August 22, 2014
Today the Coalition for the New Economy (CNE) continues its look at a recent study of government-owned broadband networks (GONs) from New York Law School by examining the report’s case study on Lafayette, La., another GON CNE has highlighted many times before.
The studies authors, Charles Davidson and Michael Santorelli, start by noting GON supporters often cite Lafayette’s GON as the best performing public broadband network in the country.
If Lafayette is municipal broadband’s high water mark, there’s clearly a drought.
Until the early 2000s LUS Fiber offered service only to city offices. In 2004, the city authorized a study to considering expanding the service and, in 2005, voters in Lafayette approved a referendum to move forward to use $125 million to expand the network Construction began in 2008 and users started to come online the next year. While LUS Fiber may not be as financially bad off as many other GONs, Davidson and Santorelli say, “the financial stability of this GON in both the short term and long term remains uncertain and should continue to be closely monitored.”
Davidson and Santorelli also report, “To date, the costs of building and maintaining the GON in Lafayette have exceeded the initial $125 million bond authorized by referendum.” Costs now top $150 million and that figure does not include startup costs. Additionally, the network has operated at a loss for the last several years and now is not expected to be self-sustaining until 2015. (A date that was pushed back from 2012.)
While private companies in other cities charge about $100 a month for superfast gigabit Internet service, LUS Fiber charges $999. Consumers can opt for speeds of three Mbps – far below the national average – for $20 month. LUS Fiber’s cost structure hasn’t attracted many takers – after five years, the system has just 14,000 subscribers.
Davidson and Santorelli also say there is no clear indication the GON has attracted many new jobs to Lafayette.
To read more about Davidson and Santorelli’s study, see our previous posts on their top 10 arguments against government-owned broadband networks, Chattanooga, Tenn., Bristol, Va., Cedar Falls, Iowa, Danville, Va. and Groton, Conn.
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