Month: October 2004

Cox Enterprises announced today that it reached an agreement with its once and future wholly-owned subsidiary Cox Communications and will buy the outstanding shares of the cable company for $8.5 billion.

As the story says, the new price ($34.75) is about 8.6 percent higher than the original offer Cox made to Cox of $32 per share. The deal is expected to close by mid-December, at which point getting information about the internals of Cox Communications will become almost as difficult as getting unpleasant facts heard at a Bush/Cheney cabinet meeting.

This story has some interesting facts about the debt incurred by this deal.

For those of you keeping score at home, the higher price per share of the Cox offer to Cox is $600 million higher than the original offer of $7.9 billion. In local terms, that’s the cost of five or six proposed LUS fiber to the home projects, depending on the final plan.

Put in perspective, it means that the Cox family prefers to paying off shareholders instead of investing in the future of this community. That was made clear by the original offer. The sweetened deal means that the family is at least five times more interested in unfettered control of the cable company than they are in the economic viability of this community. Or, Cox would rather spend an extra $600,000,000 buying paper than investing in fiber in Lafayette and a few other Louisiana communities where it provides cable services.

An editorial in the Advertiser lauds the fiber backbone, citing its use in video-based court proceeding that increase security and save money.

Hey, the Advertiser takes a principled position on the burning issue of fiber optics….

Its hard to know what to say about such tepid, safe editorializing. There’s a real fiber issue out there for the Advertiser to deal with and they seem unable to see what is obvious to both the public and its elected leadership: that competition is good, and that LUS’ fiber optic network will benefit the community as a whole.

We’ve got three newspapers in Lafayette; two are owned by a large out of state news corporation and one is locally owned. Guess which one has endorsed a fiber optic network.

The Advocate has a breaking news story,Cox Communiations offers phone service, that reports that Cox will begin offering VOIP to its Baton Rouge customers tomorrow, Tuesday the 19th. They are straightforwardly targeting BellSouth and offering their new service at a 10 percent discount BellSouth prices. There is a discount as well for buying into their “triple play” of VOIP, digital cable, and internet.

Announcements in other venues (CNET, internetnews.com) promise that VOIP will be coming to Lafayette, among other locales, in November or before the end of the year.

Cox is throwing down the gauntlet. If Cox’s new service makes significant inroads BellSouth has nothing to respond with but price cuts of its own. It ought to be fun to watch.

UPDATE 6:00 am, 10/19/04: The final version of the story has appeared online and it contains further details of the plans being offered by Cox and a response from EATEL. In Ascension parish Cox will be going head to head with EATEL’s new fiber to the home service-based version of the triple play. The locally-owned telephone company will be putting its service into operation early in the coming year.

Lisa Froman, spokeswoman for Eatel, said the Gonzales-based telecommunications company is headed in the same direction with so-called “triple play” service of phone, Internet and television service…

“This whole bundling idea is going to be very important to us in the future,” she said.

Froman said Eatel is not building its fiber network outside Ascension “just yet.”

While Eatel is not going after new telephone customers in East Baton Rouge Parish, when it entered the market it undercut BellSouth’s prices by about 20 percent.

A BellSouth spokesman could not be reached for comment.

All very interesting. Especially the implicit threat from EATEL to build it fiber beyond its home in Ascension parish.

An earlier Advocate story also hinted at EATEL’s long-term plans:

Eatel’s plan is to eventually connect all of its Louisiana and southern Mississippi customers by fiber optics, which Ahern said will be the platform for the next half-century.

“Over the last 130 years, telephone companies have relied on copper, and we’ve spent a lot of money trying to make that copper do more. So, we can provide DSL service over copper today,” he said. “Now we’ve decided it would be better to provide fiber to the home and let that take us out for the next 40 to 50 years.

All of this can only be good for consumers.

Its gotta be some sorta obscure irony that the most interesting, in-depth Lafayette stories on broadband and LUS’ fiber optic network are pretty much unavailable online.

Get thee to your corner restaurant, local convenience store or favorite coffee shop and pick up the latest Independent for a really worthwhile story and two substantial sidebars. An embaressment of riches for your local fiber digester.

The base article gives the story the space it needs and runs the gamut from potential revenue for the city to development possibilities to glimpses into the technical issues.

What is most interesting, and most valuable is the slowly emerging details of the project rollout and probable implementation. Its heartening to hear LUS opening up a bit. We learn, for instance, of an initial roll-out of 40 million intended to limit the financial risk by testing the take rates with real subscribers. We discover that the system will be “capable of” 40 megs down and 20 up, that out-of-state contractors are already swarming off the Interstate and down Evangeline Thruway, that roughly half of the outlay will be in labor, a bit more about contentious digital divide issues, and that competition in cable has resulted in rates 15 to 41 lower than in areas (like ours) without real competition. There’s more but you’ll have to ferret out your own copy.

There’s a meaty sidebar on EATEL being slowly forced out of the local market by FCC rulings (a point made here–and repeatedly) and BellSouth’s determination to shut others out of the last mile connection to the home. It gives readers enough background for them to begin to understand why line leasing was initially mandated and what the feds are retreating on when they turn the monopoly back over to the inheritors of Ma Bell. The story also hints at what the community might be losing in terms of support of community activities by the retreat of EATEL to its home base to build its own fiber network.

A little stranger is the “Lafayette Unplugged” sidebar which gingerly takes a look at the noticably insubstantial claims by a local man that he intends to build a wifi network to cover 50 square miles inside the city. More credibly, but less positively, it also cites Terry Huval saying how easy it would be for LUS to add a wireless net to the fiber build. (Shades of my quintuple play fantasy.) LUS making a wireless play makes a lot more sense as I see it. And I want my VOIP phone on top of that.

Consumers Union has issued a blistering indictment of the recent FCC regulations change that further accelerated the recent trend toward closing the Bell networks to competition saying:

The FCC today took our country one giant step closer toward solidifying a two-company domination – the local cable and telephone providers — over the consumer Internet market

The policy of promoting high-cost broadband access dominated by cable and telephone companies who are allowed to discriminate against competitors and overcharge consumers is not working…The evidence that this approach has failed is overwhelmingly clear

• In the three and a half years that Michael Powell has been Chairman of the Commission, the U.S. had fallen from third to eleventh in broadband adoption.

• The cause of the failure of high speed adoption is clear, Americans are being overcharged by the cozy duopoly of cable and telephone companies. Cross national comparisons of price show that Americans pay fifteen to ten times as much, on a megabit basis, as consumers in Japan pay. Three years ago the price in America was three or four times as high.

The current fracas here in Lafayette makes it easy to see what Consumers Union is talking about: when it comes down to it Cox and BellSouth are quick to ally up to prevent real competition from entering the fray. And real competition is defined as anything that would really drive down the price of telecom services.

The Coffee N Fiber meeting will be held at CC’s coffee on Johnston (near College) Saturday at 10:00 am.

The topic of the day is all too obvious given today’s breaking news: What about that BellSouth? Will this new FCC ruling really make a difference? Hey, where is Cox in all this? Could Lafayette end up with three fiber networks? Would that be desireable? Possible?

And if we don’t find that all that interesting (hah!) we could always talk about what sorts of new services could be developed if we had pretty much unlimited in-system bandwidth. (But metered outbound and inbound to system speeds.) The limit on giving us all big pipe bandwidth seems to be the cost of backhaul. But that wouldn’t apply in-system…

Be there or…

A set of stories in the Advocate and the Advertiser preempts a blog article analyzing the new FCC ruling I was just working on. The Advocate story: Ruling opens door to BellSouth and the Advertisers’: BellSouth broadband just got easier will no doubt really roil the waters on LUS’ fiber optic plan.

Here’s the exciting lead paragraph in the Advocate’s version:

A Thursday ruling by the Federal Communications Commission will open the door for BellSouth to begin building out its fiber-optics system in Lafayette, a BellSouth spokesman said.

And here’s the more mundane facts of the matter:

It doesn’t make any difference at all.

And the authors of those articles ought to be in a position to see why.

That lead paragraph is actually pretty misleading, and only technically true, as the following paragraph makes clear: Mr. Williams is speaking hypothetically, and really about all of BellSouth’s enourmous geographic area. There isn’t anything special about Lafayette (nor is there likely to be).

The back story is that the FCC, pretty cravenly in this writer’s judgment, extended the regulatory relief intended for fiber to the home projects to fiber to the “curb” projects. BellSouth and the other baby bell operating companies won’t have to share their lines with the likes of EATEL or ATT if they can get their fiber closeto homes and businesses and divide it up between users over copper and pretend it’s as good as a real fiber to the home connection. Nonsense. Of course the FCC had already effectively let BellSouth run companies like that off their lines by allowing them to raise their lease prices so high that such companies could not compete. Competition is already all but dead. So its hard to see just how much difference this makes practically speaking.

No, as far as I can tell, it changes exactly nothing in regard to building a fiber to the home network in Lafayette. No one but LUS is offering to do to build Lafayette a modern fiber to the home system. BellSouth is not announcing a build in Lafayette—or anywhere actually. I don’t expect them to. This decision was widely anticipated and SBC used the opportunity to announce a speedup in its fiber build out. BellSouth is noticeably silent. Mike calls the sort of noise we hear from Williams in the Advocate story the roar of the cowardly lion. He’s dead on.

Cox’s hybrid system is already in place and is already tightly closed to competition. You’ll notice that not having to open their networks to competition has not led Cox and other cablecos to develop fiber to the home systems. No, the FCC is being a bit disingenious about this. They actually hope to encourage competition between networks (rather than within the current phone network via leasing) and to give the Bells additional incentive to catch up in a race they are losing.

Cox remains the more likely candidate to provide real head-to-head competition with LUS. BellSouth’s tactical disadvantage vis-a-vis Cox remains. BellSouth wants to shut out the competition as tightly as Cox does and now they can but that has not resulted in Cox building an all-fiber, modern network here or elsewhere. And it will be even less likely to result in BellSouth doing so.

Happily, if the remarks by LUS and city-parish officials are any evidence, they recognize this.

Their serene response is justified: Nothing has changed.

Let’s hope the council is equally difficult to stampede.

BellSouth’s regional spokesperson in Lafayette was apparently channeling actor Bert Larh in his beloved role as the Cowardly Lion in the Wizard of Oz on Thursday. Huffing and puffing about how a recent FCC ruling cleared the way for BellSouth and other incumbent carriers to build their fiber networks without having to afford access to those networks to their competitors, the spokesperson tried to make it sound like Lafayette streets would — any day now — be clogged with trenchers from his company burying fiber optic lines in every neighborhood in town.

Making an exceptionally vague claim about the company’s policy to roll out fiber to the curb technology throughout its system — without citing any kind of time frame for what would be a massively expensive project in BellSouth’s nine-state service area — John Williams gave the Baton Rouge Advocate the impression that this FCC decision make a BellSouth fiber rollout in Lafayette is imminent.

Uh, not likely.

The second paragraph of the story is the doozy that must be parsed in order to appreciate the deception that rests at the heart of this BellSouth statement.

Here it is:

BellSouth will start working toward a fiber-to-the-curb network in all its regions, including Lafayette, BellSouth Regional Manager John C. Williams said Thursday.

The operative phrase here is “will start working toward.” It is worth noting that since passage of the Telecommunications Act of 1996, BellSouth and the other regional Bell operating companies have been working towards a long list of goals and objectives for their system. BellSouth is a big system. Nothing happens overnight.

Don’t give up hope in the boys from Atlanta: Lafayette will — one day — be among those markets that BellSouth will see fit to bless with the kind of infrastructure that will be an asset to this community in an economic development sense. Of course, by that time, the comparative advantage that such an infrastructure might have brought here will have been diluted due to its prevalence elsewhere.

BellSouth recently sold off revenue producing assets and borrowed billions of dollars to help finance its share of the cost of Cingular’s buyout of AT&T Wireless. SBC, BellSouth’s partner in Cingular, announced a $6 billion fiber optic initiative when the appellate court first ruled in support of the RBOCs’ ability to exclude competitors from new fiber networks. BellSouth has yet to announce such a plan for its system and no dollar figure has ever been mentioned. With them all worked up about LUS plans to invest a little more than $100 million in a fiber network here, it’s hard to imagine where BellSouth will get the resources to undertake so massive a project across its entire service area.

Declaring intent is a long way from delivering on that intent.

The central change that the Telecommunications Act of 1996 drove through the telecom industry was to allow carriers like BellSouth and others to invest their dollars where ever they saw fit. That meant, they were unshackled from the need to offer uniform services at similar prices to all of its customers, regardless of location. This was the heart of the Universal Service doctrine. Prior to deregulation, BellSouth had to offer the same services in Mamou that it offered in New Orleans and at roughly similar rates. No more. The result? A little thing known as the Digital Divide.

That is, by allowing the RBOCs to invest their dollars where they could make the best return on their investments, telecom investment dollars naturally gravitated towards the large metro regions which, as a result, got new services first. Smaller communities got those services later — if at all. The playing field is no longer level.

The court decision to allow the RBOCs to exclude competitors from their new fiber networks did not reinstate the service equivalence requirement, so there is no reason to suspect that Lafayette has moved any further up the BellSouth hierarchy of priorities than it was prior to the U.S. Supreme Court’s decision last week to uphold that right to exclude.

So, BellSouth’s spokesperson is attempting a slight of hand here by implying that, because BellSouth intends to one day have fiber to the curb technology be its dominant infrastructure, it will soon be burying glass strands in a neighborhood near you. At best, a BellSouth initiative in Lafayette is several layers of metro markets down from approaching top priority in its nine-state service area.

The one shot that BellSouth does have of making its spokesman’s prediction of BellSouth going fiber-to-fiber with LUS would be for the company to engage in delaying and stalling tactics such as lawsuits and regulatory challenges to the LUS plan. Those tactics will come and they will work for a while, but even delays of that length will not be enough to enable BellSouth’s corporate bean counters to figure a way to leap frog a Lafayette initiative ahead of those in more densly-populated (read that “lucrative“) metro markets in that nine-state footprint.

Put a detailed Lafayette fiber plan on the table with a price tag, a construction schedule attached, then, commit to it, BellSouth! Otherwise, this kind of “let me at ’em” posturing rings every bit as hollow in Lafayette today as they did when the Cowardly Lion used it in Oz.

The Ascension Citizen carries news that EATEL’s franchise for east Ascension (the parish is split by the Mississippi) is moving forward at an expedited pace. The Cable TV franchise will use the fiber optic network that EATEL is in the midst of installing.

EATEL’s entry into the market will make East Ascension one of the very rare places to actually have real head-to-head cable competition. Lafayette is hoping to join Ascension parish in this competitive situation.

Interestingly Cox’s franchise agreement is not moving forward. Cox and the parish have been in “negotiations” for almost three years with a major sticking point being Cox refusing to allow the sale of advertising on a public channel that the parish council contractural agreement with management allows. The parish council appears none to happy that Cox has presumed to tell them what is legal. Cox now appears to be caving in, allowing the station to sell “sponsorships.”

Cox, belatedly, appears to be learning what happens when people have a choice: they don’t tend to put up with the sort of shenanigans they had to tolerate when a the service was a monopoly. Competition is a bear…

Coffe N Fiber met at CCs on Johnson for a spirited discussion last week. Sorry guys for the delay in posting a review, my week got out of hand and I just lost track of it.

I particularly had fun talking with an EE student from UL about the potential of the system for him; the kind of work that it might spawn and his hopes for staying in Lafayette. He’d been wondering about specializing in telecom. My guesss is that he now thinks it a good idea. He’d like to stay home if he can… The EE student was particularly taken by a brief conversation about the possibilities of a Linux-based cable settop box that would double as a real cheap computer; seems he thinks he could set up a tidy part time business servicing such a think and doing software installs.

I passed on the word I got from a recent conversation with the folks at LUS that aside from the triple play three that anyone could buy wholesale bandwidth for any purpose. That’s popular. But they want to hear it from LUS. I can’t blame them.

We had fun talking about stuff like the possibility of unlimited in-system bandwidth. (It’s looking like the limits on what folks get at their home or business will be largely determined by backhaul costs rather than any in-system constraints.)

One guy who showed up has a sideline business of installing satellite systems. According to him installations have really jumped and have stayed up since local channels came online, stressing the installation system and keeping them running behind. (One of the other guys there might get into to that installation game for awhile too.) My guess is that Cox has more problems locally than just LUS.

Anyway, it was all fun stuff to talk about. Between the conversation and the coffee it was enough to wake a fella up pretty thoroughly.

I presume that this Saturday’s meeting will also be at CC’s on Johnson at 10 am. More when I get confirmation.