After Five Years Of Fighting, Lafayette Gets Their Fiber > Can they sustain it

reply to tshirt

Re: Can they sustain it

Profit is what is left over once you cover your costs. What makes this work is not needing to sustain a stock price, quarterly dividends or a high return on investment. When you can concentrate on the long term rather than the next quarter (or for some companies, next week) and have the local government-owned utility subsidizing the construction through bonds it's not terribly difficult to make ends meet.

Now, if they can just keep their fingers out of the cookie jar. This is Louisiana, after all...

reply to RadioDoc

reply to wifi4milez
UTOPIA?

"Created by a collaboration of cities in Utah, UTOPIA stands for Utah Telecommunication Open Infrastructure Agency. This open fiber network links multiple cities and fosters competition among communication service providers who offer Internet, television, telephone and other services, giving customers the freedom to choose their own service providers, the best prices, and absolutely the best service."

Was it successful? I am really hoping it is because it seems like such a great idea.

reply to wifi4milez
I think someone else pointed this out and I don't mean to be picky but the basic economic principle of profit is generally the amount left over after operating costs, debt retirement, capital improvements and reserves are fully funded. An organization that is classified as non-profit would never have any amount left over. If it did, it would refund the left over amounts to those which it provides service.

I do understand what you are saying but using the term profit is at best, very confusing.

What would eventually surprise taxpayers is if the utility only funded operating costs and debt retirement without building up reserves to cover the eventual need to replace portions of the infrastructure as it ages.

A perfect example of this problem is our nation's interstate highway system. In 1956 our nation started construction. Although expansion continues, the original plan was considered complete in 1992 when the eastern and western halves of I-70 were connected in Colorado. Just yesterday I heard that the system now needs ~$2 trillion to fix current infrastructure deficiencies. Obviously the government has not been funding the necessary reserves to replace and improve the system as portions of it exceed their useful and safe life span. (Consider the Minneapolis I-35 bridge as an example...) Obviously we taxpayers are "surprised" and... left holding the bag...

reply to JBear
They have successful deployments but their financial picture isn't as good as they originally estimated. Cities may end up having to pay debt service on the bond payments where in the beginning they were hoping the network could pay for itself. Part of the problem was the bureaucracy of the federal RDA funding, another part was the dirty tactics of Qwest and Comcast and lawsuits trying to hold it up, another part is incumbent telcom lobbyists that keep pushing laws in the state to hamper the network, and finally, it was managed well from the start. It's not a failure yet--many cities have 30/30 connections up and running for about 50,000 businesses and residents, but this is still short of the goal of over 100k and it is over-budget. Still, there are signs that it has helped the economic development in those cities and even though cities may end up paying debt service, I don't think you can say it's a total loss, unless you are a competing wireless company or incumbent who is eager to write the whole thing off as nothing but a failure. More info at a great website, www.freeutopia.org

reply to wifi4milez
With LUS, the city can offer the service directly. UTOPIA forced the cities to be wholesalers of fiber.
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