Chamber’s (unanimous) endorsement documents

The Lafayette Chamber of Commerce has posted its endorsmement documents on its website. You can get a summary in the form of a press release, an eight page postion paper (with references) and a two page executive summary. You can also get a look at earlier docs that support this one—(their broadband policy, and a paper on public/private issues)

The endorsement, as rumored, was unanimous. That’s great—and frankly, unexpected. An endorsement has been inevitable for some time but unanimity is a valuable extra. The downside is that, apparently to get that unanimity, the chamber chose to press for public/private partnerships in both construction and running the utility. Two sources that were at the meeting last night have made a point of assuring people that the Chamber’s support is complete and in no way conditioned upon the city or LUS agreeing to put city property into private hands.

What is demonstrated here is the coming together of Lafayette. We’ve got Democrats sitting beside Republicans and plotting cash, phone banks and walking bands. We’ve got citizen’s groups forming with representation deliberately drawn from every corner of the city. We’ve now got the Chamber of Commerce aboard—unanimously.

This is all to the best: the more we come together, the more obvious it is to BellSouth and Cox that the community is unified in its support, and the less likely the fight is to get really ugly and divisive. Only when it looks likely that a campaign of fear and distrust of our elected leaders and our local utility is likely to backfire will these corporations decide that the course they set themselves on last summer is counterproductive. As was once said: “They need to get out of our way because we are not going to stand down on this.” BellSouth and Cox need to understand the truth of those words.

Pro fiber PAC formation hits the papers

The development of a pro fiber PAC—Lafayette Yes!—is covered in articles in today’s Independent and Advocate. Both articles cover the basics of what looks to be the major money-raising arm of the campaign to bring fiber to the home in Lafayette. Headed by Kaliste Saloom III, the newly formed PAC will focus on making the media buys advocating a yes vote that the city, restricted by state law, cannot.

The Independent article, “Release the Hounds: Dueling fiber media campaigns get rolling” focuses on providing background. It notes the slow but definite lift-off of the corporate BellSouth/Cox campaigns. Steve Creeden, former Cox employee, reveals Cox’s ability to rapidly expand its ad campaign by using spots it normally reserves as promotions and gimmes for its advertising staff. The use of such advertising space would effectively mean that Cox, at least, would have to spend very little money out-of-pocket—and that anyone who’d like to track how much Cox is actually spending would have to track the in-house ad usage very closely.

Interesting quote:

An unexpected grass roots organization is also afoot to promote the fiber initiative. Don Bertrand, a local landman who also serves on the parish Republican Executive Committee, is collecting personal endorsements on his newly formed Web site, and has 100 volunteers. He sees the pro-fiber stance creating strange bedfellows. “We’re going to have people from the local Democratic Party and people from the local Republican Party,” Bertrand says. “We’re going to have UL students. We’re going to have people in neighborhoods. I don’t think this is going to be your regular campaign crowd. It’s going to have its own unique characteristics. We’re not for an individual here. We’re voting for an idea, a vision.”

The Advocate article, Fiber optics PAC created, covers some of the same ground. Like the Independent’s article, the Advocate’s emphasizes issues of local pride and a certain ‘we can just do this for ourselves’ spirit on the part of the pro-fiber partisans.

Interesting quote:

Opponents of the plan, like BellSouth, Cox Communications and a group called Fiber 411, have said the LUS plan is too risky, not fair to their particular businesses and better left to the private sector.

Saloom said many of those same arguments have been made over the decades when private companies have tried to buy LUS from Lafayette residents.

Saloom’s father, retired City Judge Kaliste Saloom Jr., was city attorney in 1949 when voters rejected such an overture from private business and decided instead to borrow money to expand LUS’ services.

The situation is much the same today, Saloom said.

In sum: You definitely come away from these articles with the sense that Lafayette will be prepared to answer the media onslaught to come, if not dollar for dollar, then at least with a lot of local spirit.

Legislators shocks lobbyists, write legislation

Last week I posted on a discouragingly long list of state-level attempts to pass laws restricting municipal efforts to develop local telecommunications utilities. The list represents the fruit of a concerted effort by the large telecos to eliminate an entire category of competition. As was the case last summer in Louisiana, most of the legislation originated with teleco lobbyists.

Having lobbyists write legislation that bears the signature of elected legislators is no longer remarkable. But occasionally we get a story that highlights just how out of whack things have gotten. In the story “Internet access sparks tug of wa,r” the Charleston Daily Mail of West Viriginia reports that:

John Ruddick, a lobbyist for Verizon, left Wednesday’s meeting of the Senate Transportation and Infrastructure Committee furious after the committee originated a bill that could involve state, county and municipal governments in extending broadband computer services across the state.

What upset Ruddick was not only that government would get involved in providing services already offered by Verizon, other telephone companies and cable television companies, but that the bill sprung out with just 17 days left in the Legislature’s 60-day session.

“You know all of our broadband providers are interested in it, and you secretly put out a bill to do this,” he said. “That is wrong.”

Committee Chairman John Unger, D-Berkeley, said he and others did consult with Verizon, Adelphia and other companies, but he made no apologies for not releasing the bill to them before it came out of his committee.

“The special interest groups think they ought to see the legislation before the legislators see it,” he said. “That’s where everybody’s got it backwards around here. They’ve got it backwards, because they think that the special interest group ought to draft the legislation and then show it to the Legislature, and that’s not the way it should be.”

Amen, Brother Unger. How did things get so crazy that a state legislator has to defend actually writing law instead of leaving it to lobbyists?

“Does Municipal Supply of Communications Crowd-Out Private Communications Investment?”

A new study, Does Municipal Supply of Communications Crowd-Out Private Communications Investment? An Empirical Study, examines an issue we’ve heard a lot about here in Lafayette: How private investors will react.

It isn’t uncommon to hear opponents of fiber say that it is “obvious” that if we choose to invest in ourselve, outside companies will be offended and choose not to invest here. But it isn’t clear that this assumption is true—businesses don’t generally make their decisions to invest in a community based on anything other than profit potential. It is an open question whether, on the balance, an inexpensive municipal network creates rich new markets thereby encouraging investment or whether it results in less potential for investors.

This isn’t a theoretical or ideological question: it’s one that can only be settled by going out and looking at how things turn out in the real world. That is what the authors of this study do. Here is what they found:

The municipal supply of communications services is on the rise. While constituents are generally delighted with the municipal services, incumbent firms that compete (or may do so at some later date) with these systems are unsurprisingly displeased with the rise of municipal communications. The incumbents levy many arguments against municipal entry, one of them being that public investment in communications networks crowds out private investment. In this paper, we subjected this hypothesis to an empirical test, and found no evidence to support the “crowding out” hypothesis. Indeed, the empirical model indicates that municipal communications actually increases private firm entry and, presumably as a consequence, private investment.

The paper is pretty mathematical in places but the conclusions are clear enough. The theory that public investment drives out private investment is not supported. Instead, investment in infrastructure provides the basis for a greater degree of private investment and competition.

(Thanks to Max Hoyt who highlighted this paper in a meeting I attended earlier today.)

What’s wrong with teleco funded “research”

The American Public Power Association (APPA) has just published a white paper that carefully documents the ways in which “research” (and I use the word advisedly) done under the sponsorship of the nation’s telephone and cable companies misleads its readers about the economic facts of municipal telecom utilities.

What is indisputable, and no research, pro or con, that I have seen tries to disputes this, is that the people in towns and cities that have public telecom utilities love them and are convinced that they have better services at cheaper prices because of them.

What the teleco-dependent researchers have to accomplish is to convince people in cities that do not yet have such utilities that people in towns that do have them are wrong. It’s a tough sell.

This particular paper, “Paying the Bills, Measuring the Savings” examines the granddaddy of all such papers, dissects its mistaken assumptions, points out the inadequacies of the data set selected, and finally shows that its conclusions that the utilities were secretly losing money are wrong. Even more devastating for the hopes of its corporate sponsors, the APPA study shows that dire predictions for the future of the utilities examined were wrong. The targets of the original study remain viable, valuable, and respected parts of their communities.

We in Lafayette will be only mildly surprised to discover that the lead author of the original study, Ronald J. Rizzuto, is the same Rizzuto we are familiar with from the the “Academic Broadband Forum” sponsored over at the Holiday Inn Holidome in August by BellSouth and Cox. We reported on the event and on the background of the panelists earlier. That event was a textbook case of disinformation about municipal utilities and much of the dubious “research” presented there relied heavily on the model developed in Ruzzuto and Wirth’s original paper.

The APPA paper should be studied by anyone who would like to understand the current debate over public and private ownership of municipal utilities. People too often assert with perfect confidence that all (all!) municipal telecom utilities lose money (as was done at our “Academic” forum). These flawed studies are the only basis (other than raw ideological certainty) for asserting something that seems otherwise so incredible.

The chief problem with the industry-sponsored studies is their assumption that what makes a private for-profit company successful is the same thing that makes a public utility successful. But of course, that isn’t true.

Private, for-profit companies exist to make money. They hope to extract the maximum return from each account and that is what motivates them to provide any services they offer the public. Success is measured by how much money they return to their owners. A private company is most successful when its profit is large.

Public utilities also exist to serve their owners well. The difference is that the owners of public utilities are the same people as their customers. Public utilities have to return value to their owners as well. But typically they are motivated to leave dollars in the pockets of their customer/owners rather than to charge them the maximum that the market can bear. That, along with ensuring local control of the quality of the product, is what motivates communities to build utilities. A utility’s motivation is close to the opposite of that of a private company. It wants to leave the maximum amount of money in the pockets of its customers (because that is the way to best benefit its owners). Put dramatically: a utility is most successful when its “profit” is very small.

Rizzuto and Wirth’s study simply misses this crucial distinction and the most critical of their errors are a result of misunderstanding what makes a utility successful. The APPA study works you through the fine points in excruciating detail. But I recommend doing just that. The mistakes are so obvious when explained clearly that it is hard not to feel that they are willful. And almost every study I know of that purports to show that utilities have any financial problems as a class cite the Ruzzto and Wirth study and rely on its mistaken analytical model.

The slow walk through the three very concrete cases compares the image put forward in the original paper with the reality of the utility’s success and its popularity with the local community. The thoughtful analysis goes a long way toward allowing reasonable people to simply dismiss arguments based on the idea that utilities are usually or even often financially unsound.

Michael Powell Sticks It To Consumers On the Way Out the Door

There are three certainties in life: 1) death; 2) taxes; and 3) that the FCC under Michael Powell will favor incumbents over consumers every time out the chute.

Case in point, the latest ruling of the Powell tenure.

The Washington Post reports that, in a 3-2 vote on Friday, the Powell FCC ruled that states cannot require the Regional Bell Operating Companies (that would be BellSouth, here) to offer a broadband DSL connection without making consumers also pay for a phone line.

No doubt, we’ll be hearing a great deal about “unfair competitive advantages” from Cox and BellSouth in the coming months of the community discussion about the LUS fiber to the premises project. When you do hear that, consider this summation of the impact of this ruling:

The ruling effectively gives BellSouth and other regional giants an advantage over competitors trying to sell alternative phone service.

The Post reports that BellSouth first sought this ruling back in 2003.

This is another installment of the anti-competitive war that BellSouth, the other RBOCs and the cable companies have waged since passage of the Telecommunications Act of 1996. They have fought every attempt to force them to open their networks — the vast majority of which were built when the companies were regulated monopolies — and that resistance to competition has been aided and abetted by the Powell-led FCC.

That suppression of competition has resulted in less choice and higher costs for business and household customers of these incumbent carriers. At the same time this suppression of competition has taken place, levels of broadband usage in the United States have fallen to 15th in the world. We are being passed by other countries because providers here will not make the timely network investments necessary to deliver modern, Internet Protocol-based, networks where and when they are needed — here and now!

There is a connection between the anti-competitive practices of the Bells (and the cable companies), the regulatory decisions of the FCC, and the precipitous drop of this country as a leader in the usage of broadband connectivity — even by the ludicrous standard used to measure “broadband” which is somewhere in the neighborhood of 200 kilobits per second.

The vote on the LUS fiber project will be a vote on whether we accept the status quo or choose to invest in ourselves and our community to deliver a new vision of Lafayette in the 21st century. Who benefits from maintaining the status quo? BellSouth and Cox. With friends like these, who needs enemies?

ProFiber meet-up last night

There was a meetup of pro fiber partisans last night and good things happened–some of them largely unplanned.

The meeting was designed to put folks from a wide range of Lafayette communities, networks, and organizations in touch with each other and it succeeded in that goal. We talked with folks from the northside and the southside, techies and folks without email, moms, citizens, businessmen, creatives, party officials, campaign managers, and advertising gurus. The focus was on building, from the very beginning, a citizens’ group that could wage a grassroots ground campaign that would reach into all areas of the community.

One benefit of such a gathering is that it puts folks together that need to meet. The chair of the Lafayette Republicans and members of the Democratic executive committee attended, as did folks from a forming PAC and people active in the campaign to come. The Democrats, the Republicans, and the money guys got a chance to get themselves in synch about funneling contributions to useful places. There was also some needed coordination agreed to between the political parties and PAC guys, particularly concerning the contribution of the two parties to the crucial last days of campaigning. All very good things.

But the PAC/s and media buys are what might be called “the air war.” The local citizens’ group envisioned by those at the meeting are the ground campaign. Elections, especially ones that are centered on ideas, are won by word of mouth—by family, friends, and neighbors talking to each other. And that is where this citizen’s group will focus its efforts. Our advantage will be that we can be light and lithe…reaching out into each community or professional group and communicating with them on their own terms. Low-cost viral campaigning will be the forte–everything from house parties to song-writing contests to 30-second downloadable “ads” are fair game. But the solid core will be talking to our neighbors, having good information to share, and developing effective means to deliver the message.

For an effort like this to be effective we’ll need to be everywhere. The first job is to bring more people—and their networks—into the group. Folks like you. Join in! To do so, drop us a line at or get in touch with the folks at Fibre911.

List of state barriers

Here’s one for your bookmarks list. Never know when you might need to check and see if you are in it.

It’s a regularly updated list of laws currently under consideration across these United States that would restrict the entry of municipalities into telecommunications enterprises. Each listing includes a brief description of how the law would restrict cities and towns. The length alone should be instructive if you’ve any doubt that the telecom companies are waging a systematic campaign across the nation to eliminate an entire sector of competition. It’s dry reading but if you can stand it you’ll discover substantially similar laws in several states. It’s a testament to the ingenuity of lawyers and the malign power of marrying ideology to financial self-interest.

It’s one of those horror-story like things. It’s not interesting reading. You know what is coming next. It’s gonna be awful. Still, you steel yourself to read just a little more. And are generally sorry you did.