[opendtv] Re: News: La. Utility Mulls Muni System

  • From: "John Willkie" <johnwillkie@xxxxxxxxxx>
  • To: <opendtv@xxxxxxxxxxxxx>
  • Date: Thu, 1 Jul 2004 17:00:26 -0700

This is a half-assed technological fix.  They're half-competing with Cox
(which offers a digital suite including cable, internet and phone) and they
might be able to compete partially with BellSouth (which offers packages
including local wired phones and wireless, and I believe also has a
satellite tie-in with DirecTV.)

However, what they will find is that price-conscious people that do not want
a package of services (call it the blue-hair or legacy market) MIGHT be
interested in them, provided their prices are lower for these legacy
services.  To do that, they will have HIGHER construction costs than cable
or phone companies, with less-valuable customers.  If that sounds like the
ticket for success (using public money) then I've missed something.  Then,
after (if) amortizing the buildout costs to the third provider of these
types of services in their market, they have to recognize that the most
efficient city in the world has a workforce less productive and efficient
than the least efficient cable or phone service provider.

I would consider it unwise -- in the current time frame -- to encourage ANY
city to do this.  For me, this is a reversal of position: I was all in favor
of municipal overbuilds when cable was a monopoly (1980s thru 1996) and the
cost of providing service was much less (and cable rates were only slightly
less) than they are today.   Today, these things suffer from legacy thinking
that fails to recognize the competitive and marketing advantages of current
cable companies.  Having the ability to put promo messages in water or other
bills for free (excluding increased postage costs) will not overcome these

John Willkie

-----Original Message-----
From: opendtv-bounce@xxxxxxxxxxxxx
[mailto:opendtv-bounce@xxxxxxxxxxxxx]On Behalf Of Craig Birkmaier
Sent: Thursday, July 01, 2004 4:48 AM
To: OpenDTV Mail List
Subject: [opendtv] News: La. Utility Mulls Muni System

Recently I spoke at a Technology incubator conference in Lafayette,
La, and had the opportunity to chat with the director of the
Lafayette Utilities System, about their desire to overbuild a
fiber-to-the-home system in the Parrish. The system would compete
with Cox Cable and Bellsouth, delivering television and telephony
services. According to the gentleman I spoke with, there is plenty of
room for LUS to undercut Cox Cable rates, which he described as
producing obscene levels of profitability for Cox operations in the

This may be a sign of things to come, as more and more municipalities
that are in the utilitiy business look to expand revenue producing
services, as a way to increase revenues in lieu of direct taxation.
For example, out counties largest industrial polluter, Gainesville
Regional Utilities, transfers tens of millions in revenues into the
City of Gainesville treasury each year; a county utility tax on GRU
services does much the same for the county coffers. GRU is now
providing broadband services to businesses around the community that
are within reach of the fiber-optic trunk they placed around the city
a few years ago.


La. Utility Mulls Muni System
(excerpted from the 6/21/04 edition of

A statistical battle is being waged between incumbent cable providers
and the Lafayette (La.) Utilities System, a municipal utility that is
building its case for extending its business into broadband and
video-delivery with the local parish council.

The utility currently provides electricity, water and sewage services
to the 190,000-population parish, but would now like to install a
fiber-to-the-home plant to deliver cable services.

The project's backers believe the can utility provide these products,
plus telephony, to its present 55,000 residential and 6,000 business
customers for less than its would-be commercial rivals, including Cox
Communications Inc. and BellSouth Corp.

LUS has spent three years studying other municipal overbuild models,
and recently presented a feasibility study to the parish council,
including the results of a poll conducted on its behalf by a Kansas
marketing firm.

The company took a separate poll of business and residential
customers, asking if they would be likely to patronize a
municipally-run telecommunications provider. According to the report,
78% of households said they'd buy at least expanded basic cable from
a municipal overbuilder, while 74% said they'd purchase phone service.

According to local press accounts, the parish council was mixed in
its response to the proposal presented June 8.

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