La. Utility Polls on Overbuild

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A statistical battle is being waged between incumbent providers and 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.

But Cox countered those results with a poll of its own. The MSO’s results show that taxpayers understand the risks, and that citizens oppose LUS’s plan to borrow money to get into new product lines, noted corporate director of public affairs Amy Cohn. Cox’s poll was conducted by FGC Research.

Consumers already have a choice of video providers, including Cox or the two national DBS services, DirecTV Inc. and Dish Network, said Cohn. Cox has a state-of-the art, fiber-to-the-curb plant in place now, she said, and the MSO anticipates launching telephony in Lafayette in November.

BellSouth is opposing the municipal plan as well, taking its objections to the editorial board of the Baton Rouge State Times and Morning Advocate.

LUS business-development coordinator Abigail Ransonet questioned the veracity of the Cox poll.

She cited a sample question: “LUS, the city-owned utility, is considering borrowing $100 million to provide cable, phone, and Internet for its customers. Opponents say it’s unnecessary for the city unit to borrow this money because other companies already provide cable, phone and Internet services to homes. Should the city parish government authorize LUS to borrow money for this plan?”

Ransonet said the script showed that Cox used a “push poll,” with questions designed to elicit the desired answers.

LUS’s poll shows that consumers want choice and support the utility because of its 100-year reputation for high reliability, Ransonet said.

According to local press accounts, the parish council was mixed in its response to the proposal presented June 8. Some supported the plan to spend $114 million, financed with revenue bonds, to expand upon the utility’s 65-mile fiber loop. Other councilors expressed fears that as commercial operators tried to make up for competitive losses, customers within the parish that aren’t served by LUS could see their video and telephony prices rise.

Cox could promote a referendum demanding a vote on the project, but the MSO had not decided on its ultimate strategy by press time, she added.

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