WBS: The Path to Leadership

What's Being Said Dept.

They're talking about Lafayette's network in New Zealand. Or at least David Isenberg is. David visited recently and I am embarrassed to admit I haven't written about it. (Yet. I will.) I've written about Isenberg & the Internet and his F2C conference here before. For now let it suffice to say that he has the sort of stature in the field that people happily fly him across the globe in order to get his advice on what should come next in telecommunications policy. (For a well-written overview of the man, and a review of his speech hit the NZHerald.)

He went to New Zealand intending, apparently, to walk the Kiwis through a path toward internet leadership that included fare like "structural separation," and "unbundling local loops." But he ditched that complex policy message and decided that the real message should be:

"...let's face it, fiber, the all-optical network, is the end game."

His recommendation to New Zealand: Just go for it. And he thinks its pretty reasonable financially. He uses Vermont's rural and Lafayette's urban networks to run up an estimate for the cost of fibering up the whole nation. Here's what he said about Lafayette:

"In town, it costs a lot less. I visited Lafayette LA two weeks ago. Lafayette is a city of 110,000, or about 40,000 households. They're building a municipal fiber network to every house in the city, rich and poor, black and white, for about 300 million, or about $2000 a house at a 50% take-rate. If you factor in OPEX and everything else, their cost will be about $50 a month. They plan to charge $70, for TV, telephone and 100 Mbit/s Internet."

I think several of those numbers are off but the basic point remains true: It's not too costly for a determined community. And Isenberg's advice to the nation of New Zealand is to follow Lafayette's lead in building fiber to every home.

That's what I call good press. And sensible advice.

iProvo to go private

Long-time followers of Lafayette fiber will recall the supportive visits from Mayor Billings of Provo, Utah during our fiber fight. Sadly, Provo will be losing its publicly-owned network if the current plan goes through. If the city council approves the sale it will be bought by Broadweave and run as a closed, private network much like Cox, Comcast, Qwest, or AT&T. Broadweave has, to date, specialized in fiber networks in new, upscale, gated communities. The silver lining on this dark cloud is that the people of Provo seem to be getting off pretty much even financially. The purchaser, Broadweave, will being paying slightly more than bonded cost of the network. And, the people have a fiber-optic network in place that no private provider would have ever built. Of course this was not what the people of Provo hoped for: they wanted two things: to own their own system and to have a rich variety of providers running over the common infrastructure. In Provo, at least, these two desires turned out to be incompatible.

I'm sure the full story is more complex (and would be happy to be further enlightened) but from this edge of the continent it looks like the misgivings Mayor Billings voiced in Lafayette during one of his visits has proven all too wise. Back then he had a blunt response to a question comparing LUS's decision act as a utility and offer retail services directly and Provo's "open network" practice of instead relying on private retailers to market all the services that used the network's wholesale infrastructure. He said that Lafayette's model was the stronger one. Utah's legislature, however, had forbidden communities to offer retail services and so that option was not open to his city.

There is a story behind that state policy: Qwest--the Bell phone system for that region--had eyed Provo's acquisition of a local cable company and rushed to the state legislature to outlaw the very idea that the people should "compete" in the telecommunications business with their venerable monopoly. A last minute compromise to its law whose original intent was to simply outlaw all public competition was to allow cities to build networks but then to forbid them to run them as utilities--offering services themselves like water or electricity. Resourcefully, the communities made lemons into lemonade: the cities and their community activists found virtue in the "open" network idea that had been their last defense against a total ban and touted the advantages of increased competition and the lower prices and increased efficiency that would (surely) follow.

But Mayor Billings was right: it is the weaker model. It is never a good idea to allow your competitors to dictate your business plan. As history has repeatedly demonstrated there is a reason why all cable companies and all telephone companies have fought for vertically integrated networks and reserved its basic functions for themselves: it reliably pays the bill. The public wholesale and private retail model forces those that take the risk and do the work of building an expensive, sophisticated network to rely on outside, private providers who have done neither to generate enough profit to pay for the network and to provide a nice profit for themselves. Having an extra profit-making business in the flow of cash necessarily, all things being equal, means charging higher prices. And, in Provo's case at least, it also meant that the reputation of the network depended upon the quality of service that the for-profit face of the network offered the community. The private firms, while surely good folks, simply did not have the experience or the resources necessary. The Provo network initially had trouble securing providers and only one out-of-town provider was found (HomeNet). It struggled, did (generously) a mediocre job, was unable to get the sorts of adoption rates that public telecom utilities in places like Burlington, VT or Bristol, VA have quickly and easily achieved. When it went bankrupt Provo was forced to quickly bring on board two new providers and simply gave each half of HomeNet's meager pie. Subscribers had no voice in who they went to and were frozen in place for a period of months while the new operators took over restructured services. Not surprisingly Provo's citizens who experienced this chaos started dropping off even as new users came on board. This "churn" lead to slow growth and limited the pool of customers available to the replacement providers further limiting their ability to improve their offerings.

As we succinctly say down here: "Not good."

Or at least not good for the community. It suited Qwest fine, I am sure. Their state law worked. Just more slowly than they might have originally hoped.

A community-owned network needs to be a utility. It needs to be run on the same stable, sensible, local basis that other community networks are run. When the community can see that it is their network, can see the lower prices and superior service that come with a utility orientation it quickly gains subscribers — as it has in Bristol and Burlington. iProvo's troubles are a case study in the worst that can happen when a community-owned network loses that connection to its community.

I am increasingly glad that Lafayette has not gotten caught in this trap. As bad as the (un)Fair Competition Act is at least it did not force us to put an artificial barrier between our network and our citizens.

For more on this story see the short articles in the Salt Lake paper, the Provo paper and the post at the Free Utopia blog. No doubt there will be fuller stories when the morning paper comes out. (Free Utopia also posted an excellent set of suggestions to iProvo recently...that is really worth the read. It's too bad Provo didn't act on them.)

Smart Power, Networking, and Lafayette

(Note: Lafayette is about to get its introduction to this topic when Terry Huval addresses the League of Women Voters tonight. Invited to talk about Lafayette's new network he says he wants to bring up ways to use that network to cut the community's electrical costs. Lafayette may be the place where the electrical and the communications networks first merge in ways that preview what will happen more widely as soon as the current, ongoing energy crisis echoes through to electrical market place.)
The electric service of the future.)

Want to get a sense of what that is about? Try the AP article that appeared in Sunday's Advocate that explored smart electricity.
-------------------

Lafayette's POV
It's all about peak demand. Or: It's all about saving money.

Your choice of focus depends on your Point Of View.

Network Engineers will focus on the first, peak demand. It's a constant source of irritation for neat, tidy, frugal, engineer types that they have to add hugely to the expense of their networks in order to accommodate a few days in August when all the AC units are chugging on high. The customer POV, on the other hand, focuses on saving money. With the rising price of energy this motivation looms larger every day.

And of course there are those pesky, forethoughtful sorts who claim that we can't keep on doing what we're doing to the environment and simply must burn less fossil fuels if we don't all want to sink into the Gulf faster than is necessary.

All these groups can hope that Lafayette's new community network will help lower peak demand and cut costs and usage.

Lafayette is positioned on the cutting edge of all these issues: unlike most communities we own and produce our own electricity. We are about to own our own advanced telecommunications system with fast fiber and, eventually, ubiquitous wireless. And, in a time of climate change and rising waters, we sit in a spot where the alluvial plain sinks into the Gulf. Had Rita come ashore southwest of Lafayette instead of south of Lake Charles we'd have seen storm surge in the southern half of the parish and up the Vermilion River to I-10.

Doing Less with More
We can hope to do less (use less energy, spend less money) with what we have more of (networking and community).

The AP article talks about what is being done in some locales--and neglects to mention how important a capable, pervasive network is in making its dreams possible. Without two way communication between the customer and the electrical grid none of the potentials can be realized.

What the engineers at power companies want is to eliminate the spikes in demand that drive the costs of providing service up dramatically and make the network dangerously unstable. Here in Lafayette you might be surprised to know that our Fiber To The Home network is not the most expensive public works project undertaken in last few years. In fact building a set of gas-fired power plants here in the parish to handle merely the occasional peak demand cost nearly twice as much! (Nobody much noticed that project and it sailed through the council with out much public notice or media comment.)

Saving money on that cost is something that, if you have smart communications, you can share with your customers who are willing to help cut such peak demand. Power companies have long sought a way to give customers breaks who cut their usage during such periods--but the technology simply has not been available in a world where the finest grained reading of meters is done monthly. With smart, continuously read meters and a tight connection to a household network a dramatic set of possibilities for helping the power company, the consumer, and the environment emerge.

You can simply charge more for electricity during peak usage periods. Smart consumers and especially businesses can shift their usage cycles to respond to that price savings. Big electricity users like chemical plants have had such capacity for years--and have responded well, running power-intensive processes in the middle of the night helping providers save on new capacity. Other, more sophisticated programs give the consumer a substantial break for allowing the power company the ability to reach in to the home and raise the AC temperature 2 degrees, or to turn off the hot water heater or refrigerator for an hour during crisis moments. Just being able to monitor how much running various electricity-hungry processes costs can have a surprisingly good effect on holding down wasted use.

--------------------
So, if you're interested in this sort of value-added convergence of LUS Fiber and LUS Power consider coming to this evening's LWV meeting. --The focus will be the network but expect Huval to introduce this new potential to the community.

Monday, May 5, 2008, 6:30 @ City Hall, Conference Room
(6:00 for Social/Refreshments)
Lafayette Consolidated Government Building—705 W. University Avenue

"Lafayette lauded for innovation"

Trying to catch up from a conference trip (on which more as soon as I do catch up) I've been alerted by my spouse to an article in yesterday's Advocate that Lafayette's partisans might enjoy reviewing.

Lafayette was named one of the "Top 10 Great Innovation Markets in the South" by Southern Business and Development magazine.

The fun part as relayed by the Advocate:

“From its world-renowned cuisine and festivals to its state-of-the-art virtual reality center and high-tech infrastructure, Lafayette is founded on creativity and innovation,” the magazine writes.

The magazine points to Lafayette’s multicultural and multi-industrial makeup, along with innovative projects such as the Lafayette Utilities System fiber project, the Louisiana Optical Network Initiative, and the Louisiana Immersive Technologies Enterprise as key contributors to the ranking.

Lafayette is the only Louisiana city named in the listings, which also include Raleigh-Durham, N.C.; Austin, Texas; Oklahoma City, Okla.; Orlando, Fla.; Huntsville, Ala.; Winston-Salem, N.C.; Roanoke, Va.; Hampton Roads, Va.; and Savannah, Ga.

The story's not online as of this recounting but the magazine has had similar kind things to say about Lafayette's business potential in past years. For your self-indulgent reading pleasure I offer up links to "The 10 Coolest Mid-Markets in the South" circa 2004 and "Ten Places in the South for the Creative Class" from 2007. (The magazine clearly likes decimal systems...)