Month: January 2006

The Advocate posts a catch-up article on the current state of the BellSouth lawsuit. The article has a good clean explanation of the basics and is well worth the read. The issue du jour is whether or not Lafayette will appeal the third circuit’s ruling overturning an earlier finding that LUS and the city were pursuing a legal course in their plan to issue bonds to fund the project.

The two factors are time and money. (Sounds like daily life, no?) It’s all complicated by a slowly rising bond market.

On the Lafayette side you have conflicting desires to keep the costs low and to get the thing built as quickly as possible. On the BellSouth side you have the perfect mirror: they want to jack up the price customers of LUS pay and delay the thing as long as possible.

BellSouth has few conflicts (if you can ignore the ones that have to do with the community and customers’ interests as easily as they do) Any lawsuit will delay the project and if they work hard at suing about things that will raise the cost of the project they might get lucky and lessen their exposure to competition. They are further cheered by the fact that the bond market is slowly rising making LUS project slightly more expensive each day.

Lafayette, on the other hand, has real conflicts. Its promise to the people involves building both cheaply and quickly…and the two are not always clearly aligned. Fighting the lawsuit further offers a good probability of giving the city the best rates when the bonds are sold, important because interest is easily the single largest line item on the bill. On the other hand giving in holds the promise of going to bond sale more quickly–before costs rise too much more. The decision fork for the city has three tines: 1) give in and get the best rate you can under unfavorable bonding conditions quickly. 2) Appeal and hope for a decision that is in your favor and hope the bond market doesn’t wipe out any gain over #1 that accrue because of delay and 3) Appeal and accept the possibility that the appeal will be upheld and you will both have to sell under unfavorable conditions and into a higher bond market.

It’s unappealing. And if BellSouth were honoring its commitments made in legislative compromises it wouldn’t be happening. The PSC, tasked with deciding what the law means, agreed with LUS to the point of joining its suit. The author of the bill, a BellSouth partisan thinks these issues were dealt with in conference. The first trial court didn’t think that fulfilling a pledge to pay had anything to do with going into default. BellSouth drew a good hand; it happens. But the game should never have been in play. And wouldn’t have been with an honorable company. The solution is repeal of the (un)Fair Competition Act: complete and utter. The state and an out of state corporation should not be standing in our way and BellSouth has demonstrated that it cannot be trusted honor a good-faith attempt at compromise.

For my part, I think the city ought to pursue appeal. It can be expedited and should be. The money is a tossup…trying to predict markets is a fools game. What’s solid about this is that caving in at this point will make it appear to the unreflective as if you were trying to get away with something in the first place–and giving in to bullies is simply never a good tactic. They know in the future that all they have to do is spook you. We should simply admit that we are in a fight with an unscrupulous opponent and go after them. –In the legislature, in the courts, and in the court of public opinion.

The Advertiser this morning runs more complete coverage of they story they published to their website yesterday.

The bottom line is that the Louisiana Municipal Association (LMA) believes that the series of Third Circuit ruling that have blocked the deployment of Lafayette’s fiber-optic network are not only wrong but dangerous to every other city in the state:

But LUS and LMA disagree, saying the ruling could negatively affect the ability of government entities to issue bonds in this post-hurricane time when publicly funded improvement projects are crucial.

“I think this is one case where it is obvious (that the court erred),” said Tom Ed McHugh, executive director of LMA. “If pledging money comes into question, the ability to do bond issues at the municipal level comes into question.”

The attempt to make Lafayette’s bonds risky and expensive by tweaking the meaning of the word “pledge” to disadvantage Lafayette inevitably effects all Louisiana bonding entities.

LUS Director Terry Huval said the Third Circuit ruling may affect local governments’ abilities to even issue bonds.

“The bond holders and bond rating agencies may look at Louisiana municipal bonds as riskier as a result of this decision,” Huval said.

It’s worth noting that it is not just municipalities and parishes which would be effected. The state itself issues bonds as a standard measure. You have to wonder what the state thinks about paying more for its bonding authority, especially in this post-storm milieu. Surely they aren’t so subservient to corporate interests that they’d fail to oppose something so clearly opposed to the interests of the people of this state. Surely.

It’s worth repeating that both the Lafayette appeal and the LMA friend of the court brief attack the previous 3rd Circuit ruling as much as the current one. This lawsuit has, in effect, reopened the door on opposing the “compromise” that lead to the current bond ordinance. Rolling back that legal basis for that compromise could benefit the city…Naquin and the incumbents may well lose advantages they’d thought they gained.

The incumbent providers in Lafayette are building themselves an deep hole. If the ugly opposition to Lafayette building an advanced network that the incumbents refused to build themselves wasn’t enough to convince voters–and consumers–that BellSouth and Cox didn’t play fair then perhaps the nastiness over New Orleans post-Katrina wifi system would. Or if the blatant attempt to steamroller the state with a Video Francise law that would have originally deprived (mostly small) localities of franchise fees wasn’t enough to convince you that they had a complete disregard for anyone’s interest other than their own well maybe making the French channel inaccessible in one of the few strongholds of French in this country and pulling the Weather Channel during hurricane season would.

If none of that convinced you that the incumbents are NOT good corporate citizens then maybe tinkering with the bonding authority of the state and every city in it in order to try and gain an unfair advantage over a single small city will.

This whole thing has gotten ludicrous and people’s anger is both justified and palpable.

Take a look at Richard Warren’s letter in the Advertiser this morning. In an open letter to Duane Ackerman and the BellSouth board, he criticizes BellSouth’s disrespect in ignoring the July 16th vote. He’s right.

The New York Times has an interesting article online about the future of TV in the age of the internet. It is scattershot and all over the map but well worth the (free) registration hassle. The setup:

What would a world with television coming through the Internet be like?

Instead of tuning into programs preset and determined by the broadcast network or cable or satellite TV provider, viewers would be able to search the Internet and choose from hundreds of thousands of programs sent to them from high-speed connections.

In the battle for the living room, cable, satellite, and increasingly, phone companies are trying to defend their turf by offering more choice through an array of content in video-on-demand programs.

While it is all over the map and you would serve yourself well to just go and read it through, two things in the article were keepers for me. First was the forthright admission that all the dreams hinge on more adequate bandwidth.

Proponents stress that the open- video Internet is still in its infancy and the battle may not be completely joined until a new generation of faster Internet connections reach the home. This is because to stream digital video requires about 1.5 megabits of bandwidth to send conventional NTSC video and from 6 to 8 megabits to send high-definition video.

Currently broadband data rates in the United States reach just 1.5 megabits or less, but those speeds are beginning to rise after years of delay as D.S.L. and cable companies upgrade their plant and equipment with fiber optic lines.

The second insight concerns the question of whether any one provider can compete with the richness of the net. The author, notes the eagerness of the current providers of cable, satellite and to some extent phone companies, to hang onto their priviledged positions as providers of video, by mimicking web characteristics like download and freedom of selection by using “video on demand” and similar features–sometimes over IP. The issue, he cogently points out, is whether they can control enough content lock customers into their provision as they clearly hope to do. That hope may be futile; it seems that history is on the side of the net:

But fending off the Internet’s openness will be a struggle, one that the online companies themselves lost years ago.

At the onset of the dot-com era, large online service companies like AOL, Compuserve and MSN tried to lock customers into electronic walled gardens of digital information.

But it quickly became apparent that no single company could compete with the vast variety of information and entertainment sources provided on the Web.

The same phenomenon may well overtake traditional TV providers. Potentially, IPTV could replace the 100- or 500-channel world of the cable and satellite companies with millions of hybrid combinations that increasingly blend video, text from the Web, and even video-game-style interactivity.

Two things would seem to make our current situation different from the old AOL/MSN/Compuserve days: video is harder to produce than html and AOL et al. never owned the connection into your home.

What made the web more powerful than AOL or MSN was that millions of individuals and institutions decided to put up html content for free use. They posted pages. It wasn’t always apparent that they would. MSN wasn’t crazy to think that if they could corral enough publishers, authors, and designers it could offer a viable alternative that it could milk for huge returns. It was only the stubborn creativity of masses of people at homes, small businesses, and local institutions that thwarted the walled garden vision. For internet TV (what I prefer to call DV, downloadable video) to match that something very similar will have to happen with video production.

I don’t see why it can’t. Institutions like our own Acadiana Open Channel (AOC) exist everywhere in this country…places where a person without cash or expertise can go and learn how to do video. Perhaps even more importantly, I am typing on a laptop that comes bundled with programs like garageband for sophisticated music makeup and imovie which allows movie creation on a scale that would have been called professional just a few years ago. Could I do Star Wars? No. Good Morning, America? Yes. Not with the elan of professionals but a basic talk show with video “intake” segments is well within reach of many, many americans.

The other issue standing in the way of DV dreams is that AOL and MSN didn’t own the connection into your home. In their dialup heyday the phone company did and had no vested interest in keeping you the consumer corralled. They were happy to undercut the “networks” and become your ISP. As was cable. Had AOL or Compuserve actually owned that last mile and if the FCC of the day had been amenable to killing the common carriage rules the corporate dream of a balkanized “gardens” of proprietary content that could be milked for endless revenue even while serving only a fraction of the people a fraction of the content that the real internet has become might well have been realized.

We’d all be poorer for it. And we should all be worried that with the cablecos and the phone companies being allowed to wear away at the principle of net neutrality the burst of creativity that the real internet occasioned will not be repeated with video. And we’ll all get IPTV from one of the big guys instead of DV from every creator with modem.

Interesting times.

Dirk van der Woude, Amsterdam’s broadband maven, working with CityNet, writes with the news that Paris has decided to go for the gold. Not to be outdone by either San Francisco’s wireless or Amsterdam’s fiber (a story I have shamefully neglected) Paris has decided that noththing less than both will properly prepare the queen city of Europe for the future.

This is a story with a nice, neat, story line behind it.

An earlier missive from Dirk pointed to a French law that “organizes loopholes” in French and European Union law to encourage municipalities to build fiber optic networlks. That’s similar in effect to the FeinbergLautenberg-McCain bill proposed here in the United States which would clear away obstacles to municipal participation in telecommunications. And serves notice that it’s not only the Asian countries (mentioned in Saturday’s post) that have developed rational, pro-active, broadband policies.

Apparently Paris is going to take advantage of those loopholes. In a story Dirk sends (in Bablefish translation) we can see the basic outline:

Paris City Hall launches into the very high speeds

NOUVELOBS.COM 05.01.06

The mayor of Paris would like to favor the development of the services of free access to internet by launching the construction of a city wide telecommunications
network.

The City hall of Paris announced the launch during the year 2006 of a tender for the
construction of a telecommunications network with very high debit(output) in the
whole of the capital.

In a communiqué, the City hall clarified that it would be about a network in optical fibres, faster than networks at present available ADSL. Besides, the mayor of Paris, Bertrand Delanoë, ” wishes to favor the development by the operators of the services of free access to internet (normal debit(output)) and in the local telephony, notably in favour of the most modest Parisians “, we can read in the communiqué.

(above is a machine translation of article in Nouvel Observateur of 5-1-2006)

More articles (in French):

Machine translation French => English at http://babelfish.altavista.com/

You can also take a look at the pdf formatted communicque/Press Release provided by and with a translation from Dirk.

My interpretation is that the city of Paris, the largest city in Europe, anticipates building a very high speed fiber-optic system and hanging a “normal speed” (?) wireless network off that. Perfect! The hidden limit of most wireless systems is anemic backhaul. A fiber network would fix that. The wireless network at “normal” speeds would be free. (That’s where the specification of normal gets interesting.) But even more: it’s including local telephony for free. Now there is a concept.

I’ve suggested in the past the quintuple play: Cable, voice, wireline internet, usable wireless data, & wireless voice. The last two are made possible by a wireless network hung off a fiber one. The ultimate technology play is the synergy between ultra highspeed wireline and high speed wireless that would make entirely new levels of applications concievable. Paris looks to be trying to make that play. Making wireless data free and voice communications between citizens free as well is certain to make nearly every Parisian a user. Some will see that as a huge “profit” opportunity forgone. But they are thinking like our incumbent monopolies. Paris is thinking like a utility: it exists chiefly to benefit its citizens, not distant owners. Since wireless is relatively cheap to add to a fiber build and, locally at least, the fiber network will give you more badwidth than you can use just give away the wireless. That insures deep, almost universal penetration, makes it certain that new wireless technologies get developed with a French (not Californian, cough, cough) flair and sets in train as wide and unpredictable an array of benefits as did the doctrine of universal service in American telephony. (A tradition the world envies and which we, ironically, are about to give up.) The network effects of having a whole city use wireless freely (in all senses) is impossible to calculate. But its benefits will surely be larger than the minor cost to the city of Paris if it is built as part of the fiber rollout. (I and others have estimated that cost at aproximately 5%.)

Mark my words; if this comes to fruition it will mark the new “must meet” standard for world cities and drive the rate at which technological change is translated into culutral commonplace harder and faster than we’ve ever seen. In ten years we may look back on it as a landmark day.

I’d love to see Lafayette follow suit. Or get out front.

Update 1-10-06 AM:
Light Reading has story on this: Paris Plans FTTH Network It focuses solely on the FTTH aspect but does include some interesting tidbits about equipment makers (Lafayette buyers looking for equipment made cheaper by mass deployment take note) and the following quote:

Heavy Reading Senior Analyst Graham Finnie, who follows European broadband developments, says the news is of major significance. “This would be a much larger project than Amsterdam, potentially involving millions of homes,” he says. “This news, on top of the Dutch project, should make every large city in Europe look at the potential of a municipal network, and consider whether they should be doing something similar..

“The companies that need to take the most notice are Europe’s incumbent national operators. This should spur them on to look again at whether they need to revisit the whole fiber-to-the-home area,” that many have deemed too costly to develop.

Translation from guarded business-speak to everyday language: These two FTTH projects demonstrate that in Europe, as in the US, patience with the incumbent providers has run out. If they want a role in the future they will have start rolling out FTTH or watch Europes largest cities–and most lucrative markets–go muni.

Broadband Reports has one of its shorts on the BellSouth appeal. As usual, what’s interesting is the comments. Two things struck me: the overwhelmingly pro-Lafayette sentiment and how closely some people from places like Oregon or Illinois are following our fight. They know a lot about what’s going on here. There are also a couple of Lafayette locals on the board…that’s fun.

From the Washington Monthly,

Well said:

“The countries surpassing the United States in broadband deployment did so by using a combination of public entities and private firms. The Japanese built their world-class system by ensuring “open access” to residential telephone lines, meaning competitors paid the same wholesale price to use the wires. The country is also establishing a super-fast, nationwide fiber system via a combination of tax breaks, debt guarantees and subsidies. But of particular note, the Japanese government also encouraged municipalities to build their own networks, especially in rural areas. Towns and villages willing to set up their own ultra-high-speed fiber networks received government subsidies covering approximately one-third of their costs.

Unfortunately, the United States has pursued the opposite policy. President Bush has called for “universal, affordable access for broadband technology by the year 2007,” and FCC Chairman Kevin Martin claims broadband deployment is his “highest priority.” But they have made no progress toward these goals; in fact, they have rewarded their corporate cronies for maintaining high prices, low speeds and lackluster innovation. Federal policies have not merely failed to correct our broadband problems, they have made them worse. Instead of encouraging competition, the FCC has allowed DSL providers and cable companies to shut out competitors by denying access to their lines. And whereas the Japanese government encourages individual towns to set up their own “Community Internet,” Washington has done nothing. Fourteen states in the United States now have laws on the books restricting cities and towns from building their own high-speed Internet networks. No wonder America is falling behind its Asian competitors.”

Having set the stage the article goes on to call on my favorite evidence for the value of municipal broadband: the history of municipal electricity, and then finishes with a scathing review of the hypocrisy of the incumbent providers.

Well worth the read. Go get it.

The Register covers the new FCC chairman’s opposition to the Telco’s plans to create a two-tiered internet–one for customers of customers who pay them off and one for customers of people that don’t. The story has a special call-out for our friend BellSouth.

BellSouth is already negotiating with one movie download provider to take a cut of the $2 to $5 fee for each film delivered, according to the paper. By paying the fee, the unnamed movie delivery company would be able to guarantee the fastest possible downloads to consumers.

It’s not a pretty scenario.

As the paper notes, the telecommunications companies have traditionally used a “best efforts” policy to move internet traffic as quickly as they can regardless of the type of data. Now, however, as increased broadband usage has made movie, music and other content services more feasible, the telcos want to cash in on the shift.

I’ve gone over this general topic thoroughly before so here’s a (relatively) brief synopsis of how you’ll experience what’s called the net neutrality issue:

Companies who pay the incumbent providers (like BellSouth) for priority bandwidth get guaranteed bandwidth and everything else on the web gets what’s left over. You already experience variable speeds as the service load varies. But right now, you are paying for and largely getting “best effort” — nobody is prioritizing someone else’s download and leaving you with what is left over. The current situation is uneven and irritating. But it is “fair.” The corporations are acting in good faith. But BellSouth, as we’ve seen locally, isn’t big on “fair.” They and the other phone companies are fighting drop the “best effort” promise. If they succeed the slowdown you experience in the first days won’t be terrible because it will be hard to notice the degradation in the connection you bought. But that won’t last. As the pipe fills it will be more and more necessary for other providers to also pay off the owners of the last mile connection in order to give their customers a half-decent experience. As more and more companies give in the guaranteed pipe will eat up more and more of the available bandwidth will be taken up to meet the guarantee. Eventually there will be so little left over that the providers of voice or movies or google’s search engine, (all mentioned by BellSouth as targets) and so on will have to pay or your download of their material will be too slow to wait for.

Who loses? The consumer and every small and startup company around. Who comes out even? The big providers who can afford to buy a cozy relationship with the Bells by passing on the cost to you. Who wins? Only the Bells. Do they keep every penny they charge you for your connection as they squeeze your suppliers and raise the costs of providing you the customer with services. Of course they do.

The best solution for the nation would be for the FCC to disallow such a radical and unfair change in the basic nature of the internet. –A principle called common carriage is fundamental to the way the net has always worked. Common carriage forbids discriminating against particular users or providers. I wish I was as confident as the Register that this is what Martin wants to affirm. As I read it he is only very carefully saying that he is against “blocking” sites–locking you and I out of sites belonging to voice competitors for instance. He hasn’t said he is against prioritizing favored services. And that is what BellSouth and the other telcos are asking for.

The other, local, solution is to own the last mile pipes yourself so that no one can mess with you in this way. That’s what we’re trying to do here in Lafayette. The old-fashioned word is “independence.”

The local media cover the Appeals Court decision which found for BellSouth. In a nutshell, the third circuit found that the city’s bond ordinance violated the cross-subsidization portions of the “Local Government Fair Competition Act.” This overturns the finding of the lower court and disagrees with the Public Service Commission’s interpretation of the law. The silver lining, such as it is, is that the Eastin/Naquin suit was dismissed.

Details can be found in the Advocate, the Advertiser, and a brief piece on KATC.

The Advocate article is an update of yesterday’s online-only article with additional quotes from the principals involved. The Advertiser substantially expanded yesterday’s brief report and the new article is well worth reading. Sidebars include a good timeline and a link to the pdf-formatted 3rd circuit decision.

Both the papers report an amazingly obnoxious press release by Bill Oliver in which he has the unmitigated gall to claim that his interpretation was what the city agreed to and to get pious about government “subsidization.” Oliver knows quite well that the city has never agreed with his and his lawyers version of that portion of the law.

(The disagreement is about the meaning of the word pledge in context of a section that declares itself to be about securing the best possible interests rates for local governments who develop a telecommunications utility. The 3rd circuit has agreed with BellSouth that if, for example, you “pledge” your assets when you take out a loan that you have to go into bankruptcy to pay off your creditor unless you have chosen to call it an “assignment” instead. This is plainly nuts–and is cannot be what the legislators or the city meant when the agreed to the compromise. Even Noble Ellington, the putative author said: “he thought the matter had been settled in the negotiations and said he wished the lawsuits ‘were not happening'” as was reported in the Advocate when Terry Huval first suggested repeal of the (un)Fair act.)

But what is more obnoxious is the and even less believable is the implication that what LUS proposes is an unfair governmental subsidy when BellSouth, recipient of years of federal subsidy that continues to this day, and a recipient of large subsidies from the city-parish for the Cingular call center, and, additionally and amazingly, the recipient of continuing subsidies from LUS itself in the form of below-market-rate fuel (wouldn’t we like a taste of that this winter) has ANY standing to complain about “subsidies.” Oliver resembles nothing so much as Slick Sam Slade the nonsense-talking used car salesman made famous during the referendum fight.

Join Lafayette Coming Together, the City, LUS, New Orleans, and a multitude of private citizens in demanding the repeal of the Local Government (un)Fair Competition Act.

Just the tonic I needed to make me smile a little after the reversal in appeals court. Harold Feld serves out a slashing review of the anti-muni broadband coalition and the pets of the incumbents that do their bidding in state legislatures.

Bits to bring a smile and stir the spirit:

To review: when last we left the state of Indiana, SBC had tried to use a pet Representative to introduce a stand alone bill effective barring muni broadband. To their surprise, it didn’t get out of subcommittee, as lots of folks from rural areas and less desirable markets explained that if the law passed, they could not expect to see affordable broadband anytime soon. Without broadband, their economies stagnated and died. We closed with democracy triumphant. Repeat in 2005 in about a dozen other states.

But, like Jason, Chucky, or Jar-Jar Binks, the telco lobbyists and their wholly owned subsidiaries in the state legislature keep comming back for endless sequels. Once again, the forces of corporate welfare have learned from their previous mistakes and have unvieled their new tactic — trying to sneak these provisions through as part of larger telecom reform bills…

Unfortunately, according to this article, Indiana’s Governor Mitch Daniels shares Mr. Hersham’s hate of local governments and love of corporate subsidies. According to the Governor, it is “bad” to spend public money to provide public services, but “good” to provide public money or other valuable benefits (like publically funded low interest loans or building conduits in public roads for private companies at state expense).

Color me stupid, but I don’t get it. If this is about how the wonderfulness of capitalism and the American way should not be sullied by the foul taint of state socialism, then why provide public subsidies to billion dollar private companies with access to capital markets and other forms of financing? If this is about providing a needed service to the public, then why not let local governments determine how best to deliver it? Local governments do a good job on such complicated and messy issues as sewers, electricity, public transportation, etc. etc…

I confess I grow suspicious when the only role reserved for government is to shut up and transfer public money to private companies, particularly monopolies deregulated in the name of “free enterprise” and “competition.” But I suppose I can’t blame these companies for trying. AT&T exists to maximize its revenue, and sucking down subsidies while surpressing competition certainly does that.

But I can blame the Hon. Brandt Hershman. People elect him to watch out for their interests, not transfer public money to AT&T and other incumbents. Hopefully the people will rise again, as they did last year, to remind their elected officials of this. Perhaps this time it will stick.

There’s a little special Hoosier flavor in the text you won’t want to miss but the bit about blaming our legislators—Hell yes…blame them and hold them accountable. We need legislators to sign on NOW to a repeal pledge.