Lafayette Doing OK, Doubles Capacity for Promotion
John at Lafayette Pro Fiber recently updated us all on LUS Fiber's financials. According to John, LUS Fiber is doing OK, not great, in its FTTH offering (probably the best deal in the nation for fast, affordable, and reliable connections). In reading deeper, it is clear that the impact of the community network on the public is GREAT, not just ok.
From John's writeup:
LUS estimates that the citizens of the community have saved 5.7 million dollars—in part direct saving from LUS' cheaper phone, video, and internet services and in part as a consequence of Cox lowering its prices and giving out special rates. Those special rates were discussed in the meeting with Huval pointing out that Cox had petitioned for and received permission to treat Lafayette as a "competitive" area. That meant that Cox could offer special deals to Lafayette users and, as we all know, has offered cuts to anyone who tries to leave. Those "deals." as Huval pointed out to Patin don't include the rural areas of the parish where Cox has no competition.
But it doesn't end there. LUS Fiber, due to anti-competitive laws pushed through the state's legislature to handicap public providers, is actually subsidizing the City -- providing more benefits to everyone, even those who do not subscribe to the network.
Again it all goes back to the (un)Fair Competion Act. One of the things in that act a concession that LUS Fiber would be able to borrow from LUS' other utilities just like any other corporation could set up internal borrowing arrangements. This is not a subsidy, it's a loan—with real interest. One of the efforts to raise an issue by Messrs Patin and Theriot centered around "imputed" taxes. Those are extra costs that Cox and ATT got the state to require that LUS include in order to force LUS to raise their price to customers (you!) above the actual cost. (Yes, really. See this. The idea was that LUS should have to pretend to pay taxes that it doesn't actually pay when setting its pricing—and include those fake costs when competing against Cox or ATT. PSC regulations (not the law) requires LUS Fiber to send those monies to the larger LUS. So LUS utilities is holding money LUS Fiber earned. LUS utilities loans it back to LUS Fiber—at interest. The net effect of this is to subsidize LUS' other utilities on the back of the new utility, LUS Fiber.
That's the only subsidy uncovered today.
You can't make this stuff up. Only in Louisiana.
Lafayette is also saddled with unexpectedly high programming costs due to Cox leaning on NCTC to prevent Lafayette from joining the coop. This means LUS Fiber has to pay higher prices than its competitors do to deliver the same television channels.
Even though Lafayette is offering the fastest broadband in the area, they are running an incredible promotion - everyone got bumped up a tier in August and September. If you are paying for 10Mbps symmetrical, you are getting 30. If you pay for 30, you get 50. And you get 100 if you pay for 50.
This is how community-owned promotions run -- they actually deliver the goods rather than only giving you a low introductory price that balloons after 3-6 months (followed by annual rate increases thereafter!).
If you wanted to judge LUS Fiber from the perspective of a private company, it would be OK. But if you account for all the benefits it is delivering to the community, it is doing great.