BELLSOUTH, COX RAISE STAKES ON LOUISIANA CITY'S FTTP PLAN

One of Louisiana's biggest cities is considering a municipal fiber-to-the-premises project that could become one of the largest in the country, but incumbent service providers soon to be armed with triple-play service have a new tactic with which to fight city hall.

Capitalizing on frustration over incomplete broadband service and recurring rate increases for cable television, the Lafayette Utilities System (LUS) is proposing building fiber to each of the town's approximately 55,000 premises (which includes about 6000 businesses) within three years. That would far exceed some of the country's largest municipal FTTP projects, such as Provo, Utah, and Jackson, Tenn., which each plan to reach less than 35,000 premises.

Public debate on the subject has followed a typical pattern, with BellSouth and Cox Communications contentiously lobbying residents that municipal FTTP is too risky and unproven. (LUS supporters say those companies even used “push polls” to scare taxpayers away from supporting the project. Cox and BellSouth declined to comment for this story.) In other cities, incumbent telecom providers have been known to upgrade their networks, extend broadband deployment or push legislation to bar municipal FTTP.

But in Lafayette, the debate took a new turn as incumbent service providers shifted from denigrating public fiber to promising their own triple-play deployments, posing the prospect of a rare three-way market for voice, video and data. Earlier in the year, BellSouth argued it could use its DirecTV partnership to eventually deliver video service to the town. But on the heels of a recent regulatory decision freeing it from obligations to unbundle fiber networks, the telco assured Lafayette residents that it could soon deliver triple-play services using fiber-to-the-curb. Late last month, Cox announced it would add voice to its video and broadband offerings for Lafayette in November.

“For the next 24 months, I'm going to get some incredible services from BellSouth and Cox,” said Abigail Ransonet, a consultant with R.W. Beck, which is assisting LUS. “Cox upgraded us to 4 Mb/s at the same $39.99. It's awesome.”

BellSouth, which favors using advanced DSL to utilize existing copper loops, insists that planting fiber all the way to premises is unnecessary. LUS, meanwhile, argues that FTTP offers the biggest bandwidth for applications like high-definition television.

LUS' model calls for a 50% take rate, but the company claims to need only a 30% take rate to be successful. If LUS secures a $100 million bond to build the network and fails to win enough market share, say Cox and BellSouth, the taxpayers will have to foot the bill. LUS insists it can reach 50% because, as a utility amortizing expenses over decades, it will be able to undercut competitors' prices by about 20%.

John St. Julien, a retired Lafayette resident who founded a Web site to help promote the fiber plans of LUS, doesn't believe BellSouth and Cox will follow LUS in rolling out triple-play services in Lafayette.

“If they can only have 30% of the market here, there will always be a more profitable place to invest their fiber dollars,” St. Julien said. “When it comes down to the day they have to invest $100 million of their own here, they won't do it.”

Starting this week, the city is conducting two public forums on the LUS fiber proposal — one Nov. 9, the other Nov. 17 — after which residents will vote on it. At press time, rumors were buzzing that BellSouth was preparing a new offer to counter LUS. No matter what residents decide, other towns that raise the municipal FTTP debate — especially those of Lafayette's size — could likely get the same treatment.

Lafayette, La.

Population: 110,582

Population rank in state: 5

Per capita income, 2002: $29,646

Source: Lafayette.org