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April 3, 2009 10:50 AM

Municipal Fiber Competition Benefits All Lafayette Citizens

Something interesting happened this week: Cox Communications launched its first DOCSIS 3.0 service tier, offering speeds up to 50Mbps down and 5Mbps up.

But what's interesting isn't that Cox did this, it's where they did it: Lafayette, LA.

The same Lafayette whose utility is currently in the midst of building a full fiber network with a top-end speed of 50Mbps symmetrical for less than $60 a month.

What this says is that municipal fiber deployment doesn't just bring the best broadband to citizens, it also introduces competition that spurs investment by incumbent providers to upgrade their networks.

And in fact the citizens had already been reaping the rewards of its municipal fiber project before it even went live. After the fiber initiative started Cox stopped raising its rates for cable TV in Lafayette, but it kept raising them everywhere else.

So while even though they had to fight through a lengthy and expensive court battle to protect their right to build this community asset, they calculated that the citizens of Lafayette had actually saved an equivalent amount in lower cable fees as the city had to pay in legal fees.

And the cost savings seem to be continuing on today as while Cox's top tier Internet service is supposed to cost $130/month, in Lafayette it'll only cost $90, though that has been described as a launch price so it may raise back up to $130 over time.

Though frankly I'm not sure if Cox will be able to do that. If anything they may have to lower that price even further. How can they expect to sell one tenth the service on the upload side for more than twice the cost? Even at the lower price look at how they compare:

Cox - 50Mbps down/5Mbps up for $90/month
LUS - 50Mbps down/50Mbps up for $57.95/month

It wouldn't surprise me if to stay relevant we also see AT&T; deploying U-Verse in Lafayette in the not-too-distant future otherwise they could be pushed out of this arms race entirely.

To me what this is showing is that competition really can work. The point isn't that this is a municipal network, it's that there's one competitor who's made the decision to invest heavily and now the competition is having to react and increase their investment. The same thing is happening in markets where Verizon's deploying FiOS.

Everyone agrees we need more competition. So this suggests that especially in markets where the incumbents aren't investing, we should be encouraging any and all overbuilders to come in and get that dynamic cycle of competitively-driven continuous investment start, whether they're public, private, or somewhere in between.

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