LUS Fiber Struggles to Shake Shadow of Corruption, Mismanagement


Michael Santorelli, Alex Karras


June 24, 2024

Lafayette Utilities System (LUS) Fiber is a long-running broadband subsidiary of the municipal electric utility in Lafayette, LA. Largely by virtue of its size and time in operation, the network has often been cited as a model for localities considering a municipal broadband project. Thanks to a history that is now mired in audits, bad behavior, and stagnant financials, the network is fast becoming a cautionary tale and a target for turnaround efforts by new leadership.

In 2014, the ACLP profiled Lafayette’s broadband efforts, which were launched using debt financing in excess of $150 million. At the time, the system was covering its debt payments, but running at an overall loss with no clear path to self-sufficiency. The ACLP cautioned that this posed risks to residents, given that the parent utility was liable for debt service, and that any need for budgetary support from the city would come at the expense of spending in other areas.

A History of Missteps

Since the ACLP profile, LUS Fiber’s administration has been marred with a variety of questionable practices and financial red flags. Equally as important, the network is still unavailable to more than half the homes in the parish.

In 2019, it emerged that LUS Fiber was being supported while it “struggled financially” by payments of “$1 million a year for a questionable monitoring system” that was intended to “monitor power outages.” The system was made redundant in 2013 following the implementation of smart meters, but payments continued for years thereafter. The payments were pushed by its director at the time, who “repeatedly emphasized the need for [them] to come through and asked several times about their status.”

In 2020, an independent forensic audit “affirmed…allegations that [LUS] unlawfully subsidized its sister telecom LUS Fiber for years.” The report found that the former LUS Fiber Director “arbitrarily adjusted and inflated LUS-Fiber’s revenue” on multiple occasions, amounting to “at least $7.3 million across just eight years.” Alongside allegations of unlawful cross subsidization, the report claimed that the former director made “intentionally misleading or false statements…may have violated one or more state laws,” and that, under his “common directorship, there was an appearance of self-dealings that clearly benefited LUS-Fiber to the detriment of LUS, its ratepayers, and potentially other LCG affiliates.”

Ultimately, state regulators declined to pursue any kind of enforcement over these “self-reported potential violations,” framing it instead as the “end of the road for [a] drawn out and costly debacle.” While this may have satisfied “anxious” regulators, it may have also tacitly set the bar for a formal enforcement action higher than even what appears to have been misconduct at the utility.

In 2021, LUS went against the advice of an outside consultant, who had been retained to assist in a search for “LUS Fiber’s first-ever independent director.” The position, no doubt intended to clean the slate following the previous director’s departure, was filled by “a veteran Fiber engineer with limited management experience.” According to a piece in The Current, the consultant, who heads a well-known broadband consultancy, had “limited time with two finalists and recommended [the city] restart the search to cast a wider net,” citing a lack of “adequate information on their qualifications and suitability.” The city moved forward with its preferred candidate, sparking further conflict regarding his compensation and the resignation of several “top leaders” at LUS Fiber.

History Repeating Itself?

Now, nearly a decade after the ACLP’s profile, little seems to have improved. The results of another audit “found significant problems with LUS Fiber, and a recent comprehensive annual report showed that LUS Fiber isn’t growing, meeting revenue targets or filling vacant positions.” Growth in LUS Fiber’s subscribership is “nearly stagnant,” with its director stating that it will “never compete” with incumbents’ “deep promotions” and must instead differentiate via “customer care” and expanded business services.

Several concerns flagged by the audit, while financially inconsequential, suggest that along with growth and revenue concerns, the utility’s fiber operations are still plagued by a culture of questionable behavior. This includes “free or reduced-cost services” provided “improperly” to former members of the Lafayette Mayor-President’s administration, a “missing” PlayStation 5 game console “assigned to LCG’s communications division,” and the disappearance of numerous Fire Stick streaming devices from LUS Fiber’s inventory.

Hoping for a Turnaround

In a recent profile in the Acadiana Advocate, the system’s new director pitched an in-development three-year strategic plan and a set of new priorities as the recipe for an LUS Fiber turnaround. The new director assumes the helm after the short tenure of the previous director, during whose time in charge the network sought state and federal funding as part of plans to expand across Acadiana, and who was not retained by the city’s new mayor.

The new director’s “top three priorities” are to evaluate open positions, launch a new marketing campaign, and grow the focus on business services. The new director has “said there’s been virtually no marketing of LUS Fiber in the past three or four years,” a surprising admission given that parish households are no doubt actively marketed to by both wired and wireless ISPs.

The new director “believes LUS Fiber can expand within the parish and outside of the parish simultaneously,” even though “municipal fiber is not yet available to every resident within the city and parish.” Per the latest FCC data, only about 65% of city and 40% of parish households have LUS Fiber service available to them more than 15 years after the launch of residential service.

Only time will tell if issues at the utility are a matter of “basic blocking and tackling” and solvable via some simple tweaks, or if years of bad practices have set the system too far back to execute a turnaround.