Month: February 2005

The Advocate’s server is having some problems this morning and a short piece on bond law hasn’t made it online. The story isn’t definitive, but it does begin to give some insight into how the lawyers are thinking about it all. In a nutshell: LUS’ use of the law is not unusual, and the use is appropriate for the sort of support for the bonds LUS has said it will give. BellSouth and Cox are claiming that it ought to be read as modified by another law intended for bonds with a different sort of support. Nobody official will comment officially. Same old same old. I’d still love to see a conversation with a lawyer who has some expertise about the ins and outs.

Update 10:36—The Advocate’s servers seem to be working reliably again and the story is now online. You can get it at: Disputed law used before, official says.

Blanchard of the Advocate produces an analytical piece that is less interesting than it could be. The article focuses on the current petition/referendum drive and the probable consequences should the incumbents force a referendum. The really essential point is nicely underlined:

“Since April, when LUS announced its plans, an election is exactly what Lafayette officials have hoped to avoid — and just what private companies have craved.”

But the reason for the craving and avoidance was pitched as simply money. It’s clear BellSouth and Cox will be able to run ad campaigns that the city-parish will in no way be able to match. That really isn’t all of it–or even the heart of it. The city rightly fears the dishonesty that BellSouth and Cox have demonstrated they will use. BellSouth and Cox crave the platform in order to run a disinformation campaign of the sort that they have had success with across the country: a campaign which we saw previewed in the late summer and early fall series of “academic” forums, manipulative push polls, and PR releases that showed contempt for the people and leadership of Lafayette. What surprised the big corporations was that Lafayette fought back. We can be proud that our leaders didn’t allow the war of words to go unanswered. The incumbents retreated–something they have not done elsewhere. We’d likely not have a suit now were it not for our own quislings who have been serving the interests of the monopolies while, in a deceptive manner no doubt learned from their mentors, pretending that their purpose is something other than stopping LUS–thereby making sure that the incumbents can continue to extract the bandwidth tax that places Lafayette at a competitive disadvantage.

Lafayette Pro Fiber readers are cautioned not to take the polls mentioned in the piece too seriously. Treating oppo, “push” polling as a credible indicator of what “the people” want–and, for that matter, using marketing polling as the other leg of what “the people” want, is simply a methodological mistake. Neither sort of polling is a reliable indicator of political attitude or intensity. I think the city would win a ground war fairly easily; but it would be exceedingly ugly on both sides and would leave scars and resentments in our community that BellSouth and Cox would not have to live with–though they would be the only possible beneficiaries.

But my disappointment with what is a journeyman piece of work is less in the misuse of polling data–that is so common that it is almost unremarkable–than in the missed opportunity to dig into the really crucial legal principles upon which the suit now turns. What is the history of similar issues? What are standard bonding procedures for revenue bonds? What principles are at work when a court decides which sections of the bulky legal code apply to specific situations? Does a law specifically written to control municipal telecom last year, one which specifies the city’s referendum procedure, express the will of the legislature on this matter, or can a corporation cherry-pick some law other than the one it backed for this purpose? Answering those kinds of questions and giving the reader some legal background would have made this a truly interesting piece.

Update 4:00 Kevin writes to note that he’s not referring to Cox’s push polls, but to the Verne Kennedy poll. My bad. The number does come from that poll and I should have caught it. That takes most of the sting out of my critique…but a little reader caution is still in order. I’d regard the poll done by Kennedy, whose fame comes from his political work, as a “candidate poll.” It had public and private portions. The public portion is framed to result in good candidate numbers. In this instance, for example, framing the issue in terms of whether government “should be in business competing with private business.” One can be assured that had the city-parish purchased the survey, the framing would have read something along the lines of whether “local goverment should be allowed provide telecommunications infrastructure.” Having a different question upfront will produce a different public response at the end. It’s the private part of such surveys that is interesting; that’s where the pollster tries out different framings–including the opponent’s anticipated frames. Now that would be truly interesting to see.

The Picayune notices something is going on across basin. The story is generic and, for an initial overview, not bad.

Some parts they get right in Power struggle pits utility, BellSouth:

“The skirmish in Lafayette is part of a larger battle being waged nationwide between the nation’s biggest phone and cable companies that traditionally have dominated the telecommunications market and power utilities.”

Other parts they get not so right. But those are the sorts of things most reporters new to the story gets wrong.

The reporter apparently mistakenly understands deregulation–which has been the real project of the last 10 years–as a way of “breaking down the barriers that for decades prevented power, telephone and cable monopolies from competing against each other.” That may have been the intent of some but it didn’t happen. Competition has just barely begun with Verizon’s FIOS and has little to do, unfortunately, with deregulation and everything to do with the cable and telephone monopolies converging on a single digital network architecture centered on fiber optics. The author further misunderstands “breaking down of barriers” as being the same as ‘Dismantling monopolies” In truth not all of the deregulation has lead to increased competition (Ask Eatel or ATT). Much of the FCC decisions have, in fact, strengthened the monopolies’ ability to prevent competition over their own ever more secure monopoly networks in the vain hope that each move to return monopoly control of their networks would finally lead to enough confidence to induce competition.

No, the convergence on a single network model doesn’t change the monopoly nature of either of their network enterprises. It just means that as they converge the battle over which will die and which will live on as a single monopoly has to begin. And at the end the competition which was structurally inevitable as a result of convergence will vanish and this time we’ll be left with only one natural monopoly instead of two. But with no remaining effective regulation.

Technology cannot save us from elementary economics, as Powell at the FCC (and certain local dullards) so fervently hope. Even Business Week has begun to understand that in natural monopoly situations regulation is necessary.

Or public ownership. The LUS model. There will be a few communities that won’t end up at the mercy of whichever private telecom survives the battle to come. And those will be places that own their own infrastructure. That’s where the real story is.

You have to suspect that something is happening out in this country when the editorials at venerable (and notably conservative) newspapers like the USAToday and Business Week start to notice that the telecom monopolies are bad for America and bad for business. (The local chamber might take note.) In the latest instance Business Week inks: “Commentary: Getting Real At The FCC.”

The Federal Communications Commission (FCC) which regulates telecommunications in the United States and is charged with making sure that natural monopolies that dominate that realm act in the best interest of the country and its people. Business Week believes that under outgoing chairman Powell the balance has swung too far towards the monopolists at the expense of the competition that funds both growth and fair pricing.

“as the agency wrestles with the issues raised by these dazzling [new technological] developments, its new chairman must avoid the trap into which Powell fell: He came to hold an unshakable belief that technological advances would sweep aside the necessity for regulation.”

This sort of ideological idealism is simply at odds with conditions in the real world and Business Week recognizes it.

The commentary moves through media consolidation, universal service issues, digital TV spectrum, and forcing the Cablecos’ (and the Bells should be included) to not discriminate against services carried over IP that compete with services they offer (such as VOIP Quality of Service Issues). The conclusion: there’s still a lot of need for regulation. It’s very gratifying to see that at least one national reporter has done his homework. The final sentence serves as well to end this post as it does to end the commentary:

Maybe one day, a sufficient number of new technologies will compete vigorously enough with one another that the FCC will be free to step aside. But for now, the regulatory hand is still needed to ensure a smooth transition to that future.