Month: December 2004

Its been a vintage year for fiber. While the fight is not yet won the end is near. We’ve got brilliant leadership and an unflappable community to thank for that.

Lafayette will be at the forefront of technology as the century blossoms. Add that to the list of things you are grateful for tomorrow.

And don’t forget your black-eyed peas and cabbage. We could still use the luck….

I’m off to the country for simple food, good family, and to watch grandchildren be amazed by fireworks. Y’all have fun!

Forbes.com: Bells dig in to dominate high-speed Internet realm Consumers could pay if giants squash rivals like tiny Lafayette, La.: I’ve celebrated the Lafayette aspects of this story in earlier posts but I ‘d be enthusiastic about it even if Lafayette weren’t mentioned. It is simply the clearest account of the “big picture” story on the changing telecom scene that I’ve seen recently. Here’s the story’s hook:

“It’s the dark side of the fiber story.

The regional Bell companies have made much of their billion-dollar plans to deploy broadband networks across the USA. But they’re also quietly trying to erect hurdles that would make it hard for anyone to compete with them — at least not very cheaply or easily.

Besides municipalities like Lafayette, the Bells are going after their phone rivals, Internet access carriers and major metro areas — anyone with an interest in building services that might compete with the Bells.

Critics say the Bells’ efforts are a direct attack on competition and that consumers could be the big losers. “

The author and the critics are right of course, the incumbents drive to eliminate competition is what unifies recent news about municipals, the FCC, and state laws. And, in truth, even “their billion-dollar plans to deploy broadband networks” is in equal parts about stifling competitors and resisting their competitors’ attempts to stifle them. The Bells and the the Cabelcos both realize that once fiber has replaced their different delivery models and the digital/IP revolution has resulted in undifferentiated services that their current uneasy, limited duopoly competition will collapse into a cutthroat regime with eventual regional monopolies the likely outcome. They are all determined to be the last monopoly standing.

The article does a fascinating job of walking through the recent history of how the Bell systems have done their best to eliminate competition. This is the sort of recounting that responsible journalist everywhere should be doing. The so-called “even-hand” reporting that reports “evenly” on what each side says about each separate little conflict amounts to lying to readers. It is this sort of story, one which traces out the history behind the little conflicts, that gives the readers the big picture they need to begin to understand what is being done.

The story told is not pretty. According to this article the Bells’ stewardship of our premier communications network has left the US lagging badly in broadband availability and in the cost of it. (The US is about 15th in the world in usage and the Japanese telecos offer fast DSL at 50 megs for about 15 dollars a month.) The Bells turn around and use this abysmal situation to implicitly threaten federal regulators that if they don’t get their way they won’t be able to overcome the gap they’ve allowed to grow. They do the same to state legislators, with the recent Pennsylvania mess being a good example—there the state legislature handed over municipalities rights to build telecom utilities to Verizon for its approval. If Verizon says no, the cities can’t go forward. Verizon will never willingly give permission to compete with it and has effectively eliminated a whole segment of market competition. (At telecom urging many states have already forbidden municipal entry, (e.g. Texas) and others have forbidden municipalities to deliver profitable retail services, (e.g. Utah)) The Bells, which gave up rights to use their networks as exclusive monopolies when they wanted entry into the lucrative long distance market, have been trying, and succeeding, in regaining that control without giving up their long-distance service. Regulated resellers like AT&T and EATel have been pushed out of the market by FCC permission to raise rates well above the standards implied in the initial agreements. The FCC had earlier said that the Bells would only get back control if they built a whole new system untainted by their generations of monopoly control. That is, a fiber optic network. Even so, as the story documents, BellSouth has managed to get around that limit and reimpose monopoly control well short of actually building what it had promised. The cellular competition that the Bells tout is often owned by them–Cingular, for instance, is partially owned by BellSouth (the rest by SBC) making that competition an in-house thing. The top three cell companies are owned by the Bells. As the Feds allow the number of competitors in the wireless market to fall you can rest assured that the healthy, price slashing competition that existed there will give way to the same sort of tepid managed competition we see in other markets dominated by 2 or 3 fat, comfortable players. If cell phone companies were ever competition for the Bells they won’t be soon. Though not covered by this article, the Bells’ attempt to use the FCC to evade local pole fees and franchise fees that cable companies have to pay when they offer cable TV is another transparent attempt to put their competitors in an untenable position. (See my earlier “phone sharks” posting for details.)

So the Bells have been engaged in obvious attempts to thwart competition. This sort of story which uses an example like Lafayette as the emotional touchstone to a to a well-documented history that shows how the strategy is pursued does a good job of informing the public about the real telecom story and avoids the all too common exchange of press releases that passes for journalism.

An valuable point seldom raised in public is that even in situations where we do not see outright monopolies but only one or two bloated corporate “competitors” usually results in much of the same problems we associate with pure monopolies. This lesson is also told using an historical example:

Experts say they worry about diminished competition in broadband services. Unless others are allowed to step into the fray and aggressively compete, broadband could fall under the control of just two players, just as the cellphone business did for many years. With just two cellphone carriers per market, operators tended to keep their prices high.

If regulators aren’t careful, the same could happen to broadband, warns Mark Cooper, research chief at the Consumer Federation of America. ”Two is not enough for real competition,” he says.

Cooper notes that the U.S. cellphone business, which was a legal duopoly for years, turned competitive only when the Federal Communications Commission decided to issue up to eight licenses per market. The entry of six hungry players upset the status quo. And it caused cellphone prices to plummet — a boon for consumers.

Since 2000, though, the wireless business has consolidated. Once Sprint and Nextel complete their merger, there will be just three major wireless carriers.

”It’s just too easy for two or three players to figure out how to avoid lowering prices,” Cooper says.

What goes unsaid in this article focused on the Bell’s behavior, is that the current duopoly situation with regard to broadband in most parts of the country of cableco and Bell company is not in any real economist’s estimation the sort of competition that you need to produce the benefits of free enterprise. These guys are gaming the system–to our disadvantage.

The article wraps around back to Louisiana at the end, revealing an issue I haven’t seen reported elsewhere:

BellSouth, meantime, is working all the angles.

The carrier recently told local regulators in Lafayette that it thought they should use the FCC’s ”Part 64” accounting requirements, which have long been imposed on local phone companies, as a benchmark for establishing rules for the city. Lafayette countered that those rules would create a costly and unnecessary burden.

Within days of making that argument last fall, BellSouth turned around and asked the FCC to relieve it of the Part 64 requirements for its broadband services. The carrier complained that the rules were onerous and outdated, noting that they force phone companies to maintain ‘extensive and tedious” records.

BellSouth insists that it’s just trying to look out for the interests of local taxpayers in Louisiana. It points out that the city-owned electric utility is a monopoly, and, as such, should be treated like one.

”We’re just saying that the local utility ratepayers should not be cross-subsidizing this new business that they want to get into,” says McCloskey, the BellSouth spokesman. ”They are a monopoly, and they should be regulated like one.”

And BellSouth?

According to McCloskey, the communications giant ”is no longer a monopoly,” which is why it’s asked the FCC for relief from Part 64 rules. ”We’re a different kind of animal,” McCloskey says.

The mindlessly cheerful hypocrisy of the incumbents is just stunning. If the Bells aren’t monopolies any more because of competition like that which LUS offers then LUS certainly can’t be a monopoly. It really angers me when these folks treat me and my community like fools by handing us junk like this and expecting us to treat it seriously. This sort of reasoning is the sort you see from a young jerk determined to do as he pleases and arrogantly unwilling to even come up with a believable excuse. It’s good to see Lafayette standing up to their bully-boy ways. They are in for a surprise if they think Lafayette is going to roll over for them.

Durel has it right: “they have to get out of our way, because we are not going to stand down on this.”

YES. Rally round the flag boys. The right is on our side.

A tip in the comments to yesterday’s post, Lafayette, poster child for municipal broadband, noted that the same story discussed there had been posted to Forbes and subsequently I found it on ITToolbox. In both those locations it is simply presented as a USAToday story. Apparently this is the story that was to have run last Wednesday; it seems to have been released into their distribution network even though it has not yet appeared on the USAToday site.

In yesterday’s post I focused on the Lafayette portion of the story. Seeing Lafayette recognized so favorably at the national level is very gratifying. The quarrel I’d have with that part of the story is that it presents Lafayette as a small rural town. The title and subtitle in the Forbes layout is revealing: “Bells dig in to dominate high-speed Internet realm; Consumers could pay if giants squash rivals like tiny Lafayette, La.” Maybe from the perspective of the writer it is a small town…but playing the story that way leads to a more substantial mistake: in making Lafayette just another rural town it misses the fuller reason that our story causes concern for the telecom monopolies. Lafayette is actually a small to medium-sized city that lies at the center of a large rural network — it gets telecom services in the second or third tier. It will be the largest municipal fiber project in the nation. By no one’s estimation is it small potatoes. But its surrounding communities may never get the same quality service; they are fourth tier and below. However, Lafayette seems psychologically poised to provide services to the outlying regions. Not immediately, it needs to secure its own system; but the signs are there that regional leaders are thinking in terms of expanded service even at this early stage. Should it move forward in that realm as briskly as it has moved forward at home the dominance of the incumbents could be threatened not just in Lafayette but regionally.

National attention on regional networking has focused on networks connecting municipalities like Utah’s Utopia and Iowa’s proposed network. I for one think these exciting efforts and likely to succeed. But they are based on an unfamiliar and untried consortium model—the consortium builds the backbone, individual cities build out their own internal networks. The business model is generally one of leasing bandwith and hoping providers will appear that are profitable enough that they can afford the rent that pays back the bonds taken to build the system. While there might be ideological and idealistic reasons to prefer this model it is clear that as a simple business model it is not as strong as a single entity owning the network and providing the essential services that run on it. Even the mayor of Provo, which is making great strides with a consortium model, remarked at the councils first vote for fiber that Lafayette’s business plan is stronger. (State law prohibits Utah’s cities from delivering retail services.)

The potential model we see emerging in Lafayette could be very different. And perhaps much more threatening to the traditionally conditoned sensibilities of the bureaucrats that run these large corporations. What they might well see in LUS is full blown, locally popular, all-fiber competitor whose business model does not depend on anyone’s success but its own. LUS has chosen to own the well-established services, just as do BellSouth and Cox, but also to sell bandwidth to all comers for new services. The bureaucrats see a steady competitor with a long history of being a successful municipal producer in a sea of private electrical providers. Cox and BellSouth have tried to push the idea that their opposition is based in their certainty that LUS will fail and a concern for the citizens in the area. (A concern which is more abstract than real as recent news symbolically demonstrates.) But it seems much more likely that the incumbents concern is not that they look at LUS and see an oddball business arrangement they think unlikely to succeed but instead that they look out and see something very familiar–except that LUS is more popular, passionately local, publicly owned, and very, very patient about its rate of return. I think they see a competitor that scares the socks off them.

I have to believe that they are astute, if misguided, and recognize LUS as the potential hub of a regional network that could threaten their dominance throughout Acadiana. The business potential is too obvious. Less visible to these executives is the history of technology penetration in rural areas: small cities like Lafayette got electricity, a local phone exchange, and a little cable company and that service radiated into the surrounding areas. There is no reason to think it can’t happen again.

RedNova News carries a truly impressive story today that both leads and ties off using Lafayette as an example. BellSouth and Cox’s ugly Intransigence and Lafayette’s plain-spoken public officials have made Lafayette’s case good copy and the obvious example to use to represent the whole municipal broadband movement. Who woulda thunk it? Lafayette has gained a national reputation as being at the forefront of one of the most progressive high-tech movements of the new century. Kudo’s to our leaders.

Here is the lead to the story, Bells Dig in to Dominate High-Speed Internet Realm:

“To hear BellSouth talk, high-speed fiber lines are the way of the future. So why is it so determined to stop Lafayette, La., a rural community in the heart of Cajun country, from installing its own fiber?

Joey Durel, Lafayette’s mayor, has been asking himself the same question. His city plans to build an advanced broadband network to offer voice, data and video for Lafayette’s 116,000 residents. BellSouth is trying to kill the project. And it’s getting help from Cox, the local cable-TV operator.”

”We have the opportunity to do something great for this community — and in a state that needs a big win,” Durel fumes. ”They have to get out of our way.”

It’s the dark side of the fiber story.

Nice, no? And the theme is repeated at closing:

Mayor Durel says the city isn’t backing down.

”This is much bigger than Lafayette,” Durel says. ”This is about economic development for us. This is about future-proofing our city.”

”This is not personal,” Durel says. ”It’s not like they’re bad-mouthing my mother. But they have to get out of our way, because we are not going to stand down on this.”

You can’t buy press like this.

————

Laigniappe:

If you scroll down to the bottom of the page you’ll see credit given to USAToday. You immediately assume that the USAToday article is the source of all the nifty quotes from Durel that you haven’t seen elsewhere. The problem with that idea is that there hasn’t been any USAToday article on Lafayette’s project—yet. If you paid close attention to AOC’s broadcast of Tuesday’s council meeting you would have caught a Durel in a little misstep that likely explains the oddity. He announced that Wednesday’s USAToday would have a front page article on Lafayette’s project. That would have been a coup beyond measure–the front page on the nation’s largest circulation newspaper is a BIG DEAL. A few minutes later, however, Durel had to retract the announcement. A big wave as he put it, (The Indian Ocean Tsunami) had claimed the front page. But he said it has been rescheduled for this coming Tuesday. Apparently RedNove got an advance copy. I, for one, will be looking for it come Tuesday. If the RedNova ‘teaser’ is any indication it should be exciting.

Update: As a commenter notes, the story is also online and Forbes–and I have found it elsewhere. The RedNova story is USAToday story, not one that uses the USAToday story as a reference. More in the immediately following post.

From a tip in the comments, a KATC story.

Cox is “Your Friend in the Digital Age?” Sure……. With friends like these who needs enemies?

A Wardville family whose home was destroyed by a fire on Christmas Day has been told they must pay 500 dollars to replace cable television equipment lost in the blaze.

Do you think a small, locally-owned company would act this way? (Much less one that was owned by the customers?)

Hey, what can I say…I blew it. I picked up this week’s Independent and realized that with the Christmas rush and all I’d never gotten around to writing up a nice entry on the Independent’s cover story that, correctly I think, named Terry Huval “person” of the year.

I’d wanted to do something thoughtful—you know, reflective, intelligent and mature. (Tounge planted firmly in cheek.) But I put if off and it didn’t happen. And now that week’s Independent is off the stand. And you can’t easily get the story online because the Independent’s web presence has been reduced to a joke. (I’m not being mean; I’m being literal.) Mea Culpa. Mea maxima culpa.

Tell you what….if I can’t find a pdf of the story somewhere online I’ll do penance by working it up myself. Either way look for a copy here. The story really is excellent and if you look on the bottom of the pile in your local dive or convience store you might find an old copy. Pure Louisiana; it’s a local color, high tech mashup. This is the sort of story I show friends in Illinois or Delaware when I am trying to explain how something that would be an confusing contradiction somewhere else is treated as “colorful” and natural in Lousisiana.

Scare up a copy or come back by.

Lafayette’s travails in the fight for fiber are regularly noted around the country on forums devoted to broadband or public telecommunicatons projects. One of the largest and most influential broadband forums, Broadband Reports, has been a consistent reporter. They pick up on KATC’s he said, she said reports in their brief recounting at Louisiana Fiber Debate – City faces considerable resistance.

What’s most interesting to our readers is not the KATC links but the copious comments on the issue that inevitably follow. Natives of Lafayette will alternately be annoyed and amused but it will surely invigorate your day to take a look at how other people view our conflict. I highly recommend a visit. (And would love to hear what your reactions are here.)

But the responses seldom rise to the level of broad humor that techy DJ type from New York took it in his comments. He was irritated by Neal Breakfields remarks that fiber in the diet is all one needs and kicked it up a notch by producing both a visual and aural “mash” of Breakfield. It’s a hoot. Take a look, (scroll down, you can’t miss it) and take a listen.

While that’s a hoot the poster immediately below, pcsdma, presents a more serious accusation: evidence that Breakfield once ran a spam faxing operation out of Lafayette. Look at the links and make your own judgment.

Both the Advertiser and the Advocate run digital divide stories this morning based on last night’s council meeting. Both are worth reviewing.

The Advertiser runs its story pretty much as a straightforward report. The article, Citizens speak up on LUS plan, Many say digital divide needs to be considered now, sets up as clean summary of what happened in the order that things occured.

The Advocate’s version of the tale LUS seeking to close ‘digital divide’ works some parallel strands into the mix as well. Blanchard reports that LUS is setting up a team (my impression is that work has begun) headed by Walter Guillory, executive director of the parish housing authority. He also reports that the chamber is looking into the digital divide question this year. Menefee, spearheading the project, tells me the effort is already underway and that the chamber will be taking an “inventory” and publishing a report in the spring. I’m not sure just what that means but it should be interesting. There’s more interesting detail and quotes in the story. Take a look.

A passing note: Both of these stories report an exchange between councilmen and Durel on the digital divide that focused on Durel advocating working parallel to the plan of the network rather than tightly integrating digital divide issues into the plan itself. The councilmen tended to be looking for tighter integration. To my way of thinking what is needed is both integration and parallellism with the committment (and the money) built into the business plan but with the details of the digital divide plan developing in parallel and continuing to develop even after the network is built. I’m not too sure the apparent opposition is very real.

But what caught my attention and apparently was missed by the room was that Durel touched off that part of the discussion by noting that rural digital divide issues couldn’t really be addressed until the network was built because until then it couldn’t be extended. That’s uncontestably true. And nationally rural/urban differences in raw access is the dominant digital divide issue. But that’s not germane to LUS’ current plan at all. That little mumble about extensions that was ignored last night in favor of discussion about our current, more pressing, digital divide issues might well be the clearest public signal yet that the final hopes for our system might well be larger than LUS’ current footprint.

Well Layne and I did our digital divide presentation before the council. It went fine and we basically covered what I intimated in the last post: integrate digital divide support and education into the basic plan and bring neighborhood level end-users into the conversation early rather than expecting that any plan will succeed that is delivered to them. The main purpose was to start the public conversation and that seems to have succeeded—there was a long period of discussion between Benjamin, Williams, and Durel on whether or not the plan really had to incorporate digital divide or if it could be done in parallel. Benjamin waffled, Durel thought parallel was good and Williams plumped for incorporated. It was good to see people actually talking seriously about basic issues.

Bill LeBlanc stood up at the end and announced to the council that his group was going to start up a petition drive. I still have my grave doubts that it will actually happen (and am sure that it should not.) Leblanc confessed in response to a question that he wasn’t sure how many signatures would actually be required. He really needs to get straight about that. That response indicates that he isn’t sure what law governs. Trouble is, numbers aren’t the only differences between the three competing regimes (state law, home rule charter, and “fair” Competition act). They also impose very different conditions on the petition itself. They will not be interchangeable and signatures gather for one will not be good for another.

Interesting times.

The current flurry of angst around a petition will, I hope, be passing. Really there is nothing substantial to be said in favor of trying to stop the LUS proposal. Opposition is almost purely ideological, grounded in the raw belief that citizens should be afraid of the government they elect and gaining traction only if they can convince the public to fear various far-fetched “what if” scenarios.

My best advice is to be wary of anyone whose strategy is to call up fear.

I suggest instead that we keep our eye on the prize. The LUS proposal will propel Lafayette to the forefront of technologically connected communities; create jobs that can allow the rising generation to stay in Lafayette; and make those advantages available to every citizen–not just those that private companies might think ‘worthy.’

My wife, Layne, and I, throughout this battle, have been motivated in no small measure by this last hope—that LUS can make available to all what had been available to the few. Advanced telecom will be the economic engine of the next generation, and if we do it ourselves Lafayette will be uniquely positioned to make sure that this new technology will help us all advance together and help heal that which divides us, rather than exacerbate old wounds.

In that spirit my wife and I are going to make a brief presentation at this evening’s council meeting on the digital divide. We’ll argue that it is important that the vision that the fiber-optic network be available and serve us all should be built deep into the business plan. We hope to urge the council and LUS to open this idea to widespread discussion at the neighborhood level and build in continuing support for education efforts. There is no reason that this city can’t become a model for building advanced telecom into the daily lives of all our citizens. Should we succeed at that task it will be much bigger news, and a much bigger prize than the simple fiber-0ptic network the dream will depend upon.

Eye on the prize, folks. Don’t let your attention drift.