Going to Supreme Court in Defense of Closed Cable Networks

The Washington Post reports in it’s Tuesday edition that the Bush administration will ask the U.S. Supreme Court to overturn a 9th Circuit Court of Appeals ruling that cable companies must provide internet service providers (ISPs) access to their networks.

This battle has been raging for years. It started, as I recall, in Tacoma, Washington, in the late 1990s where the City Council wanted to write a requirement for open network access into its cable franchise agreement. After numerous court hearings and appeals, I think that case was ultimately resolved in favor of the cable companies. But, as the Washington Post reports, a group of independent ISPs brought a separate action challenging a Federal Communications Commission (FCC) ruling which classified cable services as information services rather than telecom services.

The cable companies (and the Bush administration) argue that upholding the 9th Circuit ruling would subject cable services to charges like Universal Service Fund fees. They’re right.

However, whether that would mean higher prices to consumers is an open question. Why? Open networks would bring competition to Internet-based services delivered over now-closed cable networks. Competition has been shown to have a very positive impact for consumers on what used to be the straight telephone side of this evolving industry.

That the FCC ruled in a way that protected the proprietary hold of cable companies over their networks should come as no surprise. This is consistent with the ‘competition among modalities’ approach to competition that FCC Chairman Michael Powell champions. It is consistent with FCC rulings that have exempted incumbent local exchange carriers from having to grant competitors access to new fiber networks.

This particular Powell Doctrine represents a sharp change from the policies that were in place which enabled the Internet to become a hotbed for innovation. It is consistent with a world view which says that inter-modal competition among corporate monopolists is a good thing.

Could be, but good for whom?

Fiber munis share incumbent war stories

Broadband Reports notes our new content,Talking with Annie Collins of the TriCities in Illinois.” That’s nice notice in a major national resource on the subject of broadband.

The interview with Annie inaugurates what we intend to be a regular feature—discussions with folks in other communities also interested in moving to a publicly-owned telecommunications infrastructure. Jump over to Annie’s interview; she has some very interesting, and familiar, things to say about the tactics that the incumbents in Illinois have used to try and block their municpal coalition to build a fiber network.

Secret Identity of TJCrawdad Revealed

Mr. Menefee has done his technogeek expose thing again. TJCrawdad, the anonymous “Lafayette Resident” who produces the Let the People vote Blog, is revealed as Tom Cantrell of Tyler, Texas, the Cox executive that distingushed himself by managing to insult the Lafayette Chamber of Commerce, and defending push polls. You should go straight to the horse’s mouth and read about Master Menefee’s exploit yourself —how he did it is half, well 25%, of the fun—but I can’t resist the temptation to give you a little more of the back story here.

You will recall that Doug has exposed these guys once before when he looked up the location and domain name owner of the original “let the people vote” website. First he mentioned, in the course of discussing why going to a vote wasn’t fair to Lafayette or LUS that the Let the People Vote website was a Cox initiative. Challenged by an email to prove that it was Cox and not a concerned citizen Doug simply published the whois data showing that Cox in Tyler, Texas owned the domain and that accounts receivable had paid for it. Simple. Devastating.

Cox mostly didn’t deal with that and what little reaction they had was to say that it was all an oversight; that they never meant to deceive. But the original version of the site made it very clear that the you were supposed to believe that it was out of Lafayette. That site, its credibility shot, was never well developed and today remains a three page website that exists solely to channel email to the city council. But it still isn’t labled a Cox site and still contains phrases like “as we say in Acadiana” that certainly mislead the reader—and certainly is intended to do so. A deceptive site which remains up even after it is exposed reveals the true depth of its owners committment to anything resembling the democratic process….and their unrepentant contempt for those the site hopes to influence.

Then the Let the People Vote blog appeared. It too is set up to make the reader think that TJCrawdad, the site owner, is a Lafayette resident. Just take a glance a the profile where the owner’s location is clearly stated. It was this blog, and not the by then discredited Cox site that was advertised for hours at a time on cox cable channel 14 in alternation with an ad for the Cox “Academic” Broadband Forum.

But Tom Cantrell aka TJCrawdad is not a resident of Lafayette. He lives in and presumeably blogs from Tyler, Texas.

It will be interesting to see how Cox responds to this. The last time they got caught out they did a little Texas shuffle and went right back to trying to deceive people—if they had simply forgotten to let the readers know who was sponsoring the message, being notified of their error should have lead to labeling the site a Cox site. But the site is unbranded even today. But in the case of the blog it is not a “mere” sin of ommission. Saying you are from Lafayette is an outright lie. Can they ignore that as well?

These sorts of deceptive practices are ultimately counterproductive, a fact Mike has written on in his recent Fact Check article: Blowing the Whistle Over Bristol (scroll down to the summary).

Cox would be well-advised to reconsider its tactics. People don’t like being lied to. And once it is demonstrated that you are perfectly willing to deceive people to gain advantage you lose even people who might otherwise support you. The easiest way for powerhouses like Cox and BellSouth to lose the public relations war in Lafayette is to convince the people of the city that they cannot be trusted. They seem hell-bent on doing so.

BR Advocate provides English translation for Times column

Saturday’s edition of The Advocate carries a straight news story about a tour of other municipal fiber operations by a team of the Lafayette Utilities System (LUS) employees.

That article may come in handy if you read this Eric Benjamin column in Wednesday’s The Times of Acadiana.

Menwhile, John is still seeking help interpreting Benjamin’s first column on the LUS project.

Progress & Freedom Foundation thinks YOU are the problem!

The hired guns over at the Progress & Freedom Foundation think that the problem with telecom policy in these United States is that there is too much public input.

At least that’s the way I read this latest trial balloon from P&FF’s Randolph J. May. Mr. May believes that there are too many “cooks stirring the pot” at the FCC. His solution, make the commission directly responsible to the president.

What a neat trick!

As an agency directly responsible to the president, the FCC could invoke executive privilege to prevent the public from finding out whom the commissioners are meeting with in the course of shaping public policy.

Oh, I get it! Make telecommunications policy like energy policy! That is, make policy a captive of the corporations who constitute the industry and reduce public scrutiny of the decisions of the commission along with examination of the decision-making process.


This is proposal is classic incumbent monopolist logic at work. One passage provides the key to understanding what Mr. May and his paymasters have in mind. He writes:

“In large part because of drawbacks tied to its institutional legacy, the FCC’s implementation of the 1996 act has been problematic. In this quickly evolving digital age, the commission regularly issues muddled, fractious decisions that take many months, or years to produce and they are frequently overturned in court.”

Before getting on to the argument itself, it must be noted that the companies that fund the Progress & Freedom Foundation (particularly the regional bell operating companies Verizon, Qwest, SBC, BellSouth and their predecessors) bear a hefty portion of responsibility for the FCC’s inability to make timely policy. These companies employ armies of attorneys whose functions include filing suits to challenge FCC decisions in the various federal court districts across the country.

That apparently irrepressible impulse to litigate further strung out the FCC’s long policy implementation process which is the impetus for Mr. May’s suggestion.

Mr. May’s complaint here is really that the current structure of the FCC provides companies other than incumbent phone and cable companies the opportunity to influence the regulatory process through which the FCC makes its rules. On top of that, there is no secrecy available in the process. The ex parte rule requires that commissioners and the commission staff publicize any meetings they have with parties having an interest in commision rules. The room can be filled with smoke as the industry lobbyists can blow, but the light of public scrutiny must be allowed to shine in.

What Mr. May and his P&FF masters want is something akin to the Cheney energy task force where the entire process of shaping policy can be conducted behind closed doors, outside the view of and beyond the influence of the public and those with views that run counter to those of industry incumbents.

P&FF is saying that democracy and transparency of process are the problem at the FCC. ‘Things would be much better if we could get these rules right quicker,’ they are saying. It’s a tempting argument, unless one understands the importance of transparency in the regulatory process, as well as the nature of that process compared to that of executive departments.

The FCC is comprised of five commissioners. The prevailing rule is that the sitting president gets to name a majority (at least three) of the members, ensuring that the party not holding the White House gets at least two seats on the commission. In the years since passage of the Telecommunications Act of 1996, this split has had real world impacts.

Reid Hundt was the sitting FCC chairman when The Act became law. Under his leadership (with the support of the two other ‘Democratic’ members of the commission) rules providing Universal Service funding for schools, libraries and rural healthcare providers were passed. But, more importantly, the commission under Hundt and his successor William Kennard took The Act’s commitment to creating a competitive telecommunications environment seriously.

With the change of administrations in 2000, Michael Powell became head of a commission which, for the most part, has been dominated by a 3-2 majority that has usually favored the interests of incumbents over a true competitive environment. In Mr. Powell’s view, competition would exist among modalities (cable versus phone versus satellite) rather than within the modalities. Thus, under the Powell FCC, there has been a rollback in the commission’s commitment to things like open access to incumbent networks.

One reason converting the FCC to an executive agency is so attractive to the P&FF folks is that raw political influence is much pronounced in those departments as compared to a regulatory setting. In today’s politics dominated by corporate contributors, under secretaries and other positions in departments (like the Department of Commerce mentioned in his article) have become the positions into which lobbyists for the industry or sector that such agencies allegedly regulate migrate. It is a revolving door environment in which political contributions don’t talk, they scream.

Under the transition suggested by Mr. May and P&FF, someone from, say, Verizon or SBC or BellSouth or Comcast or Cox, would — upon the victory of the presidential candidate receiving their largesse — move into a position that is today held by an FCC staff member who might actually have an iota of understanding of the concept of the public interest.

It is this pesky concept of the public interest or, at the very least, interests that do not entirely coincide with those of the incumbent telecom and cable companies which is the target of Mr. May’s ‘reform.’

What the Progress & Freedom Foundation seeks through this proposal is to enable its prime funders (see the names listed in the previous paragraph) to grab firm control of the regulatory process and turn it into a farce.

This ‘efficiency’ would come at the expense of an open regulatory process that allows for public input and participation. This approach would give those with the deepest pockets the ability to capture control of the regulatory process and shut the door behind them.

The Progress & Freedom Foundation forgets that the pesky inefficiency which open regulatory processes impose are inseparable from the reason that our republican institutions are so widely admired around the world. There is a price to be paid for ‘making the trains run on time.’ Sometimes pretty good is a damned sight better than perfect. This is one of them.

Telcos, as sick as railroads?

Don’t have a WSJ subscription and so can’t get to the text of this one. But if you do the story is online. But according to the summary on CNET news it suggests that the Bells are in trouble and may end up being a sick industry like the railroads.

I value history and have previously opined that the railroads are a good example of the malign consequences of ignoring the natural monopoly character of an industry. In our history it lead to a lot of unwholesome things like robber barons and widespread governmental corruption. A bit more thought and I realize that both railroads and the new Bells are regional monopolies and some of the problems with both were due to unclear jurisdiction and their regional nature.

All very suggestive and I would welcome hearing from a reader who does have a subscription as to just what analogies they draw.

Bristol Shows the Incumbent Way: Don’t Innovate. Litigate!

The story of how lawsuits and regulatory maneuvering by incumbents in Virginia drove up the costs of Bristol’s OptiNet project is a pretty clear picture of what awaits LUS once it details its plan and, presumably, wins Consolidated Government approval to proceed with its fiber to the premises project.

The regulatory front was prepared in this state during the recent legislative session where BellSouth used its lobbying clout to compel LUS and other would-be Louisiana municipal fiber network builders to run their business plans by the Louisiana Public Service Commission.

But, what the Battle of Bristol reveals is that incumbent phone and cable companies have remained true to their corporate DNA. That is, they are not innovators they are litigators. The single class that has benefited most from the passage of the Telecommunications Act of 1996 have been lawyers, as incumbent carriers, competitive local exchange carriers, long-distance companies (interexchange carriers), cable, wireless, rural carriers, communities, citizens, customers and regulators clashed in the courts trying to flesh out the meaning of the new law.

Litigating is nothing new to phone companies, though; is the incumbent monopolist’s way. It is so deeply ingrained the phone company culture that McGraw Hill’s Telecommunications Protocols‘ (ISBN 0-07-134915-4) author Travis Russell writes in the second edition of that book:

“As you can see, while the computer industry highlights center around technology, the telephone industry has struggled with takeovers, lawsuits and regulation.”

With a takeover of LUS off the table, BellSouth (and, likely, Cox — either jointly or separately) will pursue the other two lines which have historically been the path of obstruction: lawsuits and regulatory manipulation.

The intent and the result will be to drive up the cost of LUS deploying a fiber to the premises plant here. In Bristol, incumbent phone company Sprint and incumbent cable provider Charter Communications vigorously pursued this route. There, they succeeded in delaying the rollout of services by OptiNet, thereby depressing revenue in the system’s ealry early going.

It may, too, have created ill will in the community for the incumbents as both have lost market share and a cable rate increase earlier this year had virtually no impact on OptiNet subscription levels.

We can expect a similar strategy of obstruction to emerge in Lafayette from the unnatural alliance of BellSouth and Cox Communications. The downside of this strategy is that it makes those that employ it come across as classic sore losers who are intent on inflicting pain on its likely competitors. But, of course, the views of customers would have to first matter to the incumbents in order for customer sentiment to be relevant.

Recently released polling data here shows that this is not the course that wins the hearts and minds of Lafayette residents. It is the course of petulant monopolists who are not accustomed to competition, nor to losing. It also reinforces the notion that the talk by Cox and BellSouth of concern for the well-being of the citizens and community of Lafayette is just so much hot air.

LUS has, hopefully, recognized the pattern of obstructionist tactics used by incumbents in its research on other municipal systems. I don’t doubt that LUS will be prepared for what awaits them when the time comes to move on its still-developing plan.

I wonder, though, if the public will be prepared for this fight? Because, cher, we have not seen truly ugly yet, but it’s coming — and it’s expensive!

National Attention for “the Battle of Lafayette!”

Two new national articles examine the fiber fight in Lafayette—and both tear into BellSouth and Cox. It does a fiber partisan’s heart good. I’ve noted before that the Lafayette fight for fiber has become the headline fight in a spreading battle between incumbent telcos like Cox and BellSouth and Municipal providers like LUS. What we are seeing now is that people across the country are recognizing that the sleazy tactics arrayed by the incumbents in any one locale is not an aberration or an indication that something is somehow really wrong with the local project. No, what LUS and the City-Parish are being put through here is repeated across the country and is an indication not of local problems but of the greed, and weakness, of the incumbent providers.

Both Broadband Reports (Playing Louisiana fiber keep-away) and Fiber Optics Forecast (The FTTx Battle In The Bayous) carry stories on the issue. (links via LUSFTTH, good going Doug!)

I’ll not try and summarize these two articles, I’ll just feed you a few tidbits to and urge you to jump to the sources themselves. Both of them are well worth the time on Wednesday morning, I assure you.

BroadBand Reports:

In 2002, Cox Louisiana was one of the few cable markets in the country that saw three rate hikes in one year; a luxury afforded companies with little competition. Regional Cox customers are part of a forgotten Cox division that has been excluded from a series of speed increases customers in coastal markets have enjoyed. Cox is only now starting to provide these customers with connections faster than 1Mbps, yet they’re sure fiber is a bad idea.

On our “Academic” Broadband Forum:

We’re guessing the experts didn’t mention that in markets with more than one cable operation (muni or otherwise) consumers usually see rates 17% lower on average, according to data from the General Accounting Office. Also likely omitted was how the 16,000 residents of Newnan, Georgia receive broadband for $25 a month, discussion of how one Minnesota suburb now enjoys $16 3Mbps wireless service, or the growing number of other communities enjoying less expensive alternatives.

(Broadband forum is guessing right, they didn’t mention that, in fact they were at some pains to assert that municipal competition never caused incumbents to lower their prices. A position contradicted by both common sense and the facts.)


These aren’t honest debates over the viability of municipal operations occurring in dozens of states across America. These are not corporate executives seriously concerned with the Democratic process and the quality of service communities receive. These are tactical corporate disinformation campaigns, designed to protect bottom lines and keep competition from arising in the service vacuums these companies have helped to create.

(Oh, and if you thought that was vigorous writing–don’t miss the comments….)

Fiber Optics Forecast

Telephone and cable companies, fearful of losing as much as 50 percent of their customer bases, have been opposing just about every one of the municipal projects. Until now, most of the battles have been fought behind the scenes, with only the tip of the iceberg showing at the occasional city council or other hearings. In Lafayette, the battle has escalated well-beyond that, into an acrimonious public debate that rivals the 1863 Civil War Battle of Vermillionville (as Lafayette was named back then, after the nearby Vermillion Bayou).

After expressing concern at the cost per customer of the LUS project FOF notes:

…Meanwhile, for BellSouth and Cox, the Battle of Lafayette really is a lose-lose situation, one that is reflected in smaller municipalities around the country. If Lafayette goes ahead with its project, the two incumbents could lose as many as half of their customers. If that happens, the economic underpinnings of the networks the phone and cable companies have built start to look quite shaky.

…Initially Bell South senior PR folks tried to convince us at Fiber Optics Forecast that it already has fiber to a million homes and that it is adding new fiber at the pace of a quarter-million homes per year. After just a couple of questions, that claim collapsed with the admission that the fiber passes all those homes, but doesn’t actually go to a single one of them. To be quite frank, our initial reaction was similar to Lafayette Mayor Durel’s comment to us that “they want to treat us and south Louisiana like we were a bunch of idiots.” At press time, BellSouth still had not produced promised executives to discuss the Lafayette situation. Similarly, Cox failed to respond to requests for interviews. The bottom line is that, in small towns like Lafayette, BellSouth and other CLECs might want to consider biting the bullet and abandoning most of their own lines, instead negotiating for a franchise as the voice carrier in any triple-play system offered via the LUS FTTx system. Half a loaf, after all, is better than none.

They close out with:

In any case, the Battle of Lafayette is sure to be studied by municipalities all over the country, with the eventual outcome helping to set the pattern for rural FTTx deployment all over the United States.

Your Cable Dollars at Work!

The following blurb and link were contained in an email eLetter from Southeast Tech Wire today:

o Discovery Acquires Raleigh-based Rainbow Educational Media

Raleigh, N.C. — Discovery Communications, the Maryland-based media

company behind such cable TV stalwarts as The Discovery Channel and TLC,

said on Monday that it has acquired Raleigh-based Rainbow Educational

Media, a publisher and distributor of core-curriculum educational videos,

CD-ROMs and DVDs. A Discovery spokesman said that the principals of

family-owned Rainbow — also known as the Charles W. Clark Company — plan

to retire, with the business being absorbed into Discovery’s current

facilities. Financial terms of the deal were not disclosed.


What’s the connection? Well, Cox is an owner of Discovery Communications, owner of The Discovery Channel and The Learning Channel (TLC).

This just in: Cox still has no plans to build a fiber to the premises network in Lafayette!

Another Letter Alert

In my little crusade to make sure that folks don’t take the recent flurry of anti fiber letters as all that indicative of the opinion of anyone but BellSouthCox folk I give you the latest letter. Though he doesn’t mention it he’s a BellSouth retiree; he said as much in his previous letter. I imagine he retired a while ago since he seems unaware of Voice Over Internet Protocol—VOIP. VOIP is surely the method that LUS will use if its plan goes forward and it involves using none of BellSouth’s resources unless the person you call is a paying customer of BellSouth or one of its lessees. Anyway, those “discounts” aren’t such a good deal anymore. The Ma Bell, AT&T, recently stopped taking new customers in our region due to regulatory changes which will eliminate much of the “discount” the writer complains of. Ma is moving to Cox, among others, to provide its local connection using VOIP as was reported here earlier. (See: Running to Mama for VOIP).

Don’t worry, I’ll get over this silly little bit soon. It just irritates me.