“Another appeal filed on fiber plan”

The Advertiser has its story on the Naquin-Eastin lawsuit, confirming the filing of an appeal that the Advocate reported yesterday after talking to one of the Plaquemines lawyers.

Lafayette Parish Clerk of Court Louis Perret said his office mailed the Naquin/Eastin brief to the Third Circuit Court of Appeal on Friday, meeting the legal deadline.

Third Circuit Clerk Kelly McNeely said his office received the brief Tuesday.

The reporter talks to the Third Circuit and they have received the appeal. So, as suspected we’re in for one last round on the bond issue.

August 14th is the last day for a decision folks; mark the date.

Appeal Filed in Bond Suit

Kevin Blanchard at the Advocate reports, after talking to one of the lawyers, that an appeal has been filed by the Plaquimine lawyers in the local case that has generated a lot of frustrated heat among supporters of Lafayette:

Two Lafayette residents, Matthew Eastin and Elizabeth Naquin, are seeking to block LUS’ funding of a proposed phone, cable and high-speed Internet business.

As has been the case in each of the myriad lawsuits and appeals in these cases against the city the plaintiffs have waited till absolutely the last moment to file an appeal. (The current crop have four cases running at once.) The idea is to delay a decision for as long as possible. Considering that the city has won the large majority of the decisions in this rearguard battle being engaged by the incumbents (losing only twice and deciding to plow ahead rather than appeal both times) this tactic makes sense. They’re not going to win on the merits. But this delaying tactic is not something that can go on forever. Naquin and Eastin’s bit of obstructionism barely squeaked in under the legal deadline in its attempt to entangle the bond issue with a vague charge that LUS overcharged on electricity prices at some point in the past. No further attempts to delay the project by frustrating the sale of bonds legally will be possible.

LUS has two weeks to respond to Naquin and Eastin’s appeal. The 3rd Circuit has to hear the appeal no more than a week after LUS responds, then decide within a week.

If all the deadlines are met on the last day, a decision would be reached by Aug. 14.

This thing is coming to an end. And we will have the system the people voted for a year ago.

The sad thing is that Naquin and Eastin’s decision to let themselves be used by the incumbents for their purposes has cost the community millions of dollars in interest rates. That cost will be borne over many years — in small increments but in real ones. You know, there are currently little “fees” on your phone and cable bill designed to remind you that part of the cost of doing business for Cox and BellSouth is to pay taxes. Do you suppose that we could each month label a part of the bill the “BS/Cox/Naquin/Eastin fee” for the money these delays have cost us all? It’s not something we should forget.

“Year after vote, fiber project still stalled”

The Advertiser runs a story on the first anniversary of the fiber referendum that explores the tactics that have been used to delay the project. The most recent is the Eastin-Naquin suit.

Lawsuits challenging a fiber bond ordinance approved by the Lafayette City-Parish Council must be settled before LUS can issue up to $125 million in bonds to pay for the project, Huval said…

“Conceivably, had we not had any interruption with lawsuits, we would have issued bonds and would be well under way with design and construction of the early parts of the fiber system,” said LUS Director Terry Huval.

Actually, if the incumbents had stood out of the way from the begining and decided that they’d compete instead of trying to change the rules to their advantage at every turn we’d already be using the fiber optic system LUS had planned.

The story goes over some of the obstuctionist tactics used by the incumbents –skipping over some highlights like the battle at the PSC or the ugly case of Sharon Broome’s bill to fine the city in the 2005 legislature. It focuses on the most recent set of legal challenges including some interesting particulars on the current class action lawsuit:

Only one of those legal challenges can stop LUS from issuing the fiber bonds, said City-Parish Attorney Pat Ottinger. It is an appeal to the Third Circuit Court of Appeal by Naquin and Eastin challenging the bond ordinance, he said.

Attorneys for Naquin and Eastin filed an intent to appeal. The deadline to file the full appeal and brief with the Third Circuit was Friday, Ottinger said. By early afternoon, the plaintiffs had not filed the appeal, he said.

It sure would be nice if they hadn’t filled an appeal, but these lawsuits can apparently be filed by fax until midnight on the due date. So no one will know whether LUS is freed up until Monday morning when the employees return to work. I wouldn’t advise you to get your hopes up.

Who Done It? On Elizabeth Naquin and Matthew Eastin

In one of two related stories, The Advertiser this morning asks, but doesn’t answer, the question that comes up first when people in Lafayette discuss the fiber issue: who are Naquin and Eastin. We’ve discussed on these pages (Elizabeth Naquin and Matthew Eastin–Why?) how hard it is to come up with any explanation that leaves them in an honorable light.

This morning’s story asks questions I’ve been hearing around town and puts them into the mouths of the city’s leaders:

“It’s strange that you have a lawsuit holding up the city and nobody’s ever seen the plaintiffs,” Huval said. “Nobody knows anything about these folks. Who’s putting these people up to this?”

…Durel on Friday wondered what is the motivation and the incentive for Naquin and Eastin since their lawsuit claiming LUS is overcharging customers cannot reap them a refund. There is no monetary award if they were to win, he said.

“An out-of-town attorney that’s got two people who, as far as I know, don’t exist. There’s somebody and some organization behind this,” Durel said. “One day the truth will come out that these people are pawns.”

“….What’s really frustrating is this could bring tremendous benefits to the city, and just a couple of people apparently are trying to block this,” said Lafayette resident Mike Stagg. “This is obstructionism in the worst sense.”

He said one day he hopes Naquin and Eastin “have the courage to come forward and apologize for the cost they’ve inflicted on us all.”

It’s not just people who were directly involved in the fight for fiber here that are frustrated. People want to know what is going on–who contacted these two very obscure people who were otherwise uninvolved in this (or any other) political fight and recruited them to the role of class-action plaintiffs? Why did they agree? What do they hope to gain?

While this article reveals more about the principals in this suit than any previous story it is also clear that the reporter didn’t go beyond the most easily available public records–all that was necessary to establish the basic points of the story that Eastin and Naquin had not had a previous record of public involvement with fiber or much of any other cause but were real people who actually lived in Lafayette.

Should reporters decide to go into full “investigative” mode on this we’d all get a lot more information. Let’s hope they do.

Tracking the AT&T-BellSouth deal

According to recent reports, reviewed in the Chicago Tribune, The AT&T/BellSouth merger might not go as smoothly as planned.

Judicial review of the takeover of AT&T Corp. last year by SBC Communications Inc. and Verizon Communications Inc.’s acquisition of MCI Corp. has raised questions about whether the Justice Department and the Federal Communications Commission acted in the public interest by approving the two mergers.

U.S. District Judge Emmet Sullivan said he might need more evidence before signing off on the consent decrees that approved last year’s mergers.

While few expect Sullivan might try to unwind the mergers, they said his review has already embarrassed the department and the FCC, which will likely cause both agencies to provide greater scrutiny to the proposed AT&T-BellSouth deal.

“The FCC and DOJ are on notice there’ll be more public scrutiny of how they handle BellSouth,” said Daniel Berninger, an analyst with Tier1 Research.

The share prices of both AT&T and BellSouth have dropped.

What does all this mean for Lafayette? It’s hard to say. But the idea that the merger is not an absolutely done deal is pretty new.

PSC: BellSouth Enhances Competition

This is a companion piece for the posting a bit earlier on US Senator Stevens, the man who chairs the committee responsible regulating on the internet.

Here we draw attention to Jimmy Field’s understanding of competition. Feld is the man who chairs the Louisiana Public Service Commission; the body responsible for protecting Louisiana consumers.

The PSC was asked to rule on whether allowing AT&T to buy up BellSouth would be good for the public or not. By a vote of 4 to 1 the PSC decided that it would be good for consumers. Here is the way Feld justified that vote; in it he demonstrates his profound understanding of how massive consolidation can lead to increased competition:

Commissioner Jimmy Field of Baton Rouge, who chairs the five-member panel, said competition in cities that have operated under merged companies offer more and cheaper services to consumers.

“This is one way to encourage competition and that outweighs the negatives,” Field said.”


(From the Advocate)

“Perhaps a little fiber….optic cable might be the answer”

A fair number of the readers of this blog have probably already run across Senator Ted Stevens “unique” understanding of the internet. His complete misapprehension of the internet would be a giggle if he weren’t the guy in charge of overseeing the internet, e-commerce and net neutrality issues for the United States.

Once you realize just how absurd this is it is no longer a giggle–it is painfully, hilariously sad. As Jon Stewart demonstrates. Take a gander at the YouTube clip.

(Tip ‘o the Hat to a reader who was concerned we not miss this one.)

Cox Rasies Rates

For most folks the big telecom news of the last two days wasn’t Governor Blanco’s veto of HB 699 but Cox’s announcement that it was going to hike rates in its recently combined Baton Rouge/Lafayette/Acadiana region.

Both the Advocate and the Advertiser have had articles on it. The Advocate ran articles both yesterday and today and the Advertiser ran one today. The Advertiser’s version goes a good bit deeper into the the specifics of the changes in Lafayette and repays close attention.

It’s an odd a rate increase–it raises the cost of the “expanded cable” tier, lowers the cost of the basic tier, and puts an even surcharge of $2.00 on all tiers of internet service. The internet-based VOIP phone services aren’t touched. Now that doesn’t make much sense if you take Sharon Kleinpeter’s rationales for the increase seriously. She suggests that:

…rising programming costs, increasing fuel expenses and operating overhead associated with our rebuilding efforts directly impact retail cable pricing.”There is also a lot of other costs associated with the storms, things like higher insurance rates, what everybody is feeling right now,” Kleinpeter said.

No doubt that is true enough. But as Huval retorted other folks, like LUS, who also had storm-related costs aren’t raising rates and using that as an excuse. Said Huval:

But Terry Huval, director of Lafayette Utilities System, said the increase shows the need for the fiber-to-the-home plan the city has been seeking to build since April 2004. Once the city-parish has a fiber optic network in place, it will offer cable, TV and Internet service at rates 20 percent lower than Cox, Huval said.

“We had damages during the hurricane – we’re not looking to increase electric rates,” he said.

The difference? As far as I can tell it’s that LUS, being familiar with Louisiana, plans for hurricane expenses. There’s a concept. (We hear a lot of guff about poorly operated publicly owned utilities “must” be. Experience doesn’t seem to bear this out.)

Whats odd about the scattershot rate increases and reductions are that fuel and hurricane rebuilding costs equally impact all parts of the business. Based on that you’d expect that Cox would raise all prices by a similar percentage across the board. But that’s not what they’ve done–VOIP users are not bearing any additional burden while lower-tier internet users are bearing a higher proportion of the rate increase than upper tier users. Saying rising programming costs are driving up prices makes the picture even more puzzling since the really big increases in programming are in the premium channels like HBO that are not included in “expanded basic.” Cox is NOT simply recouping costs; something else has to explain the particular places Cox chose to jack up their rates.

So what’s going on here?

Well, one thing is that Cox is aligning prices in Baton Rouge and Acadiana. Acadiana getting a much larger “catch-up” jump than Baton Rouge. Lafayette hadn’t experienced a rate increase since its people started talking about building their own fiber to the home project and so had fallen “behind” Baton Rouge and its environs. With Lafayette’s decision effectively made by the people a year ago holding off on rasies in Lafayette with an eye to effecting our attitude toward Cox was no longer sensible. Similarly, with the legislature no longer meeting to consider issues that effect Cox’s interests the time was ripe to raise rates.

Cox is also trying to move people off the “cheap” basic cable tier. This is a long-term project of all the cable companies. Of course, they always want people buying more expensive stuff from them but beyond this they don’t like basic cable for all sorts of tangled technical and regulatory reasons. Suffice it to say that they really want you to upgrade badly. So reducing the number of channels and dropping some that are popular and useful is part of this strategy. By law they can’t drop local broadcast stations or local PEG stations like AOC. But having dropped services to the bare bones required by law regulation forces them to lower prices as well. So you are now confronted with the spectacle of raising the prices on the (unregulated) “expanded basic” tier while reducing prices on “basic” cable.

No doubt they were concerned that bumping up prices would push people to the cheaper tier so it was incumbent upon them to make that tier less attractive. The gap in price between expanded basic and basic was already huge..making simple basic even less attractive is one way to try and keep anyone who was teetering on the edge of dropping back to basic with the expanded basic tier. And the difference is huge: in Lafayette it will the difference between $13 a month and $47!

So what do you get for the extra $34 dollars a month? Well ESPN, the Weather Channel, and The TV guide channel to name what looks like the most popular channels that are moved out of basic cable and into the expanded tier. That wouldn’t do much for me. I don’t watch ESPN, I get my weather off the web, and I much prefer TiVo’s TV guide to Cox’s–but if I didn’t have TiVo losing the guide might really irritate me. The Expanded tier has all the lower end movie channels and popular speciality channels–channels you might recall from when they used to be offered on basic cable. Many of them gained a following there.

Of regional note in what Cox labels “Acadiana:” if you are a local French speaker you’ll want to note that TV 5 has moved up from expanded basic to one the sports speciality package. Sports??? So grand mama is going to have to buy a fancy bundle of sports channels to get French programming? However the “extensive” Spanish-speaking population will have a whole new tier devoted to Spanish programming–10 channels. That’s odd in a city where almost 20% of the population speaks a language other than English in the home and Spanish and Asian language speakers together are not 10% of the total. What are all those folks speaking? French? You guessed it, cher. You think maybe nobody ever talked to Cox about how out of touch this stuff makes ’em look? My guess is that LUS will be a mite more on the ball about such things.

A little reflection makes you wonder how long the tiering system can last once a converged cable/Internet system really hits the cable market. It’s already easier to get your weather off the web. TiVo has a better channel guide–I’d even prefer Yahoo’s if I could swap it in instead of Cox’s…and I can imagine a set of software conduits that would allow me to do just that. All the movie channels? Netflix. There’s a two day turn-around but you get great choice, personalized record keeping and good recommendations. With big broadband I could download all those movies and not give a fig for HBO. What remains are the specialty channels –I’d find it hard to give up the Food Network or Comedy Central (we all have our weaknesses). And finally, all the local channels. That’s a real reason to keep cable…but that’s only 13 bucks a month.

The only thing stopping people from bailing on Cox and moving to the net when hit with rate increases is that Cox also controls the big bandwidth that would make it possible. And they aren’t aren’t giving us quite enough. Yet. (Bring it on, LUS!) Cox hasn’t missed this point–they’re jacking up costs on bandwidth too–a uniform two bucks across the tiers. Meaning that folks who get the least are paying the highest percentage of increase. They’ve got you coming and going.

So Cox is catching Lafayette up to the prices that Baton Rouge has been paying. At the same time it is trying to push people off basic cable and onto its much higher-priced tiers. It’s also shifting some cost to its internet service, apparently sure that it won’t be hurt by BellSouth’s relatively anemic offerings.

It’s an interesting chess game which Cox can mostly play without considering much besides BellSouth’s DSL offerings its own desire to increase its VOIP market. (As myriad studies have shown, satellite TV doesn’t effect cable pricing much–though it can reduce the size of the market by establishing its own market; the two satellite providers compete but the cablecos basically ignore them.) Since it wants to grow its VOIP market and it thinks that will go a lot faster if it keeps a broad gap between that price and the plain old telephone price BellSouth charges it decides to not raise its VOIP rates at all. Instead it transfers those costs to its cable, where it is has no effective price competitor, and internet, where it has only BellSouth’s anemic offerings. But that ability to arrange things to its liking will change soon enough. BellSouth will enter the video market; and after Blanco’s veto it will have to actually compete with Cox; not just cherry-pick the market. LUS will also enter the market and its primary motivation will be to amass market share for its long-haul payback. Both new entrants will limit the kinds of choices Cox has been free to make. You can bet, for instance, that neither new cable company will let a 34 dollar per month gap sit unoccupied between the cheap “legal minimum” tier and the expensive everything-but-the-kitchen-sink expanded tier Cox has found to be to its advantage in an atmosphere all but devoid of competition. There will be real competition to find that sweet spot for cable–the price/channels combination that folks really want rather than the contorted setup that Cox finds most profitable in the absence of competition.

That will be a good thing.

But the real competition in the long run will be over pure bandwidth. And there the prize will go to team that can offer the most for the least. Competition in bandwidth will, eventually, kill the cable business model. And that’s ok by me. Bring on the future…Downloadable Television (DV as opposed to TV) is an end devoutly to be wished.

More on the Veto

Both the Advocate and the Advertiser have articles following up yesterday’s veto of HB 699.

The Advocate article does a journeyman job of reporting on the video bill veto, citing points from all sides of the issue; it focuses on the veto and on the reasons for the veto. John Hill, reporting for the Gannett papers, appears to have gotten stuck early on the idea that the real argument was between BellSouth and the cable companies. That was never true and any justification for thinking it was went away after Cox (however tepidly) joined BellSouth in advocating the bill after the cable industry was also given the ability to seek a state franchise. Even though local government opposition was what finally kiled the bill Hill fails to quote any local government representative. Talking only to proponents of the bill–one weak and one strong–results in a story that is pretty distorted.

From the Advocate:

Gov. Kathleen Blanco has vetoed legislation that would have allowed telecommunications companies, such as BellSouth, to get a statewide franchise to deliver television service.

In her veto letter on House Bill 699, Blanco cited concern about whether local governments would end up losing money…

HB699 would have allowed companies to provide cable and video services by getting a 10-year state franchise certificate. Areas that had a home-rule charter before 1974, such as East Baton Rouge Parish, would have been exempt.

That’s a point worth emphasizing. Local Government types emphasize that in areas containing 35-40% of the state’s people (5 parishes and about 29 cities) the AT&T/BellSouth would have still have had to negotiate traditional franchise agreements. In all honesty that includes almost everyplace, except a few wealthy exurban developments in incorporated bedroom communities, that AT&T might conceivably want to get into. The idea that this bill would have facilitated any real competition was never very credible. It was always about prohibiting build-out requirements by local governments. The law, as written, would have prevented even pre-74 charter areas from passing any local ordinances that would have required BellSouth/AT&T to serve the whole community. It was always about cherry-picking the “best” neighborhoods in the biggest cities…any talk about general “competition” was sheer rhetoric.

Widespread cherry-picking and the consequent digital divide conflicts that would have resulted is the bullet this state has dodged.

Congratulations and thanks are due Madame Blanco.