Policy Documents

Lessons in Municipal Broadband from Lafayette, Louisiana

Steven Titch –
November 4, 2013

In this document from Reason, Steven Titch writes that government-funded broadband projects start with a fundamental error: governments believe they are entering a monopoly-based infrastructure business when in reality, they are entering an extremely competitive service business. The shock comes when they learn, usually within two years of start-up, that technology cycles in broadband are short. An even bigger shock comes when cities discover how much they must spend year-to-year to build and maintain viable market share. This paper examines one of the largest and most publicized municipal broadband projects in the U.S.: the $160-million fiber-to-the-home (FTTH) project launched by Lafayette Utilities Service (LUS) in Lafayette, Louisiana. Six years into the operation, LUS Fiber is 30% short of its revenue projection as set out in its business plan, more than $160 million in debt, and struggling to compete with cable, telephone, wireless and satellite service providers in terms of price, performance and service options.