Month: January 2006

Ed Gubbins notices BellSouth’s run of bad publicity. And it’s all so charmingly self-made. Gubbins runs the whole list from non-existant growth policies to offending New Orleans and Lafayette, to becoming the poster boy for violating the principles of net neutrality.

If you want to catch up on how BellSouth has become the nation’s corporate whipping boy the references are all here.

His conclusion: “If anyone is in need of an image makeover these days, it’s BellSouth.”

(Thanks to a reader for pointing to this one…)

Gene Flyte of Lafayette is angry at BellSouth…and wants to cut BellSouth out of any benefits of LUS’ current fiber loops. I’m not sure that BellSouth makes much use of the fiber loop (though they would if they were half so smart as they think they are). It’s certainly true that the days of “helping out” a “local” business by arranging backups and interconnects should be over with BellSouth who has conspicuously forfeited any right to be considered a good citizen of the community.

I’ve no doubt that BellSouth simply doesn’t care about these matters but I do think they should know that resentful reactions like Gene’s are common. Given the chance, the people of this community will be more than happy to leave BellSouth “out of the loop” whenever the opportunity offers. BellSouth should hope that its federal lobbying effort to exempt itself from the local franchise obligations that other video operators have always had will succeed. If it fails the people of Lafayette will be in no mood to cut BellSouth any kind of deal at all.

(A large part of the reason that BellSouth feels free to abuse local communities in ways that Cox hesitates to do is that Cox actually has to deal with local communities to be able to offer local service and BellSouth, exempted by federal law years ago, does not. Cox has been silent recently and, astute readers may have noticed that the council declined to bump up the 3% franchise fees it currently pays to anything like the 5% it could charge by federal statute. I suggest that Cox’s silence and the council’s forbearance are connected. And that BellSouth ought to have to deal with the same issues if they want to go into competition with Cox and LUS to offer video.)

Mr. Flyte also has a bone to pick with ULL for not stepping up to the plate on fiber. He’s right. UL is a wonderful part of this community but they’ve given evidence, with the horse farm issue and with museum questions and, yes, with their inactivity on fiber, that they may have forgotten that that is true. I fear that the old boy network that Joey Durel attacked during last year’s state of the city-parish address is at work here as they appear to be in the other situations that have embarrassed ULL recently. Old friends, old connections, past favors…they should go out the door when the good of the community is at stake.

TeleGeography Research has the most succinct summary of the newly announce French Telecom (FTT) FTTH plans:

Explaining the timing of the FTTH trial, FT said that while its existing copper-based DSL services were able to cope with existing demand for broadband access, in future fibre network alternatives would be needed to cope with increased access bandwidth requirements that will most likely render traditional technologies obsolete.

Om Malik, as always has an interesting analysis. A tidbit:

….this is an interesting development, given that France Telecom has always championed DSL. But now they feel that in the end fiber is better because the company wants to offer HDTV on multiple TVs, VoIP, online gaming and other services. … it follows a similar path in Japan, where fiber is slowly spreading and gaining market share at DSL’s expense. In the US, Verizon is using fiber to essentially replicate a cable TV infrastructure and layering some data on top of it. James Enck says German incumbent, Deutsche Telekom is planning to roll out a 50-city FTTC network as well. So far its been a DSL-driven broadband provider. I wonder if this could become an all familiar upgrade path: milk the copper as long as you can, and then switch to fiber?

Light Reading pushes a bit more information out there and calls on James Enck for an analysis of the competitive context wihin whch European fiber plans are placed. In part:

He notes that FT will be feeling the heat from Parisian FTTH startup CiteFibre , which is planning to provide triple play services across 100-Mbit/s connections, and from cable player Noos , which is conducting FTTH trials in the French capital.

Fiber is blooming across the world. Fast rollouts on this scale should produce whole new groups of proven and deployed (and hence inexpensive) hardware. It could work out well for Lafayette.

Overshadowed by the continuing fracas over naming a different street after Martin Luther King the media carry the story of Lafayette’s decision not to proceed with an appeal of BellSouth’s win at the appellate level.

I covered this pretty extensively last night after a visit to the council chamber. The Advocate and the Advertiser post stories that are nearly identical structurally but with a bit more in detail from the Advocate. The key issue that the Advocate gets that the Advertiser misses is cost: dropping the position LUS, the city, the lawmakers involved, and the PSC agreed was the right interpretation of the law will cost LUS and hence the ratepayers of Lafayette real money. (My response, as you might expect, highlights that hard consequence.)

KLFY also has an online short focusing on the issue. It repeats the incumbent talking point (attributing it clearly to the incumbents, I grant) that the “project stifles competition.” I confess to grow weary with reporting that merely repeats the he said, she said list of statements from the two sides. Something so obviously false as the current near-monopoly owners objecting to a new competitor with the empty phrase that it would “stifle competition” really shouldn’t pass muster with a reporter who is trying to inform the public.

Update: 1/18/06- 2:15: You can now get the original press release off LUS’ site.

It’s official, the city will not appeal the 3rd circuit ruling.

According to a press release at the city-parish council meeting LUS and the city have decided to bull ahead without further delay. The announcement says that the city-parish will seek a new ordinance that is in line with the 3rd circuit’s interpretation of the Local Government (un)Fair Competition act.

On the balance I regret that…I don’t like giving in to bullies and I think it will cost real jack to go along with what this set of bullies wants. But there is certainly a part of me that is jubilant: This insures the shortest possible wait for our fiber-optict system.

The city says:

After a careful review of all options , the City will accept the recent ruling of the 3rd Circuit Court of Appeal. the City believes tht to seeck review by the Louisana Supreme Court would likely delay the project for a longer time than if the bond ordinance were simply amended…

So delay is the reason given. Behind that is real doubt about when and even whether the State Supreme Court would take up the issue. As both a reporter or and a lawyer have troubled themselves to let me know the Supreme Court is under no obligation to take this bond question on an expedited basis. Apparently the found unconstitutional a law that would have required them to do so. So LUS could wait as much as a year to find out they weren’t willing to hear the case at all. Court crowding, an endemic situation, has been made much worse by Katrina. I’s still like to have seen an appeal–and don’t see what’s to stop BellSouth from threatening to appeal the next ordinance as well. But I have to say that the lack of an expidited process does make the decision not to appeal more understandable.

I’ve also had it suggested to me several times…and, oddly, only by lawyers, that trusting the courts of Louisiana where big corporate money is involved is not smart. I do feel obligated to report that one of the lawyers, while openly disdainful of the third circuit, thought the Supreme Court much more reliable. That concern no doubt played into a decision not to appeal as well.

While Delay and Distrust, and especially delay was influential I strongly suspect that another factor, while less visible, was equally important in producing the apparently odd decision not to appeal: Debt.

The press release alludes to this whe it says:

Over the past two years, telecommunications incumbent BellSouth has consistently blocked the fiber project through lawsuits, legislative action, and challenges to the Public Service Commission in an attempt to delay the timing of the bond funding that could drive the cost of the project up considerably...With the continued favorable intrest rate environment coupled with decreases in the price of fiber technology, our feasibility plan remains on target.” claimed Lafayette Utilities System Terry Huval. (emphases mine)

A consistent theme of the Local Government Fair Competition Act is increasing the cost to the consumer of using LUS’ services. The most efficient way to do this is to increas the debt load on LUS. And that is what the current lawsuit was aimed at. LUS and the city will accept conditions that will make the loans they take out more costly. During the time the city has been delayed by BellSouth and Cox the prime interest rate has risen from an historic low by more than 3 points; tax-exempt bond rates track prime rates for fundemental economic reasons. (Banks buy money from the treasury and resell it in the forms of loans to customers; the spread seems to have been from 3.5 pts to 5 points during the last decade.) Lafayette, as a direct consequence of incumbent obstructionism has missed the best bonding opportunity in more than a decade…bond prices are still good and, in fact, lower than the business plan anticipated but BellSouth and Cox’s delaying tactics have cost each and every customer of LUS telecom money–just as the incumbents intended.

Now, more than ever we need to repeal the “Local Government (un)Fair Competition Act.”

New Tricks: Cox asking FCC to “deregulate” in North Carolina. City and county claim that such deregulation will free Cox to charge poor and rural customers more than their neigbors have to pay says the man who oversees the cable company for the county:

Under deregulation, the company could charge “one neighborhood one price and another neighborhood another price,” Lynch said. Poorer neighborhoods could see higher rates because homes there don’t take advantage of Internet, digital cable and other services, he said.

Right now, of course, most city’s contracts with cable companies require that they serve all and that they offer the same services at the same prices to all. That’s the cable model in our country. And it’s a LOCAL, not federal or state, requirement.

But BellSouth and the other Baby Bells (most noticeably Verizion and ATT in addition to BS) are lobbying the FCC (and statehouses) hard to escape the “cable model” and be allowed to use city property without having to agree to serve all in a community equally. This is mostly not about (as the Bells claim) the “onerous” task of negotiating with municipalities but about getting a competitive advantage over their chief potential competition: the cable companies. If the Bells are allowed to compete only for the most profitable neighborhoods while the cable companies are stuck with providing for all, it will add up to an enormous unfair advantage for the Bells. (Hmmn, the Bells seeking an unfair advantage, why does that seem familiar?)

This story suggests that the cable companies have begun thinking strategically–they can’t dump infrastructure they’ve already built but they could demand that the feds allow them the same discriminatory “powers” they are poised to give the phone companies by exempting the cablecos as well as the telecos from local franchise agreements. That would neatly get them out of the Hobson’s choice they correctly see the telecos as trying to force them to make: of either being forced to lower their prices to the point of nonprofitability across a whole community in order to compete in the most profitable segments (like our upscale River Ranch), or abandon the most profitable segments, allow the phone companies to beat them there and wait for the teleco’s inexorable expansion into every profitable neighborhood.

That’s the world we find ourselves in. It’s another race to the bottom with consumers in general and the least wealthy of any community in particular taking the hit first and hardest.

MarketWatch columnist Frank Barnako writes about BellSouth’s continuing failure to comprehend what this Internet thing is all about. Although, there may be a subtle change in BellSouth’s strategy emerging.

Barnako quotes BellSouth chief technology officer Bill Smith as saying the company has been talking to content providers who might have an interest in paying network providers like the phone and cable companies fees to ensure a better user experience. Here are relevant paragraphs:

“Higher usage for broadband services drives more costs that we have to recover,” he said in a telephone interview.

He suggested that Apple Computer might be asked to pay a nickel or a dime to insure the complete and rapid transmission of a song via the Internet, which is being used for more and more content-intensive purposes. He cited Yahoo Inc.’s plans to stream reality TV shows as an example.

“It’s the shipping business of the digital age,” Smith said, arguing that consumers should welcome the pay-for-delivery concept.

Barnako mentions that Mark Cuban also backs the idea.

While having providers whose services rely on high-speed delivery of content pay some money to theoretically pay for the cost of network building might make some sense (depending on the amount charged and the impact that has on access to content on the part of consumers), this is a somewhat different tune from the ones that BellSouth and Verizon had been singing earlier.

In their earlier rendition of this song, the network owners (phone and cable companies) would have made deals with service providers that would have purchased their packets preferred treatment over those networks. That sort of walled-garden approach to Internet access (AOL on steroids as designed by a roomful of Bill Olivers) would fundamentally alter the Internet as we have come to know it.

Smith’s comments indicate that the idea is still evolving. It’s better than it was, but still problematic because of the way it would erect barriers to market entry for startups. For instance, how much more capital would, say, search engine startups have to raise in order to be afforded the same kind of access to customers that established companies like Google, Yahoo! and others would have bought for themselves?

The Internet has revolutionized business precisely because it lowered barriers to market entry. What the phone companies are proposing, even in this slightly revised version of ‘pay to play’, would blunt the innovation edge that the Internet has brought to business. It is a clear example of the interests of the phone and cable giants not matching up with the interests of other businesses and consumers.

The core issue here is that neither the phone nor the cable companies have enough money to build the networks that their customers want built. They’ve come to this realization only after shutting off competitive providers (that is, revenue sources) from their networks. Now that they have their networks all to themselves, they are back out looking for new revenue sources and have hit on the idea of making the content providers pay.

Brilliant! Except for the fact that in so doing, they propose turning the Internet into something resembling cable TV — 500 channels and nothing on! And, since the phone and cable companies fantasize about being content providers themselves, would that not put them in competition against they very content providers that they are looking to as, in effect, partners in these new network buildouts?

Ask the Competitive Local Exchange Carriers (CLECs) and independent Internet Service Providers (ISPs) about the track records of the phone and cable companies’ ability to cooperate with their competitors! I’ll save you the trouble: the phone and cable companies fought cooperation at every step until they finally drove all competitive content providers from their networks.

Another question that needs to be asked is this: What kind of say are the phone and cable companies willing to provide these content providers in the design and operation of these improved networks in exchange for their helping to fund those improvements?

Here, again, the record of the phone and cable companies to allow any outside input in the design and operation of their networks is relevant.

In the end, it’s pretty certain that the phone and cable companies will view these content providers as they view their current customers: cash cows whose views are not relevant to the operation of their networks.

So, Mr. Smith tries to makes it sound all so reasonable. And it would be were it not for the fact that the history of his company and his industry so vividly written for all to see.

If you believe his pitch, I’ve got some rising Louisiana marsh land to sell you! 😉

Here’s a piece I pulled up that seems appropriate for Martin Luther King Day: an editorial focusing on the discriminatory effects of recent decisions by the Bell companies. I’ve complained long and hard that the real value to the phone companies of eliminating the local franchise systems is to put the cable companies at a dramatic competitive disadvantage by letting the phone companies cream off the most lucrative customers.

What’s relatively rare is to hear a black minister make the obvious points about the discriminatory effects of this policy so starkly. (There’s a group in Chicago making the same complaint.)

Some of the good bits:

The giant telephone monopolies — AT&T, Verizon, BellSouth and Qwest — have launched an unprecedented push to effectively eliminate the only non-discrimination provision in federal law that prohibits redlining by any telecom company providing “video services.” They ask legislators to bless a dubious business plan to bring their new TV services only to wealthy neighborhoods…

For the cable industry, that law has resulted in more than a $100 billion investment in new networks and today represents the closest thing we have to a universal broadband policy. Rural communities and inner cities are considered as important as the wealthy suburbs.

But the Bell telephone companies appear to have much meeker goals. With strange fervor, they are insisting that Congress and state legislatures exempt only the Bell telephone companies from the non-discrimination provisions…

As the late C. Delores Tucker, founder of the National Congress of Black Women, argued, it is the “(phone) monopolies that want to trample our civil rights traditions.”

AT&T’s proposal, for instance, is known as “Project Lightspeed.” Months ago, its executives said that its bold new broadband service would be rolled out to 90 percent of its “high value” customers but only 5 percent of “low value” customers. Chaffing at what seemed to be an open admission of redlining, U.S. Rep. Ed Markey, whose subcommittee oversees telecom policy, accused the company of offering “Lightspeed for the well-off and ‘snail-speed’ for everyone else.”

A point of clarification: This essay could lead the reader to think that what was happening is that a federal law was about to be overturned. But that is most emphatically not the case. What the Bells are angling for is new federal laws to be imposed that would forbid local governemnts from demanding that corporations who want to rent municipal property (rights of way, poles, etc.) treat all of their citizens equally.

That really ought to not be something that the feds are trying to prevent us from doing for ourselves. And thats’ something we might feel a bit more acutely today.

Mike sends on a link to a nifty article in the New York Times: Hey, Baby Bells: Information Still Wants to Be Free. It’s a good introduction to what’s gone wrong with our telecommunications network from the standpoint of an informed Joe Consumer. Most folks who are up in arms (and up in arms we should be, let there be no doubt) about the current telecom betrayals in Washington or either tech geeks, or law geeks, or policy wonks. These guys are intense, driven, and cannot, for the life of them, see how anyone could not care as deeply about these matters as they do. (Yes, yes, I do count myself in that number. Apologies.) Of course, that’s nuts. Telecom outrage is not a reasonable day-to-day angst for most folks. Like black coffee or bock beer; it’s mostly an acquired taste.

What’s nice about this article is how undriven it is, yet is still emphatic about what it is we should want and could have–if we’d all just wake up.

AT the top of my wish list for next year’s Consumer Electronics Show is this: the introduction of broadband service across the country that is as up to date as that 103-inch flat-screen monitor just introduced by Panasonic. The digital lifestyle I see portrayed so alluringly in ads is not possible when the Internet plumbing in our homes is as pitiful as it is. The broadband carriers that we have today provide service that attains negative perfection: low speeds at high prices.

It gets worse. Now these same carriers – led by Verizon Communications and BellSouth – want to create entirely new categories of fees that risk destroying the anyone-can-publish culture of the Internet. And they are lobbying for legislative protection of their meddling with the Internet content that runs through their pipes. These are not good ideas.

That’s about the shape of it. The guys that have put us in a pretty pickle are lobbying to make it worse–much worse. The internet is like the goose that laid the golden egg; it’s a mysterious gift that’s produced unanticipated wealth. That wealth seems to have sprung up mostly because anybody could trade anything with anybody –information and ideas not only want to be free; they only flourish when they are. The telecoms look at all this wealth (which they did nothing to create) flowing through pipes they own by a bit of peculiarly American history and seem to think that smothering the goose that laid the golden eggs is a good idea. It wasn’t in the fairy tale and it won’t be in our real world either.

The story goes on to document just how poorly we are doing vis-a-vis countries with an actual broadband policy. (100 megs for 25$? Japan. A Gig for 120? Sweden.) How much freedom to choose we’ve lost (Recall dialup ISPs, hundreds? Now our effective choices for the new broadband are 0, 1, and 2. Lafayette will join a vanishingly rare elite to have a paltry 3 choices.)

For the geekier among us this story reveals a new thing to worry about. Previously, we’d only had to worry that the providers (AOL, Google, Vonage, Netflix, etc.) would have to pay a surcharge they’d pass on to us to get decent service, and leave the public part of the net with only what’s left over. We not have a bit more to worry about: exclusive provision. Where one company in each category is allowed to bid for not just decent service but the right to exclude its competitors. (This idea could only come from a monopoly like the Bells who gravitate to such things easily. Imagine: If you’ve got BellSouth you can only buy from NetFlix and get fast downloads. Or only search Google quickly, and Vonage? My guess is that they couldn’t pay enough to make their service half so good as BellSouth’s branded product. None of this is a joke, folks. It’s happening now. And our good friend BellSouth is in the forefront:

In an interview, William L. Smith, the chief technology officer at BellSouth, described to me his company’s trial offering in West Palm Beach, Fla., last year of a speedy download service for Movielink content. When asked whether BellSouth would offer its special service on an exclusive basis to a particular content site and agree to exclude the sponsor’s rivals, he did not hesitate in treating the question as a matter of simply settling on the right price. The N.F.L. and Nascar strike exclusive distribution deals, he said. Why not network carriers?

Companies like Google and Yahoo and everyone from Adobe to Microsoft to Lawrence Lessing and Vince Cerf object. The battle is far from lost but winning will take an aroused public. And this article is a good one to think on and to share with friends.

Now here’s a guest editorial I almost completely agree with (tongue firmly in cheek): Repeal act that gives BellSouth leverage to delay fiber plan. The author, John St. Julien, hits the nail on the head. I can do little better than to repeat it here. 500 some-odd words.

BellSouth has kept the people of Lafayette from building their own fiber-optic utility for long enough.

It’s clear that the current providers, and especially BellSouth, haven’t dealt fairly with our community. They’ve taken compromises we made to keep the project moving and used them to increase our costs and delay our project. We need to take away the weapon they’re using. Demand repeal of the Local Government Fair Competition Act.

It’s a matter of bad faith on the part of these companies, who can no longer be considered good citizens of our community. BellSouth and Cox refuse to build a fiber-optic system here, yet they’re trying to block us from building one ourselves. They’ve used a string of ugly tactics: insulting push polls, a deceptive “academic conference,” a threat to move the Cingular call center out of Lafayette and more.

The Local Government Fair Competition Act, which was sold to the city as a compromise that would allow our project to go forward with some restrictions, instead has been used to delay the project and raise the costs to citizens. To make matters worse, that law has crippled New Orleans’ ability to use its own wireless network to aid her people following Katrina and it blocks other Louisiana communities from taking care of themselves as well.

BellSouth, and to a lesser extent recently Cox, tried to stop the project but failed in the legislature, in the city-parish council and – most importantly – before Lafayette’s voters, 62 percent of whom approved the fiber project.

A company that respected our citizens would have stopped there and decided to compete rather than litigate. But BellSouth kept pushing, lobbying for more restrictions, losing before the Public Service Commission and losing several times in court. Most recently they won a verdict before the Court of Appeals.

This is not only a matter of allowing Lafayette to do as our citizens have voted to do; it’s also a matter of hard cash. The act will artificially inflate LUS’ prices by requiring LUS to set rates as if its costs were greater than they really are – pretending, for instance, to be renting its own property.

BellSouth’s actions already have cost us more than $125,000 in legal fees. Rising bond rates make borrowing more expensive, and we’re also losing the savings that competition would bring.

BellSouth’s actions defy the spirit of the compromise that Lafayette made with BellSouth and others to put the act in place. BellSouth is using the act to defy our local vote. It hasn’t served its purpose as compromise legislation that would allow a fair launch of a public utility. Instead, it’s being used as a weapon to prevent us from building the system we voted on.

Lafayette’s great advantage is that it’s a real community where friends, relatives and colleagues discuss important issues. Plead our case. We’ve voted, and we shouldn’t have to fight BellSouth to move forward.

Let’s get rid of the Local Government Fair Competition Act.

Contact your legislators, or get more information at www.lafayettecomingtogether.org/repeal.htm.

(John St. Julien is a member of Lafayette Coming Together, “a volunteer corps motivated by the vision of creating a better Lafayette by joining together to pursue common goals.”)