Month: January 2005

In Light Reading: BellSouth’s Earth Is Flat.

…the real take-away from BellSouth’s earnings call is that all is not cozy right now. After stripping away the one-time items in its report, growth for BellSouth’s core businesses has essentially remained flat over the last three years, which may be an early signal that competition from cable operators and CLECs is slowly starting to erode the RBOC’s hold on its territories…

Longer term, analysts say the Bells will have to be successful in offering video services to compete.

“They’re going to need between 15 to 20 percent video penetration, and I don’t think they’re going to get that with a bundled satellite deal,” McCourt says.

Translation: BellSouth needs fiber for IP video and they need it now.

(They’d have been wise to have used LUS’ fiber–but blew that one. If I were a smart analyst I’d read the tea leaves of the astonishing decision to forfeit its best chance to test advanced services in its footprint as a clear sign that management doesn’t understand what is necessary to survive. And issue an immediate “sell” rating. Full disclosure: I carry no telecom in my portfolio. 🙂 )

PS, don’t miss the comment. Hilarious. I think.

The tag team of Joey Durel and Terry Huval fired back at BellSouth today. They were visibly distressed by what they regarded as a betrayal by BellSouth. Time and again during the formal presentation before the cameras and then later fielding questions from the reporters they let it be known that they had reached the conclusion that this time and on at least two separate previous occasions the city had talked with BellSouth in good faith only to have the corporation turn around and speak out of the other side of its mouth.

The most dramatic phrase of the evening was Terry Huval’s cajun characterization of the problem with the incumbent: “it’s an issue of la gourmandise-which means greed.” Strong words. But it was apparent that our leaders have decided that strong words are justified.

The mayor issued a dramatic call for the citizens to “take a stand” and “let BellSouth know you are furious about this.”

The city appears absolutely confident about the law and frustrated at the time and money that working through the lawsuit is likely to entail. They claimed that, had they not had to deal with BellSouth obstructionism in the legislature and the current lawsuit, that they would have been looking at begining construction in six months–and without the added costs the delay’s have entailed. The lawsuit was seen as an attack on and “an affront to the people of Lafayette.”

The new regime with the incumbents is that they’ll talk to them–but they want any proposals in writing first, so that they know they aren’t wasting their time.

The language used has moved dramatically toward frustrated remarks that BellSouth is an outsider, a large corporation from Atlanta, and that it “is not a citizen of this community –the people of Lafayette are citizens of this community.” In discussion with the reporters Durel referred to “monopolistic practices” and Huval remarked that the point of battles like this was to make places like Lafayette an example and to “squish cities like Lafayette” like “ants.”

It wasn’t repeated tonight but the message was clear:

“Get out of our way, because we are not goint to stand down on this!”

Well, everyone has been expecting a lawsuit since BellSouth and Cox failed to panic the public or intimidate the council. As it turns out the surprise little petition drive in the middle was just a pretext–something to give the big boys cover and standing when they trot out their first delaying lawsuit.

The Fiber411 boys won’t care for that interpretation but here is what the public has to decide: Do you think that the crew from Fiber411 came up with this convoluted tactic–one that involves obscure state laws, arguing for a new interpretation of the law that one segment of the code should be newly defined as controlling another, that at least two laws written to control in special cases (both of which apply in this instance) should be ignored ( one that BellSoouth had written specifically to control this instance), and piously mouthing the clearly bogus idea that dedicated opponents to the plan have suddenly replaced concern for corporations with a set of democratic values that they clearly don’t give a fig for. Do you believe that Fiber411 came up with that and that BellSouth standing on the sidelines, motivated by the pious concern for proper procedure in bond law that the Fiber411 guys “developed” stepped in to help out and clarify law? Or do you think a strategy like this much more likely the product of a phalanx of lawyers at BellSouth who knew that they needed some strategy, no matter how convoluted or weak to stop the sale of bonds which will lock the city into its plans legally, leaving BellSouth to only–gasp, horrors–compete.

I know what I think. I challenge the Fiber411 guys to tell us all just who suggested their legal strategy for starters. And just why they decided, at the moment when the bonds are being readied for approval, but when–even by the law they cite–they do not have the necessary city-parish signatures to halt it; why turn “your” petition in before you gather that last thousand–why unless someone has suggested that the time to do it is now, while the bonds can still be delayed. Who suggested that?

It is very hard (and I have been trying) not to smell a rat.

Media on BellSouth’s lawsuit:

KATC

The Advertiser:Fiber battle heads to court

The Advocate: BellSouth sues utility on funding –(A fuller, more interesting, version is in the paper; I’ll post an update if and when it appears This URL now points to the fuller version of the post, thanks are due the Advocate online staff.)

Pretty much everyone has a skeletal recounting of the involved legal rationale behind BellSouth’s suit (one which Cox has joined). I have to say that the media has shown its smarts in mostly ignoring the transparent excuses and feeble justifications that BellSouth put forward in its publicity release in favor of an analysis of what the suit actually asks for and intends to do. Stop LUS.

Update: 10:42 am, I’ve gotten acknowledgement that the version of this story on the Advocate website is incomplete. We’ll see if the online staff will get on the stick and fix it. Update 2: 11:50 pm The problem was due to the Baton Rouge and Lafayette versions of the story being slightly different, most likely due to there being a difference in the available space left for the story in each edition of the paper. Once that was straightened out the folks over at the Advocate were great about getting the fuller version online. Go take a look, the URL remains the same, but now you get the extra textural goodness described below–and more…

In the interim here is some of the missing text:

But City-Parish President Joey Durel said that recent statements by Oliver saying that recent statements by Oliver saying BellSouth would be willing to talk about partnering in LUS’ project have proven “insincere.” “This (a lawsuit) is not how you forge a partnership.” Durel said.

….

Durel said he thinks the voters who elected him and the council did so because they trust their judgment.

“In my opinion, BellSouth is suing the people of Lafayette.” Durel said. They’re trying to dictate the direction of this community, rather than the elected officials.”

BellSouth and Cox are burning bridges.

These corporate bureaucrats should be advised that this isn’t some sort of corporate dance where its ok to manipulate and deceive your opponents for marginal advantage since you both understand that negotiations have nothing to do with character and everything to do with a game of incremental advantage. It may look like they are playing a corporate game here. But they are wrong. They are dealing with people who are earnestly trying to do good; such people care about honesty and character and are perfectly capable of refusing to negotiate with people, who in their judgment, lack the character to make negotiations meaningful.

We’re looking at a conflict of cultures here. And BellSouth is wrong if they think they can’t poison the well.

You can still get anti-BellSouth “Get Our Of Our Way.” bumper sticker art at our ArtWorks page and Jon Fitzgerald still has some bumper stickers left from the first batch.

BellSouth has filed suit in support of the BellSouth/Fiber411 petioners. The language announcing it is as deliberately deceptive as the campaign to date has been.

But read it yourself: BellSouth PR release justifying suing LUS.

Quietly receding into the background of our Lafayette debate, because the issue is largely settled, is the fact that LUS has made clear that fiber-optic cable will run in front of every home in our community, no matter how poor or wealthy. That being settled, the conversation shifted to cost and LUS has made it abundantly clear that its pricing structure is, at least in part, designed to let folks purchase real broadband plus telephone and cable TV for the same price as they would have formerly paid for phone and cable alone. We are now moving on to issues of making access available through community centers and providing things like advanced ISP services and education.

Just how far ahead of the game we are is evidenced by legislation pending in Virginia (reported in the story: “Cable to Fight Bell Attempts to “Circumvent” Local Franchising Laws”) which would (in the name of competition) allow the local Baby Bell to cherry-pick the wealthy areas and redline out the poorer areas. (See Mike on Redlining.) The mechanism is a proposed state law that wouldn effectively exempt the telecos from the standard contracts with local communities that require cablecos to provide universal service in order to use citizen-owned rights of way and poles. Interestingly, universal service is the only real issue. Fees, the complexity of public channel provision and other public service issues are conceeded. All we really want, says the telco is the right to not serve all the public. The cable companies, whose builds have always had to comply with universal service provisions, are adamantly opposed.

There’s nothing in the legislation that would require Verizon or other phone companies to build out the entire community, [cable representative] Janucik said. “We don’t believe that we should have the same build-out requirement as cable has,” countered Hoewing. The reason, he said, was cable had the “luxury of time” and didn’t face competition. “So they had to build out their network to an entire franchise area.” Verizon, on the other hand, is facing a competitor, he said: “So we should be able to make the build-out economic and competitive.” Having the same build-out requirements as cable “doesn’t make any sense in today’s environment,” Hoewing added. He said Verizon isn’t opposed to paying franchise fees and is prepared to meet public, educational and govt. access (PEG) requirements but should have flexibility to negotiate. “We should not have to just lock, stock and barrel accept everything that cable has had.” The conditions and requirements should be the same irrespective of who provides the video service, said Janucik…

The cable representative in the story is coy about discussing the competitive disadvantage this law would put them in. But that is all this story is about. I am not nearly so coy and you can get my analysis on just this issue at an earlier post that responded to proposed federal regulation with similar intent: The Phone Company Sharks are Circling. As you go deeper into the article it becomes apparent that cable companies across the country are bracing for a blitzkrieg in teleco-dominated state legislatures where, as here in Louisiana, telecos have historically been hugely influential in any telecommunications legislation with well-established lobbyist relationships ready to hand. (They’ve invested in controlling the state regulatory processes, a layer of regulation that cable companies have not had to contend with. This is precisely why it was BellSouth and not Cox who wrote the original law intended to ban Lafayette’s project.)

But spill no crocodile tears for the cableco’s–when it was to their advantage vis-a-vis satellite companies they have no hesitation to do exactly the same: Buy state legislators to put their competitors at an unfair advantage.

So rest assured that the cable company’s objection is strategic and not principled. Should states pass such “fair competition” acts cable companies will first get themselves exempted for future builds as well. (The proposed Virigina law apparently does so already.) They will then engage in a race with teleco’s to snatch up rich districts and give them everything the can as cheaply as they can. (Expect special rates sold door to door in River Ranch, for instance.) And anticipate that poorer neighborhoods will languish and in cases where the finances of even maintaining the current system don’t, block by block justify maintenance, to be actually abandoned. (Expect some areas of the northside to simply no longer have access to cable, much less advanced telecom right after our next hurricane.)

There is a huge storm brewing in the states with large implications for digital divide issues and as far as I know few are attending to it. This isn’t a distant quarrel between the Bells and the Cablecos–it’s about the continuing erosion of the very idea of universal service on any level with both Federal and state pressures coming to bear on the last bastion of that ideal: local franchising agreements.

If folks in the states don’t get on this right now, only rare places like Lafayette with its own utility-based advanced telecom system, will have equitable access. We’re doing the right thing here in Lafayette. The nation could listen and learn.

First the good news: We have an “editorial” (actually an analytical piece since no actual judgment is ever passed about what would be preferable) from the Advertiser which appears to be premised on the assumption that LUS could do the job it has asked to do and that private companies might be wise to let LUS do it.

Now the bad news: The Advertisers’ Bill Decker, who has had plenty of time to educate himself since his unreasoning initial attack on the very idea (a rant which had something to do with socialism and five year plans) remains a fount of misinformation even as he clearly tries to be even handed.

The basic point of the essay is that Cox and BellSouth might be wise to reach an agreement with the city and LUS; that’s true–and obvious as we have noted in these pages since the beginning. It acknowledges that LUS success would lead to economic development and that LUS’ plan might well help in bridging the divide between the haves and the have nots on this issue. It’s a good thing to see the business editor of the paper recognize these fundamental truths.

Now a list of misinformation:

• The basic idea that the conflict has been like a mob war with both sides “going to the mat.”
• Honestly, only one side went to the mat. BellSouth and Cox. LUS set up a defensive perimeter and reacted to attack but never went after the incumbents with anything like the vicious attack we saw from Cox and BellSouth. There is a difference and to ignore for the sake of a cheap metaphor does the community a disservice.
  
• Putting forward the idea at this late stage that the plan is unwise and somehow “immoral” for not putting the interests of huge, out-of-state monopoly corporations ahead of the interests of Lafayette.
  
  • Say what? A funny sort of morality you have there sir.
    

• That investors might prefer a public infrastructure-only role for LUS and that such a role would be less risky than reaping retail profit.
  
  • One shouldn’t have to point out to a business editor that its wholesale telecom, that has been risky in the last decade and last-mile retail that has bee profitable. A business plan that hands profit over to active competitors, as Decker is implying is just this side of irrational. That’s the sort of mistake that investors notices. Its’ sort of obvious. (Please note that even the Mayor of Provo, which is building a structurally divided system, acknowledges that Lafayette’s plan is the stronger.)
    

• Decker tells the people of the parish that Cox will makeup loses in the city by raising rates on the parish.
  
  • This is a damnable lie and Becker cannot have the job he has and believe it. Does anyone seriously think that Cox, the dominant cable company across the south will have any need to ameliorate losses in the city by overcharging a few in our little parish? Especially since it would make certain that LUS, for political reasons alone, will compete there as well? Never in a million years.
    

Regular readers of Lafayette Pro Fiber:

What follows is a summary of the last two weeks of the fiber debate in Lafayette. It is something I do occasionally (meaning less often than I should) on Timshel. For those of you who may not know Timshel it’s the Acadiana region’s premeire politcal blog and a great read. (If you can endure the pro Saints, anti Tiger proclivities Ricky shows. I try never to criticize a man’s religion, but…)

Ricky gave me my start in blogging when he asked if I’d do some guest posts on fiber following convoluted remarks I had made in the comments. Consequently the folks over there have some background in the fiber issue and I still try and go over and catch them up even while I attend to LPF.

This post was a little different, it’s less news and more interpretation. So I thought folks here might be interested even though you’ve already seen all the bits. Let me know if this sort of thing is interesting….. (This one covers two weeks. It appeared first on Timshel Saturday.)

——————–

It’s been an eventful couple of weeks since I’ve last checked in with a summary post; apologies for the absence. Lafayette’s fight to be allowed to invest in itself with a state of the art phone/data/cable utility has been beset by what has mostly turned out to be confusion.

Here’s the executive overview: The tide is rising. I sense one of those tipping points coming where suddenly all those folks who have been guarded about the project and a shockingly high percentage of those who’d been clearly dismissive of the possibility discover that they’ve been ardent supporters all along.

That’s a good thing and is both natural and necessary. But it’s hard for those weary pro-fiber partisan smiles not to be a little wry.

Here’s a little tale that illustrates how the last two weeks have gone:

When last we visited on these pages BellSouth’s Williams had issued each truck in his service fleet a copy of the anti-fiber petition to tote around town with them while they service the public. (Apparently the workers didn’t necessarily greet that with enthusiasm.) What was most noticeable about William’s support was that nothing visible came of it. No announcements about numbers of signatures gathered by blue and white trucks and no further supportive comments from BellSouth headquarters. Word then leaks out that Williams has talked to his employees again, and that the memo’s instructions this time is that they are not to circulate the petition on company time. Finally we are treated to the spectacle of BellSouth’s William’s disingenuously declaring that he has always been for bringing “Lafayette forward in the world of technology” in the midst of “overtures” by both incumbents.

So what happened to produce that strange little trajectory?

That’s the right question. And the short answer is that by the end of the recent two week period the balance between profit and loss had shifted, the cost of support had risen and the likelihood of eventual success had fallen. Cold calculation…and perhaps that the word has come down from corporate central that bad national publicity at this moment is too costly.

[open timeout for background]

Monopolist generally are amazingly immune to public opinion except when a regulatory commission is meeting. And right now BellSouth has some things before the Federal Communications Commission that are critical in the Baby Bell’s real and inevitable battle with cable. A battle which realistically rates much higher in BellSouth’s priority than publicly resisting our city’s right of self-determination. With the resignation of remarkably pro-corporate Chairman Powell from the FCC imminent, it is in BellSouth’s interest to get while the getting is still good. BellSouth and the other Baby Bells would dearly love to be exempted from what is required of their opponents, the cablecos; that they reach a franchise agreement with local communities like Lafayette before they are allowed to run cable TV. The FCC apparently believes they could step in and define cable TV offered by the telecos into a category they control. This would do considerably more than “save” the teleco’s the annoyance of having to deal with all those little guys and pay some local folks for the use of their poles and rights of way. Much more crucial, it would exempt them from the standard clause in such contracts that they offer service to all citizens equally. Universal Service. They’d much rather cherry pick just the rich districts, keep their capital cost down, and drive the cablecos out of the most profitable parts of each local market. That is where the long term advantage lies.

And having a lot of publicity in the national press about how you are keeping a little municipality in colorful Cajun country down hands their opponents on the FCC valuable ammunition which is targeted right at the heart of the issue of local control. BellSouth can’t want that.

[close timeout for background]

The events: National: Negativity

The biggest single event was a national blockbuster: USAToday endorsed Lafayette’s plan in an editorial that followed up an analytical piece that indicted the baby bells for pursuing a plan to regain monopoly status. In the story and the editorial Lafayette’s role was symbolic. We played the part (quite well, thank you) of the small town determined to control its own destiny lead by a fiery and idealistic mayor. BellSouth plays the symbolic role for the Telcos: the grey behemoth the whose monopoly ambitions are expressed in its attempt to keep even such wholesome competition as Lafayette’s at bay. I don’t mean to demean the battle here by saying that USAToday made it symbolic. Quite the contrary. Symbolism is most powerful when it is the simple truth. And the mythic story taking shape here, regardless of the details, is fundamentally true.

Other national events are less momentous. But in their narrow areas, no less important, and no less a danger to the story the private incumbents would like to see told.

A continuing series of negative stories about supine state legislatures giving away the store to the telecom industry emerged following the passage of a law in Pennsylvania intended to outlaw all municipal participation in broadband. Lobbyists in Pennsylvanida made the egregious political mistake of handing local sovereignty over to corporations and that tactic, finally, drew some media attention. (In Pennsylvania these days a community has to ask permission of any corporations that might want to provide telecom services and if they say they do then allow them to try. Sometime. Maybe.)

Intel, a behemoth itself, came out endorsing the idea that there is a legitimate role for municipals in the provision of broadband services. It clearly understands that if broadband is to expand rapidly local governments must not be written out of the competition by state laws.

A string on Lafayette’s battle on Slashdot resolved, as much as such things can resolve, into slashing expression of technorati contempt for the incumbent providers of broadband and a defense of municipalities right to break free.

The Consumer’s Union, the venerable gray lady of smart consumerism, launched a surprisingly activist website, hearusnow, devoted as much to rallying opposition to the developing monopolist practices of incumbent providers of telecommunications as to smart consumption of their products.

Ministers called SBC’s plan, and by association BellSouth’s very similar one, to roll out fiber to the (wealthy) curbs redlining. Since that is uncomfortably close to the truth, having it pointed out wasn’t all that welcome. Especially while regulations are pending before the FCC which would allow them to do just that.

A meme emerged with some force in the media that incumbent providers in the United States are not doing their job as US rankings in broadband penetration continue in free fall and as those Americans with the limited broadband the incumbents provide discover that faster service is available for less in countries we once disdained as “second” or “third world.”

Yes, BellSouth might well have thought that right now wasn’t the time to confirm criticism of the ways it handles local broadband competitors by helping fix a local petition drive that appears doomed to failure anyway.

The events: Local: Confusion

The news wasn’t good locally either.

The petitioners, by accepting BellSouth’s aid, made BellSouth a target and lent credibility to the suspicion that they were doing work that the incumbents desired but had failed to accomplish themselves.

News broke (on LPF) that Cox had made “overtures” to the city. After a week the mainstream media picked it up. Even the hint of a possibility of an alliance between Cox and LUS had to make BellSouth very, very nervous. The current alliance between Cox and BellSouth is both unstable and unequal with BellSouth the weaker network in Lafayette.

Doubt mounted as to the legality of petition as it became more apparent that petitioners were simply looking for the easy rather than the legal path.

Bellsouth found itself allied to a group that couldn’t shoot straight. They called press conferences to bemoan the fact that they were going to be prevented (by what would have been their own oversight) from presenting their petition before a deadline. The city-parish had to tell them that they were mistaken and they could present…but that it was the wrong petition, one which didn’t apply to the type of bonds issued. So they issued another press release saying the drive was back on in full force. And later they asked for the city to halt progress on LUS’ project while they tried to clear up legal questions. The mess did not reflect well on BellSouth.

The petitioners attracted some pretty telling criticisms as the administration used every opportunity to insist that a signature on the petition did signify opposition to the project regardless of what the petitioners said. They hit hard on the idea that it would hand decision-making power over to bureaucrats in Atlanta. And the obvious point was that this was all poor sportsmanship by folks who understood neither the technical nor legal frameworks they were dealing with.

That turned into a lot words, regardless of my attempt to focus the narrative on BellSouth’s little turnaround. Still, the point is clear: BellSouth had its reasons for abandoning its open support of the petition. Both locally and nationally the leadership can’t be happy with the way the battle has shaped up to date.

But the collapse of open incumbent opposition, even if it proves temporary, is a huge opportunity. Let’s hope LUS is in position to take advantage of any fleeting goodwill at the PSC where BellSouth is rumored to be trying build roadblocks into LUS’ regulatory regime.

Here’s something that is little more than a tidbit but still…it expresses something particularly Lousiana. The story is about a new cluster computer over at LSU. (A cluster computer is a type of super computer built with standard computer boxes, in this case Mac XServes.)

What makes it particularly Louisianaish is the use it’ll be devoted to:

Nemeaux is the only cluster of its kind devoted to computational arts research. It will open new avenues of expression and creativity for artists, musicians and researchers at LSU.

“Nemeaux provides a platform for scientists and artists to explore new possibilities,” said Stephen David Beck, director of the Laboratory for Creative Arts & Technologies, a division of CCT, and professor of composition and computer music.

Researchers in LCAT will benefit from Nemeaux’s ability to link art and technology for future creative and research projects. Among the intended uses of the computer cluster are video composition and animation rendering, which translates a set of computer data and virtual objects into a full visual representation of those objects. Nemeaux will also serve as a powerful research tool for the computational aspects of music, film, video and art.

There is something right about Louisiana having “the only cluster of its kind devoted to computational arts research.”

Now if we could only get one for Lafayette’s students.

I occasionally get really irritated at the sorts of nonsense that people assume is true just because it is ideologically correct. No doubt my irritation level is high because Lafayette has had to deal with incumbents and their agents who regularly and mistakenly mislead the community into regarding BellSouth and Cox as if they were “free enterprise” corporations rather than the monopolists that they have been and remain. There is and can be no “free enterprise” alternative to a public fiber-optic network for Lafayette. The coming monopoly will either be owned by the citizens and thus oriented toward serving us or owned by traditional monopolists and dedicated to extracting the maximum amount of profit from its advantage. And that excess profit will be sent off to Atlanta.

Every day we see stories that are explicable only as the malign effects of allowing monopolies to pretend they are like mom and pop hardware stores and retreating from the rational alternatives of public ownership or rational regulation.

A large part of why that happens is that our media doesn’t seem to be able to distinguish between an actual story and the one the incumbents tell them and so report to the citizens of an area a story which comes close to fabrication but evokes no concerned response because it is comfortably ideologically correct.

The following story from North Carolina illustrates the point well. Go take a look at the story it is short and simple. Then return here for a review of the problems that it illustrates.

——-go on, take a look, the rest really won’t make good sense unless you do—

Raw version of this story: Usage spike in North Carolina caused the wireline phone system to crash.

Ideologically correct version of this story: BellSouth and its competitors phone systems overloaded because the people panicked during a snow emergency. Unhappily the public service commission says it just isn’t economically feasible to make it more reliable. (This is what the paper unreflectively reports.)

Rational version: BellSouth’s phone system (which leases lines to other carriers) crashed during a usage spike due to an event that is unusual but hardly extraordinary and well within the reasonable service parameters for system design. Data show that capacity peaked out at 1.7 times normal usage. Officals at the state utilities commission, charged with regulating the monopoly landline’s service standards, evaded discussing service issues, referring instead to cost factors over which they have no authority.

Analytical version: It is clear that regulatory oversight is out to lunch in North Carolina when a low-grade public excitement can bring down the basic telecommunications system. An exciting snow on North Carolina’s beach’s is unusual but certainly did not excite panic. These guys have hurricanes, for goodness sake. These citizens either have to learn to regulate their local monoplies so that basic services are reliable enough to count on during real emergencies (which this was not) or decide to make their essential services into utilities that will have service as its first priority rather than the current system of taking monopoly system income and investing it out-system merely to increase its stock price. (BellSouth could easily afford to upgrade its antiquated system with fiber throughout–if it weren’t investing for highest return in other, non-wireline pursuits, many of which –like its enormous loser in Central and South American wireless were huge losers.)

We’re doing the right thing here in Lafayette. The nation could listen and learn.