Follow up: East Ascension, Cox, Eatel….and LUS

There is a new addition to the East Ascension parish/EATEL/Fiber story that we have been following from a distance. The tidbit is dropped in the Ascension Citizen in a story titled: “Cox, APTV working to keep local programming on air.” That paper’s style seems to tend to irony, and indirect speech. The actual story, reading between the lines, is that Cox has returned to trying to keep local programming off their network, especially local program that, horrors, carries its own advertising.

An earlier blog entry, “Cable controversy still not resolved,” reported on Cox’s attempted refusal to carry the channel if it sold its own advertising. The parish retorted that it set the terms for franchise agreements and that advertising was necessary to support local programming. The chairman of the parish’s strategic planning committee said then that he is prepared to tell Cox Communication to “take their cable and leave” the parish if their do not agree to terms outlined by the council. Councilman Beiriger said he refused to allow a private company (Cox) to dictate “to us what we can and cannot do.” Strong stuff. And in the usual circumstances a local government could never be so bold with their cable monopoly provider. (Suppose Cox were to fund an opposition candidate who claimed that you ran ESPN and HBO outta town? Cox could likely elect its own council in that circumstance.) What lends the parish courage is that EATEL, the local rural telephone provider, is even now rolling out its competing fiber optic-based triple play in the parish (and perhaps, eventually, beyond). The parish’s telephone company can provide ESPN and HBO and so the council doesn’t have to feel that offending Cox would be suicidal.

The current controversy, which revolves around Cox invoking an overlooked provision in the franchise contract that effectively eliminates the local channels ability to offer live broadcasts—for instance of parish council meetings. Cox moved its offices and claims that the old control mechanism that allowed the Ascension channel to directly control its programming isn’t working. Apparently Cox wants to simply provide this service for free and has a friend on the council who wants to shut down council support of the local channel. Underneath all this, of course, is that when EATEL comes in both Cox an EATEL would likely be carrying this channel under similar franchise requirements and EATEL has stated they have no objection to APTV carrying their own advertising. If both cable franchisees carried the station a local advertiser could get the whole local cable market by purchasing with the local channel. Cox would prefer to eliminate that threat to its advertising revenue before APTV achieves that status. (This puts the cable-only channel in roughly the same position as local broadcast television that captures advertising revenues (based in part on cable viewership) independent of Cox. Federal law requires that Cox carry local broadcast programming. Cox sells local advertising on its other channels.)

All of this is interesting to students of Lafayette’s evolving situation because LUS will represent here, as EATEL does in Ascension, a third player in what will be in most locales is an emerging war between two network providers, the phone and cable company. (We covered a three-cornered story in Ascension in October: Let the Price Wars Begin.) The three-cornered conflicts in Ascension may have something to teach us about our own three-cornered conflict and both our situation and Ascension’s may well be worth folks elsewhere in the nation watching to see how a little disruptive local competition effects the phone and cable giant’s behavior.

Durel on LUS’ Fiber

Local News – The Lafayette Daily Advertiser –

Joey Durel has been on an impressive campaign to make being available to the public as a part of his role as Mayor. I haven’t seen a mayor expose himself to unmanaged public questioning as consistently as as he has and it is one of the more admirable aspects of his tenure. (If I wasn’t such a fan of his courage on the fiber issue I’d be tempted to say it was the most admirable aspect.)

The newest venue is a monthly “Have a Cup of Coffee with the Mayor” program. The first was yesterday morning and was covered by the Advertiser. Inevitably, the first question was about fiber. A Carencro man and his son were clearly worried about what you might expect they’d be: the risk to the city and the (and in my opinion faux) “conflict” between public and private. If the question was unremarkable, the response was not. I’ll reproduce the whole exchange (The Advertiser has decided to make its archive paid, a big step backward in public access. You’ll see me reproducing more of their text if I can’t rely on their archive to provide a context for curious readers who might run across this post next week or next year. ‘Course that’ll mean less page views for their advertisers next week and next year. Their choice.)

“If we don’t do it, we won’t get it,” Durel said. “I’ve begged the private sector to do it,” but they need a fast rate of return on their investment, while government does not.

If LUS doesn’t launch the program, won’t the private companies do so in 10 to 15 years at no risk to the city utility, Koenig asked.

“Ten to 15 years is not acceptable to me,” Durel said.

If the city had waited the 30 years it took private utilities to extend electricity to Lafayette, the university probably would not be in Lafayette, Durel said. Instead, the city created LUS and provided electricity to its own citizens.

Bob Koenig, an executive, said fiber technology is “absolutely critical” for the future, and asked Durel to address private versus public sector competition.

“LUS was created to compete with the private sector,” Durel said.

Even with the fiber project, if private companies — such as Eatel, which pulled out of Lafayette — are willing and able to pay sufficient wholesale rates to lease LUS’ fiber lines, they may do so, as long as LUS generates enough money to repay the bond debt, Durel said.

That is really amazingly clear for a politician and is revealing of the way that Durel is thinking about this problem. 1) We’re not willing to wait for private industry to do this for us; if they won’t do it on our schedule we’ll do it ourselves. 2) Even more unabashed was the breathtakingly clear statement that LUS was created to compete with the private sector. This follows from the first assertion, that LUS exists because it is our arm to do for ourselves what private industry refuses to do. But I had not thought we’d ever hear the obvious, too not PC. I underestimated Durel. Bracing stuff.

Of course I’d like to see the city fathers take one more step and simply assert that there are some things, like essential, natural monopoly infrastructure, that the people simply ought to control at as local a level as is possible. And that LUS is our arm for asserting that right of self-determination. Maybe at the next coffee?

Tar Babies on the Broadband Council

The good intentions behind the creation of the Louisiana Broadband Council crashed into the reality of how that council is configured on Friday.

The Baton Rouge Advocate reported that BellSouth lobbyist Tommy Williams sent the council off the rails in its second meeting by asking for a definition of broadband and then asking how the council will identify who doesn’t have it.

Well, it didn’t take long, did it? Mr. Williams knows or should know that his company actually helped pay for a study (PDF file) of broadband availability in Louisiana that was released earlier this year. In fact, that study helped bolster the need for the creation of the Broadband Council.

The study used a pretty much useless definition of broadband: anything over 56 kbps line speed. As a result, it painted an overly rosy picture of broadband availability in the state. What it also found, though, was that real broadband — anything above 256 kbps — was not so widely available and was very expensive to the point of making, say, a T-1 line or its equivalent, beyond the reach of most businesses in non-metro Louisiana.

Governor Blanco, in the BayouBuzz piece by Steve Sabludowski linked to in the first paragraph, had this to say about the importance of broadband access to Louisiana’s economic future:

“High-speed computer access can become as important to the development of our state — the rural areas specifically — as phones and electricity were in the past. Broadband connections are a vital piece of infrastructure in the 21st century, just as important as rail and highway connections were in previous centuries.”

Viewed in this light, one could make the case that the high cost of bandwidth particularly in non-metro Louisiana is an impediment to economic opportunity and growth.

Now, let’s see. Who would provide that overly-expensive broadband? Uh, my guess is phone companies and cable companies. Look at the make up of that Broadband Council. The legislation that created the council created a body that is heavily influenced by special interests — read that “incumbent phone and cable companies.”

The list of spots reserved for incumbents reads as follows:

— Incumbent Local Exchange Carriers (one seat). BellSouth got that one.

Louisiana Telecommunications Association (one seat). The Louisiana Telephone Association got that one.

— Competitive Local Exchange Carriers (one seat). A company called New Phone got this seat. The fact that the seat exists at all is curious, since rural local exchange carriers are not required to open their networks to competitors, so there are no competitive local exchange carriers in rural areas where the bandwidth problem is acute.

— The cable industry got two seats, one for the big companies (dba the Louisiana Cable Telecommunications Association) and one for the small companies. Carlyss Cable Company got that seat. Carlyss Cable is a subsidiary of Cameron Telephone.

— Wireless companies got a seat (Alltel got it).

— Interexchange Telecommunications Companies (long-distance) got a seat and the seat went to an attorney representing that group.

— Satellite companies got a seat (Auto Comm Engineering Corp. got that seat).

— Internet Service Providers (ISPs) got a seat and that one went to Infinity Solutions.

Then, there are the hidden incumbent votes on the Council. Those include:

Allen Doescher of the Division of Administration’s Office of Information Technology (OIT). Doesher is a veteran state bureaucrat whose fingerprints are all over the history of technology efforts in the division. Doescher’s’ purview includes the Office of Telecommunications Management (OTM) which has operated as an in-government subsidiary of BellSouth for just about all of its existence.

— PSC Commissioner Dale Sittig. Dale is a nice guy (he’s from my home town of Eunice), but he’s been one of several rubber stamps on the PSC for whatever it is BellSouth has wanted.

— Representing the Louisiana Senate on the council is Senator Noble Ellington. Senator Ellington, you may recall, was author of the bill which created the council. But, he was also author of the BellSouth/Cox inspired bill (SB 511 later changed to SB 877) which sought to bar all municipalities from the network infrastructure business.

One member of the commission that caught my eye is Carlo MacDonald. He’s landed one of three “Rural Private Business” positions on the council. Now, Carlo MacDonald is a wireless technology leader, but his business is based Baton Rouge via Camsoft Data System and Verge Wireless. Not exactly rural. Wonder what’s up with that?

The rest of the council consists of representatives from various state agencies and departments, plus a handful of other interest groups like the Louisiana Municipal Association and the Louisiana Police Jury Association. The LMA appointed LUS’s Terry Huval to its seat on the council, so that’s at least one person on the board who has some special insight to the nature of the obsfucation and deception that is the incumbent way of making an argument.

The point here, then, is that we’d best not expect much out of this Broadband Council. The incumbents (with their allies) are well-positioned to gum up the works — at least so long as progress is defined as doing something that actually responds to the interests of rural businesses and consumers. Actual rural interests (and people who can articulate them) are scarce.

The intentions are good and, I think, pure. But, the fact that the council is formed in such a way as to give the parties responsible for the problem of high-priced bandwidth the ability to control the council will likely doom it to failure.

It didn’t have to be this way. How? Why, by putting the interests of consumers first — not the interests of the companies responsible for creating the problem the council was created to address.

We’ll figure this out one day.

Time Warner Cable sues to stop Missouri muni fiber build-out

The Kansas City Star reports here (free registration required) that Time Warner Cable has filed a federal lawsuit to prevent North Kansas City, MO, from building a fiber to the premises project in that city.

This is an interesting suit. It accuses the city of not being honest about their intentions. According to the story, Missouri law requires a vote of the people in order for municipalities to get into the cable business. North Kansas City says it wants the network for data and voice. Time Warner Cable says the city fully intends to get into the cable business at some point in the future, but is hiding its true intentions in order to circumvent the public vote requirement.

Imagine that. A cable company demanding truth in packaging! It’s a mad tea party in Missouri!

Telecom sponsored research says: Current investment in copper to be obsolete by 2010

When do you suppose our local telecommunications employees will get the memo from headquarters that fiber optics really is the future, the immediate future of the industry and their company? Recall all that noise about not needing fiber and blather about services rather than bandwidth?

A press release by Technology Futures, sponsored by “a consortium of telephone companies comprised of Bell Canada, BellSouth Telecommunications, Qwest, SBC, Sprint, and Verizon” reports:

According to a new report by Technology Futures, Inc. (TFI), by 2006, one-half of U.S. households will subscribe to broadband access, and a shift to much higher data rates in the range of 24 Mb/s to 100 Mb/s will have begun. By 2010, U.S. broadband penetration of 75% is likely, and 10% to 20% of U.S. households will subscribe to very high-speed-broadband. In the process, most of the local exchange carriers current investment in copper cable will be made obsolete.

From the website, a depiction of the transition to very high bandwidth and accompanying remarks:

Broadband Households by Nominal Data Rate, Percentage of Households

The upper curve shows TFI’s forecast for broadband penetration in general. The bell-shaped curves show successive broadband generations broadband, each characterized by a higher nominal data rate. These curves reflect the general tendency for bandwidth demand to increase along with computing power and memory. An important transition begins in 2006 with the 24 Mb/s generation, which will require fiber optics to, or close to, the home.

TFI is brutal in its analysis of the weakness of the phone company’s current network. An separate report gives us this analysis:

Illustrated in this figure is the forecast transition from standard broadband (as provided by ILECs today on copper cable with DSL or T-Carrier) to very-high-speed broadband (mostly on fiber) that operates at 24 Mb/s or above. The figure assumes that ILECs capture about one-half of the very-high-speed market, meaning that ultimately total ILEC lines stabilize at about 100 million. However, to accomplish this, ILECs must evolve from predominately circuit-switched, narrowband, copper-based networks to packet-switched, broadband, optical-based networks. This will not be easy because competition will be simultaneously stranding large quantities of network investment. The long-run alternative is illustrated by the dashed line in Figure 1.2 with total ILEC access lines falling to 63 million lines by 2015 and 43 million by 2020.

Taken together we can see that the phone companies are paying good money to be told that to save half of their lines to the home they will have to move to fiber immediately; the alternative is to lose more than 3/4 of their most valuable assets—their direct line to the home—by 2020 while demand for high bandwidth that only fiber optic based networks can provide rockets far beyond the level that most of these companies (save Verizon) have been willing to contemplate.

This analysis is also a ringing endorsement of LUS’s fiber optic strategy. LUS has implicitly made the judgment that high bandwidth is coming soon and that the only way for Lafayette to get ahead of the curve is to provide it for ourselves. A glance at the above curves will confirm that they are not alone in that judgment.

The Phone Company Sharks are Circling

Recent stories have noticed that, whoops, the widely touted move of the Baby Bells, including our own BellSouth, into the land of the triple play runs into Federal law requiring that video providers pay local landowners (aka local governments) for the use of their right of way and poles. This translates into franchise agreements with local governments. Which, generally, translate into cash fees and universal provisioning requirements.

The Bells have petitioned the FCC to let them out of this “unfair” “regulation.” As I’ve grown weary of pointing out, entering into a contract for the use of someone else’s property is not what we usually call either unfair or regulation. (Apparently any advantage you take of governmental agency is fair in the eyes of some ideologues.) The Bells have complained that it would be too complicated to get franchise agreements with all those little municipalities everywhere and that they should get some sort of special consideration because they are providing competition for the cablecos and that what they are doing is not really “video” but is, instead, some special IP (Internet Protocol) thing.

A reasonable reader might be perturbed. Too many little guys to deal with? Get over it. The cable companies manage. Providing competition with cable? Hunh? The phone company is going to endorse subsidizing those who compete with monopoly operations! Surely those Bell monopolists haven’t thought that through. Or maybe they think we won’t notice a little hypocrisy. About the IP thing, a casual reader might think: that is just silly. Well, probably that reader would be right, it is just silly. But that doesn’t mean that the Bells aren’t actively trying to get the FCC to pull the trick of removing their video offering from any requirement that enter into franchise agreements with local governments to use their land and equipment. Yes, it is nutty. But the Feds just pulled this trick at the state level by deciding that Voice Over Internet Protocol (VOIP) phone service wasn’t really phone service but was, instead, an “information service” and used that rationale to keep state regulatory commissions from regulating the phone service provided by, for instance, cable companies.

However perturbed the reasonable reader might be, most mainstream coverage of the issue has been exceedingly thin, doing little more than repeating the incumbent’s justification and their ‘concerns’ that dealing with local governments might slow their broadband rollout and make it more expensive.

Follow the Money

Ah, but a little bit of reportorial prying into that last motivation, expense, reveals a lot that is not in the press releases of the Bells. “Follow the money”, the ominous advice of Deep Throat during the Watergate scandal applies here. The other stuff is mostly distraction and excuses. The real motivations of large corporations are simple, and they are not public benefit or concern for the United States’ standing in the broadband race. The motivation is that first of the seven deadly sins: greed. (Before you dismiss that characterization as overblown let me ask you what you’d call it if a company enlisted the powers of one branch the Federal government to override federal, state, and local law requiring that property owners be compensated for the use of their property and equipment. I’d have to call it greed. What would you call it?)

Two stories published recently gently ease into the real story while also repeating the claims of the incumbents. They are both useful though the USAToday version is a bit more readable and the BusinessWeek article a bit more complete (for instance, correctly including BellSouth as a major player in this arena along with Verizon and SBC).

Part of the expense story is, of course, fees–money. Getting out that cost, which the cable competitors already pay, would place their cable competitors at the same disadvantage vis a vis video as the phone companies are in relation to telephony. What the telephone companies really want is bit more advantage over their competitors, they want out of any local version of universal service.

Universal Service

What people mean when they refer to “universal service” is that all in a service area that desire service can get the same service at the same price. Most municipalities’ contracts with cable companies to lease use of their rights of way and poles require that all the owners of the property used (aka citizens) be allowed to buy the service at the same price. That seems both fair and reasonable.

That works ok for cable companies since their hybrid coax systems were designed with equitable service in mind their upgrades are relatively easy to do. Besides the cablecos’ make the most money off high cost, high margin, high bandwidth premium services and they are mindful that HDTV will mean massive upgrades to their system anyway. Cable companies are generally ready to upgrade their whole systems when they have to.

But the phone companies are different. Their core business is still the phone line into the home. It is a low bandwidth use and their systems are awkward and expensive to transform into a more capable, high-bandwidth IP-based network. They want a bigger competitive advantage over cable than just a reduction in local municipal fees. The phone companies want to force high-cost customers on the cable companies and to be allowed to skim off the highest profit customers for themselves.

Time out

A break for some elementary economics is in order: When the cable company provides TV service for an entire community some neighborhoods are more profitable than others because the provide greater income for each mile of cable laid and for each connection to a home built. That logic puts a premium on dense (more customers per mile) and wealthy (more expensive services per household) neighborhoods. To make that concrete: In Lafayette think River Ranch, a densely packed neighborhood of wealthy households.

The Sharks

If the FCC steps in and preempts local law the phone companies will be able to set up what will be, for them, a very delightful cycle that drives their costs down and their competitor’s costs up. They will, as they have already done in their current DSL (Digital subscriber Line) upgrade, provide service first to those areas that will be most profitable while their cable competitors upgrade costs have to be spread across many less-profitable neighborhoods. Cable costs are greater than they would be if they could cherry-pick too. Relative to what they would have to charge if they too had to provide universal service the phone companies will be able to reduce their charges. Lower prices lead to ever higher penetration rates and ever lower costs per customer. The predator can leisurely eat its way down into less profitable neighborhoods forcing ever higher costs on its competitor.

The image is sharklike: There is a certain deadly fascination about looking at all those teeth.

Of course, this would be a more realistic scenario if the phone companies weren’t so far behind in terms of basic network bandwidth. But BellSouth, of all the phone companies is best positioned to make this little game work for it. It currently has its fiber closer to the home than any other. That has cost it a lot of money to relatively little benefit. But it is already in most wealthy neighborhoods with its DSL buildout. The returns on DSL alone haven’t been enough to compensate for massive wireless investments and outright wireless debacles in Latin America and allow BellSouth to pursue the Fiber To The Home build that will take Verizon to a spot well ahead of the cable companies. But this little regulatory trick might just give BellSouth, more than any other, the breathing space it needs to catch up in wealthy areas only. From that high ground it could conceivably eat its way down the food chain.


Now this strategy just won’t work in Lafayette. The new LUS fiber-based utility will be both cheaper for all consumers and have enourmously more bandwidth to push out advanced services with. There will be no space for an entering edge of the wedge at the top. And arguably the cable companies and particularly the newly privatized Cox are too far ahead for merely pulling even in video provided to wealthy neighborhoods to give BellSouth enough margin to allow it to build up more rapidly than the cable companies can respond.

But this scenario is, IMHO, the phone companies’ last best hope to catch up. You can bet that the sharks will be circling at the FCC.

BellSouth’s Latest Network Upgrade Announcements and Lafayette

BellSouth recently announced, with considerable fanfare and not a little misdirection (on that score more later) a upgrade to its DSL system that is will provide for 4-6 megs of download speed. Om Malik does the nicest job of distilling the furor to its essentials in a post on his blog.

That sounds like good news—and there are good aspects of it for those select neighborhoods in the top 30 markets that get access. But the first question for Lafayette residents is whether it is something that we will even see in our town and the initial reports do not carry information on just which 30 markets BellSouth considers its top markets for this purpose.

The internet rides to the rescue! Or at least Google does. A search finds an article, BellSouth FastAccess Internet Service Deployed in 30 Target Markets, that details what BellSouth historically considered its top 30 markets—and Lafayette is included. As are New Orleans and Baton Rouge in Louisiana. The interesting part is included here:

“BellSouth began deploying DSL service in seven initial markets in September 1998, and added 23 markets in 1999 to bring service to a total of 30 Southeastern markets. BellSouth FastAccess Internet service is presently available in some areas in the following Southeastern markets:

Athens, GA

Huntsville, AL

Atlanta, GA

Jackson, MS

Augusta, GA

Jacksonville, FL

Baton Rouge, LA

Knoxville, TN

Birmingham, AL

Lafayette, LA

Boca Raton, FL

Louisville, KY

Charleston, SC

Memphis, TN

Charlotte, NC

Miami, FL

Chattanooga, TN

Montgomery, AL

Columbia, SC

Nashville, TN

Daytona Beach, FL

New Orleans, LA

Fort Lauderdale, FL

Orlando, FL

Gainesville, FL

Pensacola, FL

Greensboro, NC

Raleigh, NC

Greenville, SC

West Palm Beach, FL

So probably Cox will see some competition from BellSouth on speed in the coming year which has to be a good thing for local customers for whom it is available. At 4-6 megs, however, BellSouth will not be in a position to advertise more speed than Cox and will have to continue to compete on price to woo customers from the cable company. Video services, a big part of the hoopla surrounding the upgrade will have to wait until considerably faster services are made available.

But what might well be most interesting for Lafayette folks will be to see if Lafayette is actually included in the list of 30—not including her will be a strong, early indication that BellSouth has decided not to try and compete in Lafayette. My guess is that we’ll see the speed.

Sinner Reappears in Broadband “Debate”

There is a little debate online directed at the municipal broadband issue, if you can call 4 or 5 exchanges a debate. It takes the recent Philly debacle as a point of departure but really doesn’t go very far.

I mention it here because the text references Lafayette, our friends in the Tri-Cities and because one of the participants is Titch, the same fellow who got his advertorial published in the Lafayette Daily Advertiser. I had let my “sin” series languish in the press of the holiday season but this convinces me that I really should readmitt a little grumpiness into my and my readers lives.

Another fun thing is that the web site that hosts the interview, Digital Democracy, has a the full range of possible media available for the viewer/reader/listener who prefers one mode to another.

Web page

Print and read page

Streaming Video Small & Large (Full show)

Listen to MP3 (Full Show)

Buy a video CD

MY, My. That’s a lotta media, its good to see somebody attuned to all the possibilities. Now if only they’d use a creative commons licensing scheme it’d be just about perfect.


Om Malik (a consistently excellent blogger on broadband subjects) has a nice little entry, IProvo-is-a-live, on Provo’s broadband network and provider Home Net lighting up the first section of its fiber build with a triple play offering.

They’ve got a 40% take rate at an average of 2.5 services per customer–most folks are taking the full triple play.

Good for Provo and good for Mayor Billings whose support for Lafayette is well-appreciated.

Sometimes the good guys win.