Month: October 2005

I’ve got a small pile of worthwhile items that readers have sent over the last couple of weeks but haven’t gotten worked into the blog. (I’ve been catching up on work deferred from the summer.) The latest link (thanks Stephen!) points out Louisiana’s abysmal ranking in the uptake of advanced technologies.

According to data gathered by the census bureau Louisiana is 3rd from the bottom in both computer ownership and in subscriptions to broadband. In both cases only Mississippi and Arkansas have lower rates of usage.

Taint good. Not for our state, not for economic development, and not for people’s quality of life.

The explanatory correlations are with both poverty and rural life. Both are correlated with low uptake and both are areas in which Louisiana, Mississippi, and Arkansas vie for “top” ranking.

Normally this would just be a “feel-bad” story. But here in Lafayette we have started changing at least part of the story by creating a local utility. Part of the reason that rural areas have low uptake is that decent broadband is plain not available. LUS will make sure that in the city of Lafayette at least everyone will be able to hook up to the most advanced services available to anyone in the country. But the more intractable issue is poverty…something of which the three states named have far more than their fair share. There are two ways of dealing with that: raise incomes and lower prices. It’s damned hard to do the former. But we’ve taken the right steps to insure lower prices. LUS will drive prices down 20% once they are up and running and the private corporations will have to follow suit. (Competition’s grand.) According to the census bureau’s numbers nearly a quarter of those who don’t now have broadband don’t because they can’t afford it.

Refs:

A BBC News story on the issue might flesh this out for some readers.

The census bureau has two main avenues into the data: a page listing tables of the analyses and a pretty pdf summary. Your choice.

LUS has responded to the BellSouth lawsuit according to reports in both the Advocate and the Advertiser. That suit aims to cripple LUS’ ability to do business by making LUS appear to the bond market as an independent start-up with no resources. If successful, it would raise the costs of bond-based borrowing and increase the cost to LUS customers.

And that’s the whole point of the lawsuits: to raise the cost to LUS’ customers.

This has been a consistent goal of the incumbents; the in lieu of tax “controversy,” for instance, had little to do with taxes (since none were to be collected) and everything to do with increasing the bill presented to customers by the amount that LUS would have to have increased it if it were collecting for those taxes. That’s in a clause BellSouth and allies got included in the (un)Fair Competition Act passed by our legislature.

The incumbents ought to try competing in the classic, classy way. That will involve lowering their prices instead of engaging in legislative and judicial tricks trying to raise the costs to the competition. But the only company involved that has promised to pursue actual price competition is, shock and surprise!, the pubicly-owned local utility. Those who persist in seeing this battle through rosy ideological lenses that paint all private corporations as good guys really ought to rethink. Our situation wherein a local, publicly-owned utility is squared off against monopoly monoliths with a proven record of monopoly practices should really be a learning experience for us all.

As usual, Kevin Blanchard over at the Advocate has the more complete version of the story and walks the reader through the conceptually tough bits. The (un)Fair Competition law in question provides for pledging resources for the explicit purpose of getting the best rates. That’s pretty clear; you get to pledge your assets in the way that will result in the lowest cost to the citizens of Lafayette. Easy. But not so easy for BellSouth apparently.

From the Advocate account:

“This language is seemingly clear and explicit to anyone, except BellSouth. The City is entitled to use the ‘resources’ of its other utilities,” the LUS response says.

“It is self-evident that the bond market requires maximum security,” to secure bonds, LUS wrote.

State law also calls for governments to “not be precluded from” common practices of private companies, LUS wrote in its response.

“Surely, even BellSouth will not contend that it is not ‘legally permitted to engage in’ the pledging and payment of its corporate debt by its corporate parent,” LUS responded, quoting a portion of state law.

The point that LUS should be permitted to engage in any practice its private competition regularly resorts to is a good one. The legal standard, established in the law, by which “fair competition” should be judged is defined to mean that LUS should be allowed to do anything that its private competition is allowed to do. Leveling the playing field is the ostensible purpose of the law. BellSouth’s actions make it clear that fair competition is the furthest thing from their minds as they pursue a strategy of raising the costs to their competition’s consumer so that they don’t have to lower their own to compete.

A letter of support for Lafayette’s telecom utility from the northwestern tip of Washington state is to be found in the current Independent. It good to know that folks across the country are following our travails.

The author makes a good point about “subsidization.” BellSouth gets lots of subsidizes–from the federal, state, and in Lafayette even from the local government. (Remember the Cingular deal?) My guess is that LUS gets no such subsidizes. In fact LUS, in a perverse turn of fate, is providing subsidized electricity to Cingular, BellSouth’s wireless subsidy.

Hypocrisy, thy name is BellSouth. And even folks on the other side of the continent can see that easily.

Wicked, Funny, True.

Talking to a local lawyer last night I was told that an ethics complaint has been filed against Fiber 411. I certainly hope that is true though, as was the case when ethics-challenged Eric Benjamin “revealed” that an ethics violation had been placed against Joey Durel, it is impossible to confirm that such has occurred without courting an ethics violation yourself or encouraging another to do so.

An ethics challenge would be appropriate because the final ethics filing of Fiber 411 was wholly inadequate. The purpose of such filings is make visible who supported and who has benefited from campaign monies. Fiber 411’s filing serves to hide this rather than reveal it.

As treasurer for Lafayette Coming Together’s PAC I can attest to the fact that the filing rules are arcane and burdensome, you are supposed to file a lot of detail and file it in a timely manner. It isn’t easy. (We missed a deadline for instance.) But the basic purpose and what you are supposed to file is clear.

Now the Fiber 411 crew of Tim Supple, Bill Leblanc, and Neal Breakfield spent a lot of energy trying to avoid being held responsible for a public accounting at all claiming that, for reasons that were always murky, that they shouldn’t have to register as a PAC in order to receive money and spend it to influence the election. They were wrong and and under pressure eventually formed a PAC. There are more than a few things that are fishy about the whole setup.

• First, they organized the PAC after they had solicited, gathered money and presumably spent some of it. It should go without saying that this is not the right or legal order.
• Tim Supple who, oddly, is the only officer and is written in as both chair and treasurer in the organizational filing. As I understand and it the regulations require a chair and a treasurer at minimum and the legal responsibilities of the two differ. (Published claims by the trio have all three of them agreeing to actions taken by the PAC.)
• During the heat of the campaign and shortly after finally conceding that they had to have a PAC Fiber 411 told reporters that it had filed the interim report required by law. The trio’s “report on their report” to the media, coupled with filings actually appearing on the ethics commission website from properly registered pro-fiber PACs made interesting reading at the time. But the stories made it sound as if the 411 guys were doing the right thing. Unfortunately the report they said they filed then never appeared on the ethics website at all. What happened? Was it not filed? Was it not filed correctly? Why wasn’t a correct, if late, filing made? (One was required at that point in the campaign.)
• The final Fiber 411 report claims 22,000 dollars in “in kind” contributions by Bill LeBlanc for “yard signs.” That’s way too much money for yard signs; Bill LeBlanc is too good a businessman allow himself to be overcharged that badly.
• A Times of Acadiana article includes the last minute (and very dishonestly negative) direct mail pieces that Fiber 411 claimed credit for were part of that $22,000 that Bill LeBlanc claimed to have spent…it would pretty much have to be to have run up that sort of bill. Why wasn’t that reported? It needs to be reported somewhere.
• The most glaring problem with the final report though is the lack of any detail on the $22,000 in-kind contribution attributed to Bill Leblanc. That’s a lot of money coming from a single individual. (To give you an idea of just how disproportionate: the rest of the opponents in Lafayette was apparently concerned to the tune of only $185.) It is hard not to wonder if that that disproportionate an investment might not conceal donations that Bill passed on. But, source aside, what this “in kind” ploy surely conceals is who was paid and how much. Again, I worked with the “in kind” requirements while wearing the treasurer’s hat for Lafayette Coming Together. The in kind requirement is intended to keep people from contributing resources anonymously. So if someone helped us design a mail piece but donated the service we had to report that as an “in kind” contribution to the cause. The point is that the in kind requirement works to force the PAC to list all those who contributed to the campaign in any way. It is most definitely not intended as a device to “sublet” the campaign so that one person contracts out and pays for all the work that is done and hides all the pay-outs under their name. We deserve to know where the money came from and who it was spent on–and on the profiber side that information is readily available. The in kind contributions reveal information for both Lafayette Yes! and Lafayette Coming Together. The in kind contribution on Fiber 411’s listing conceals information. To distill the applicable law: Expenditures made by an agent on behalf of a political action committee must be specifically reported.

I’m sure any competent lawyer could find more to question.

For lagniappe, one could file a separate complaint against Neal Breakfield and Eric Benjamin for revealing an ethics complaint illegally.

Or, for that matter, another enjoyable endeavor might be trying to track down where the $51,000 of BellSouth money that was apparently paid Calzone and Associates actually went. Might that have something to do with who designed the mysterious last minute direct mail pieces? I’ve worked around print design much of my life and am confident they were professionally–and very cleverly–designed. Someone designed it and someone printed it. Who is a question that is supposed to be answered in an ethics commission report. Saying that a person or a PR firm paid for the work isn’t good enough. Any money paid by a public relations firm or agent is supposed to be itemized by the candidate. The law is clear on this:

Expenditures made by a public relations firm, an advertising agency, or agent for a candidate, political committee, or other person required to file reports under this Chapter shall be considered expenditures of the candidate, political committee, or such other person, and must be specifically reported as required by this Chapter.

It’s not enough to say you paid a company to do it. You have to say who they paid.

But WAIT. There’s MORE!

Apparently BellSouth is taking “credit” for the last minute automated phone banking that went on in opposition to Lafayette’s’ plan. Who paid for that had been a mystery. Ourso Beychock Johnson, a Baton Rouge political firm, was paid by BellSouth to do the deed according to the election day report.

A curious payment of $750 dollars for election day work was made to Dustin Ryan Cravins, Don Cravin’s youngest son, according to BellSouth’s report. Dustin is a registered lobbyist. He registered Calzone and Associates as clients in a supplemental filing 5 days before the election but failed to fill out the part of the documentation where he is supposed to state whether Calzone and Associates paid him leaving us to speculate as to who his paymaster actually was. Cravins’ office was the locus of considerable hullabaloo during the election when a Cravins aide was caught “running” picketing outside and questions during town hall meetings. His actions were disavowed by Cravins. We were told that Brooks, the aide, was free-lancing. The timely Dustin Cravins connection to Julie Calzone’s firm reawakens those questions. We’ll have to wait to find out what he did with that money till February 15th when lobbyists have to fill expenditure reports for the second half of the year. It will be entertaining. It should be fun get some clarity on who paid him and what he did with the money.

The Baton Rouge business Report treats us to one of those true rarities: an unflinching, inside assessment of a competitive field. In “EATEL’s wild ride” neither the author nor the company’s president he interviews bothers to evade the difficulties EATEL faces or the ultimate source of those difficulties. Soft-pedaling such issues is what makes too much business writing into a form of puffery. Steve Clark is to be congratulated for avoiding those pitfalls.

The bottom line is that EATEL has lost more than half its customers by losing Baton Rouge and has laid off more than 20% of its workforce. This is a direct result of an FCC ruling that removes regulatory controls originally intended to introduce some competition into the monopoly wireline telephone market. EATEL was an aggressive competitor, undercutting BellSouth by as much as 20% and snatching many BellSouth customers. But EATEL is fighting back. From the story:

The silver lining is that EATEL … is deploying a $30 million fiber optics network for television and high-speed Internet access that EATEL believes will prove is a potent weapon against newcomer Cox on EATEL’s home turf in Ascension and Livingston…

Meanwhile, some experts say last year’s FCC ruling–making it impossible for small telecomm companies like EATEL to have a chance against giant phone companies like BellSouth–is, in general, a step backwards for facilitating competition in the nationwide telecommunications sector.

The kicker is that this wasn’t necessary. It was due to a decision by the Bush administration:

A series of FCC rulings upholding the Bell companies’ obligation to lease lines to competitors at cost was reversed by a pair of decisions from a Washington D.C. circuit court. The Bush administration elected not to appeal the case to the Supreme Court, a move regional Bell companies such as BellSouth applauded.

“Had they appealed it, I think most everyone expects the district court decision would have been reversed, and the FCC’s pro-competitive policies would have been permitted to continue,” Gillan says. “Instead, by basically stopping the judicial review process at a point where the [Bells] had a win, they locked in this bad court decision.”

The DC circuit is the nation’s most pro-corporate bench. The failure to defend the executive branch’s own regulatory decisions cost EATEL much of its customer base–and cost you a lot of money.

But, as EATEL clearly understands, the solution is to own your own advanced, fiber-based infrastructure. That, and that alone, can secure your competitive future. That makes two places in Louisiana that get it: Lafayette and Gonzales.

My:

“Of all the monopolies, oligopolies and other arrangements that subvert progress merely to benefit the few, perhaps the most pernicious is the conspiracy by telephone and cable companies to exercise control over high-speed Internet access.”

Now that’s strong stuff even by my standards. It’s from a business column in the Los Angeles Times. (free registration required)

It goes on:

DSL and cable modem connections provided by these companies account for roughly 98% of all high-speed, or broadband, service in the country. But their success at discouraging competition has left them gorging on a pitifully small pie: In recent years, the U.S. has fallen from third place to 16th globally in the penetration rate of broadband service. (Chauvinists can take pride that we’re still ahead of Portugal.)

It’s unsurprising, therefore, that many local communities have taken matters into their own hands by building or contracting for their own municipal Internet systems.

You see more of this sentitment all around the net. Most of it is oriented toward the currently “hot” wireless alternative (in response to call for proposals in San Francisco and Philadelphia) but the logic applies equally to more capable systems like the one planned for Lafayette.

Ethics-challenged Eric Benjamin is back at his off-kilter crusade to say snide things about Lafayette’s telecom utility using strained metaphors drawn from popular culture.* He remains unconstrained by any real editor and hence his stylistic meanderings and factual mistakes go uncorrected.

The latest in this string of attacks is found in this week’s “Here’s to You, Mrs. Robinson” attempt at an editorial which tries to use the film “The Graduate” to set up a parallel between the protagonist of that film and Joey Durel.

The stylistic problem is that for such cute tactics to work you have to have something that is parallel. This involves 1) that the pop culture tale you analogize to should have some resemblance to the real world you are satirizing and 2) that the satirical claims you make have some relationship to the pop culture tale you are using.

Benjamin doesn’t bother with either. And in the process of ignoring the basic principles of the genre he manages to turn the recent Katrina/Rita tragedies into a silliness more toxic than any ever found in New Orleans flood waters:

You can imamgine (sic) the graduate telling the crowd, “When BellSouth and Cox brought Hurricane Katrina in to stop the advance of fiber-laying activities, we thought that was impressive. When they followed it with Hurricane Rita, we realized we were dealing with some formidable powers. We’ve managed to pull off a bit of sleight of hand of our own, you might note, as there are now more than 40,000 new consumers in the Lafayette area, all new fodder for our cable, Internet and telephone services, all of them with no allegiance to either of our competitors and fresh prospects for us.”

Now that’s typical of Benjamin: put every distasteful thing you can think of into the mouths of people who actually did something to help folks in order to feed your inexplicable animus. It doesn’t have to have anything to do with “joke” he is pretending to and it doesn’t even have to be internally consistent. Editors worry about such things, General Managers apparently don’t.

Ok, so he’s stylistically challenged and intellectually ineffectual. And factual accuracy isn’t his longsuit.** We knew that. But I have to say that I’m equally offended by Benjamin’s apparent inability to think clearly about basic issues. For instance, in a sidebar he endorses the astonishing claim by BellSouth and Cox that the extremely limited merely potential “cross-subsidization” of LUS’ telecom division by other services as provided for in state law and regulation is unfair to the Corporations because they, poor, pitiful megacorps that they are “have no such additional revenue stream to tap.”

Aw cher, can’t you make better sense than that? How ’bout Cingular? No “cross-subsidy” revenue from that? How ’bout BellSouth’s Latin American wireless divisions? How ’bout the cross-subsidization of BellSouth and Cox’s battle with the tiny local, public utility by every customer in states across the Southeast? NO law even tries to limit them from turning their huge, protected, monopoly profits in other places and other businesses against LUS. Fairness to the corporations?!! Get Real. The cross-subsidization issue is a fake legalism introduced by BellSouth and Cox to try and prevent the creation of a utility that is the express will of the people of Lafayette. The PSC voted to sustain LUS’ position because it was in the law. That law the PSC upheld is a law that BellSouth and Cox imposed on LUS and BellSouth and Cox agreed to the final compromise. Benjamin knows all this. He just doesn’t choose to share it with his reading public.

One would think, and frankly hope, that the man whose job it is to run the business side of things (most business managers don’t write columns) would have a better handle on what constitutes a relative business advantage.

I have to think Benjamin does understand that BellSouth and Cox’s “cross-subsidization” advantage is hugely greater than any that any local firm, public, private, or purple could ever manage. But he doesn’t feel obligated to speak fairly from his position of priviledge. And that, finally, is what is most offensive to journalistic ethics.

Now, as before,*** one has to ask: Who exercises editorial oversight of Benjamin?

Mr. Powers? Your name appears above his on the masthead.

* Remember Lester U. Smiley?
** Facts, well, the Advocate had them anyway.
*** See the post: The real issue is…

The Public Service Commission (PSC) has confirmed its earlier regulations governing the Lafayette Utility System’s provision of telecommunications services. Stories in the Advocate and the Advertiser do a good job of reporting the story and the Advocate even does a nice job of educating the public briefly about the issues involved. It’s comforting to know that some people can stay the course even in the face of corporate pressure.

In that vein it will not surprise you to hear that the Joey Durel of old is back. After listening to the mealy-mouthed gumming of too many of our public officials in the wake of Katrina and Rita it is refreshing to hear a public servant speak plainly. Quoted in the Advertiser:

City-Parish President Joey Durel on Wednesday asked BellSouth to drop the lawsuit and not file another.

“It’s shameful at a time in Louisiana history where we’re going to have to rebuild 75 percent of the economy of the state, there are out-of-state companies with their greedy interests who would even consider filing a lawsuit,” he said.

And from the Advocate:

“Give the people of Lafayette an opportunity to pull ourselves up by our boot straps,” Durel said.

Nice, and it shows a clear awareness of the game that is being played out here: only part of the ongoing battle is waged on the regulatory and legal fronts. In those arenas the cost to the incumbents of ugly intrangisence is small and they have little incentive to play fair. But the larger game includes public relations and the political consequences of losing that battle are large. (Recall that losing the public relations war during the Fiber-Optic Referendum cost the incumbents the ability to even effectively resist during the election. The PR war matters.)

Making it clear, as these stories do, that attempting to run roughshod over votes of the council and the people at a time of great hardship for the people of Louisiana is not going to be as cheap politically as BellSouth and Cox were hoping, is a very good thing. The people of Louisiana and even some of their representatives are feeling pretty put upon by big, faceless, out of state bureaucracies that seem more interested in self-promotion than doing their job. It’d not be hard to put our incumbents in that box…their inability to back off and just compete regardless of rebuffs in Louisiana ranging from a vote of the people to statewide regulatory commissions stands as evidence that they are uninterested in being “good local citizens.”

Were I LUS and the the city I’d ride this hard and I’d ride it to the legislature. If BellSouth intends to use a very bad law to engage in endless attempts to override the will of the people then it seems like a good idea to go in and ask for the law or for the most irritating portions of it to be repealed. To my way of thinking the only fault in the current strategy of our local leaders has been to be too willing to ONLY compromise when pushed to shorten the period of delay. Granted, delay cannot be tolerated. But the incumbents compromise when they have to–as they did to get the current bad (un)fair competition act passed–and then pursue an aggressive path of altering the deal after the fact. Not the way the game ought to be played. But it is the way the opposition is playing it. We should be willing to play too. Introduce a bill that returns “local control to local people.” Model it after the law governing electrical utilities. Fight for a “state hands off local decision making” principle. Get the PSC and, for goodness sake, the state legislative auditor, out of it.

The people of Lafayette don’t want, or need, state “protection” from our own decisions. And we certainly don’t need the state stepping in on the side of the out of state bureaucracies.

So the Consumers for Cable Choice, a group which advocates the Phone Companies’ positions on local cable franchises has acknowledged that its startup money was supplied by Verizon (East Coast Teleco) and that it expects SBC (Texas to Chicago’s Teleco) to kick in as well. Can BellSouth be far behind?

This sort of group is known as “astro turf” — a fake grass roots organization. This is part of modern corporate tactics and part of the more general strategy of FUD (Fear, Uncertainty, and Doubt) that you’ve heard about on these pages. The idea is to confuse the issue by making it seem like there is a real group of “consumers” (that are not paid off by corporate masters) that want to take away their local government’s rights to ask for something in return for letting companies like BellSouth and Cox use our locally-owned rights of way. In the normal course of events there’d not be any such group of local citizens.

Don’t believe ’em and don’t let politicians use such organizations as cover for bowing to special interests.

What really irritates me, however, is the brazenness of some of these “organizations.” This one is willing to get righteous about the cable companies’ monopolies in order to advance the interests of the phone monopolies. Do they think we’re all asleep? And they are willing to say that they think people ought to think them “independent” because they’ll take money from anyone. You’d think there’d be some standard: even in ethics-challenged Louisiana we know that an honest politician is one that stays bought.

These guys aren’t even that honest. A pox on them, their phone company masters, and their cable opponents alike.