS Fiber Ad

The Sunday morning Advertiser has a full page LUS Fiber ad…the first, but not the last, we’ll see.

At left is the page. The blue banner is explanatory—they want folks to know that they’ll be seeing “visible signs of progress” because the “crews will be working hard to bring you a fiber-fast, fiber-fantastic network.” (Whew!) “And with it , lighting-fast internet speeds an miles of expanded bandwidth. Plus crystal-clear cable TV and telephone service” Now that’s somewhat florid language but not inaccurate—we hope. You can get a larger picture by clicking on the one at left.

The pic below is a scan out of the ad… if you click it to get the big picture you should be able to read the ad text yourself. And for local fiberistas it is a lot of fun to read…and reassuring to see list of all the things we’ve been promised make it into advertising. It’s one thing to tell the loyalists what they want to hear and quite another to put into print advertising.

And the advertising is still more conservative than the talk…the promise in print is that the triple play will average 20% less than Cox (and AT&T if it every gets around to offering its cable package.)

The body copy opens with a bit of bragging: Fiber to the Home and Business Technology is the most advanced means to provide what is typically referred to as a ‘triple play’ of communications services—cable TV, phone, and high speed internet—directly to homes and buisneesses. There are no FTTH systems serving entire commuities in Louisiana and very few in the U.S.

Other bullet points:

  • will serve apartments (Happily for competitors like LUS the FCC is trying to outlaw exclusive apartment contracts—the cable companies are, of course, suing)
  • local programming and stations
  • advanced phone options
  • Video on Demand
  • DVRs–Digital Video Recorders
  • Channel guides