Month: September 2006

The Louisiana Municipal Association (LMA) filed its friend of the court brief supporting Lafayette in the fiber fight Friday, according to a story that appeared on the Advertiser site this afternoon.

The LMA argues that the Third Circuit’s decision is out of line with previous law and practice saying:

“Under Louisiana Law, a ‘pledge’ has always included the right to use a stream of cash to pay a credit or principal and interest as these come due,” LMA said in its court filing.

The brief contends that this has serious consequences, the decision,

if not corrected, could call into question virtually any local government’s ability to pledge money to repay bonds, officials say.

The attempt to run over Lafayette using legal bullying is turning out to have serious consequences for other communities. It’s good to have an ally in this fight.

Anger over Cox’s recent channel changes continues unabated. The most recent letter to the editor is particularly upset about the loss of the sole French-speaking channel from the lineup.

In a city where the Census Bureau data indicates that about 13% of the population speaks French in the home that’s a good question. (The percentage of French speakers is bound to be much higher.) The talk I hear about town focuses on the fact that while the one French channel was moved off into the stratosphere of high numbers and high prices a major new service package of multiple channels and attractive programing was offered in Spanish (whose speakers are about 2% of the population). Preserving the unique heritage of the region would be hugely helped if there was a similar package in French.

Cox wants Lafayette to be more like Baton Rouge because it would be more convenient for them.

But the citizens of Lafayette aren’t interested in being more like Baton Rouge.

Cox needs to wise up and actually serve the communities they are in rather than trying to make one size fit all. The days of their monopoly are numbered.

Kevin Blanchard at the Advocate has posted a worth-while read on the city’s appeal to the Louisiana Supreme Court.

The crux of the story he tracks out is Lafayette’s contention that the Third Circuit’s ruling is dangerous to the municipal bonding process state-wide.

The appeals court decision that blocks Lafayette Utilities System from issuing telecommunications bonds backed by utilities revenue threatens all municipal bonds and should therefore be overturned, according to an LUS appeal filed Friday to the state Supreme Court.

That danger was a point that was raised after the previous lawsuit by BellSouth–the one that LUS/LCG chose not to appeal–and abandoning the lawsuit made some observers outside Lafayette very nervous on that account alone. As I mentioned in my post last night on this issue the Louisiana Municipal Association is expected to file a friend of the court brief in support of Lafayette that addresses their concern over the way the Third Circuit ruling undercuts existing municipal bond practices.

Blanchard does his usual exemplary job of explaining arcane matters. Give the article a read.

It’s official: Lafayette filed its appeal of the third circuit court’s recent decision to the supreme court Friday. They’ve filed both a writ of ceriorari requesting that the State Supreme Court reconsider the third circuit’s decision and a request for an expedited hearing in accordance with state law.

It’s the first appeal of any sort that Lafayette has filed since the fiber battle moved onto the legal stage. The underlying truth is that Lafayette doesn’t want to be in court. It wants, desperately to be building the system the people authorized. It’s the corporations and their agents that are happy to be in court — or in the legislature or in regulatory hearings–anywhere but out in the streets actually competing. The stark contrast between the community’s goal of “getting it built” and the incumbents goal “delay” plays out most noticeably in the way decisions to appeal a court’s finding against you. The incumbents are, mostly, happy to lose–and lose they have on multiple lawsuits–for a loss means a chance to appeal and serves their ultimate goal of delay. For Lafayette a loss means choosing between accepting the delay the incumbents want and serving their ends in that way or deciding to revamp their plan to avoid the delay of appeal.

Until now Lafayette’s leaders have chosen to end delays by conceding points and moving on. This worked and played out to our advantage with the referendum. The city and people of Lafayette won and the incumbents failed in their intent of stopping the project through forcing an election. The election confirmed the judgment of the folks we’d elected to do the job but also legitimated the project beyond all doubt.

But that hasn’t worked out as well with the giving way on the legal issues concerning a pledge. We went back to the table and rewrote the bond issue the last time it was successfully appealed in the third circuit. That rewriting turned out to not satisfy the incumbents who sued anyway–but withdrew their suit after Lafayette agreed not to pursue a multipronged attack on (un)Fair Competition law. A lawsuit went forward anyway–one fueled by invisible sources and having only one mysteriously motivated Lafayette resident. Occams razor: the simplest explanation is that the incumbents are behind this one too. This time avoiding delay by giving way has not worked out for Lafayette. Nothing, in the end, was gained by giving up a decent shot in the post-Katrina legislature for rolling back that recent law that was preventing both New Orleans and Lafayette from moving ahead with ambitious projects.

This appeal is a good thing, I think. It is my hope that a lesson has been learned: Making deals requires that you have an honest person sitting across the table. If you don’t there’s no point in the pretense of deal-making.

The Writs:
The writs are actually interesting (for legal documents 🙂 ).

The request for an rapid hearing cites law but also cites the economic damage done Lafayette and Louisiana by delaying economic development in the wake of Katrina and Rita. The document claims that every .1% rise in interest rates cost the citizens of Lafayette 1.7 million dollars. Or 17 mill for every 1 %. (Your Friend in the Digital Age…Sure.)

… the importance of the fiber optics project to the citizens of the City of Lafayette – and, indeed, of the State of Louisiana – cannot be overstated. One of the purposes and objectives of the several lawsuits which have been filed to stop this project is delay. Delay in the issuance of the bonds necessarily means that interest rates will increase, thus increasing the ultimate cost of the project, with resultant higher costs to consumers. Under the current market conditions, it is widely feared that interest costs will continue to rise. In the instant case, an increase of even .1% in interest rates would result in an increase in interest costs of approximately $1.7 million over the life of this project.

The appeal itself interestingly goes back to the city’s previous loss and asks the court to reconsider the concession the city made then. Back then the city decided not to contest a bit about “pledges” and wrote a new ordinance that adopted points the 3rd Circuit had called for. Now it asks the Supreme Court to reexamine that reasoning.

… the Third Circuit failed to recognize this well-established form of pledge. Instead, the Third Circuit required a “default” of the bonds secured by the pledge, prior to the creditor being able to use the stream of income. This decision will have an immediate and potentially devastating impact on Louisiana’s municipal bond market, creating market risk for bonds and threatening the very ability to issue bonds at reasonable rates. Necessarily, the effectuation of public projects utilizing revenue bonds will suffer.

I understand that the Louisiana Municipal Association will file a friend of the court brief in support of this point. More is at stake than Lafayette’s project. The Third Circuit is writing new law.

The appeal is actually pretty readable if you want to get a sense of what the conflict is really about and what motivates the city. Even though there is a fair amount of structured repetition (apparently the forms must be followed) its well worth a patient read.

“More of the same” was the catch phrase in two emails and a conversation I had this morning regarding Tim Supple’s latest attempt to frustrate Lafayette’s hope of building a fiber-optic network.

What’s been most consistent about Tim’s various positions on the issue of Lafayette’s fiber plan is that he opposes whatever is on the table right now–and that he supports whatever would give BellSouth and Cox an immediate victory.

Supple’s history is disturbingly easy to read. He came onto the scene backing a petition to force LUS and the city to bring the fiber initiative to a vote. During that time he wanted to claim neutrality on the fiber plan itself but was pushing for the same goal Cox and BellSouth had pursued in the legislature and in their public statements. He was fighting for a vote where the city would be unable to spend money to defend itself against incumbents who would have huge sums of money to spend in addition to owning the crucial cable medium. Understanding that it is not surprising how many of those “neutral” petitions were circulated. BellSouth did a lot of it by putting the petitions in the trucks of workers as they rolled out to install or repair service. Under pressure from both bad publicity and its union, BellSouth finally took those petitions off their trucks but no one would ever answer the question of how many of the signature the petition got were gathered by BellSouth workers. In the end Tim and the corporate petition backers weren’t able to get the modest %15 of the voters called for by charter. A legal challenge to try and change the rules concerning how many signatures they’d need also failed.

Not missing a beat Supple joined the lawsuit BellSouth and Cox had initiated trying to force a vote through suing the city of Lafayette. He and his allies continued to intermittently claim neutrality on the question of the fiber build itself but their actions belied any claims of neutrality. As with the petition, it was clear that the immediate beneficiary was the incumbents and that Supple and fiber 411 were backing what the corporations most desired at the moment: a referendum which put all the advantages with them. That lawsuit failed at the first level but was reversed on appeal. The city decided to avoid the further delay and to lessen its potential disadvantage by adopting a referendum initiative under a different law than the one BellSouth was suing for. That mooted the BellSouth/Supple lawsuit, the referendum was held and BellSouth, Cox, the fiber 411 trio that Supple was one of lost. Resoundingly.

Immediately after the referendum was called fiber 411, which had regularly claimed that it had no purpose beyond pushing a vote on the issue “discovered” that the business plan was bad and didn’t miss a beat in becoming the incumbent’s only local allies. Press releases continued unabated. Only now they urged a “no” vote.

There were debates and letters and a couple of different bases for opposing the project–one of which was the current line about favoring an “open” network. But the pattern of history is very clear. Tim Supple’s actions, as opposed to his words, have always worked to the immediate advantage of the incumbent corporations and to the disadvantage of Lafayette. The rationales have been high-minded but the effect has been unmistakeable–as has Tim’s isolation from mainstream opinion in Lafayette.

Today’s plan:
The current suggestion follows the pattern of earlier attempts to block the fiber plan’s advance in that it appears to not be completely against fiber but would have the effect, if succcesful, of working to BellSouth and Cox’s advantage. It’s not a new idea–even for Tim– and emerged during the openly anti-fiber phase of Supple’s opposition to the fiber initiative.

Sweep away the hype about BellSouth’s (un)Fair Competition Act and you’ll see that today’s essay suggests is that LUS abandon the plan the people voted for and put in place the one Tim prefers.

It’s a bad idea.

For a guy that once hung his hat on respect for a vote of the people it a little strange to see Tim, after having done nothing during fights in the legislature, the state regulatory commission, and multiple lawsuits to voice any support for the plan the people of Lafayette voted for 62 to 38%, to find his voice only now. And to use that voice to suggest something the people never voted for–but which would further delay the approved plan and alter it so radically that we would be faced with starting over with something entirely new. Who would benefit if Tim succeeded. Not Lafayette–the same people who would have benefited from his petition, and from his lawsuit: BellSouth and Cox.

If backing a plan that the people voted for turns out to not be so important to Supple as it once seemed then you’d hope that his other big claim –that he was against the plan because it was a “bad business plan” that was “too risky”– might explain his latest position. But that turns out not to be the case either. Under Supple’s new plan the city would assume all or much of the fabled “risk” he feared of building a fiber network and then rely on private partners to make sure that the system made enough money to pay for itself. Only one thing is certain in such private-public partnerships: that the cost to the consumer would rise. LUS’ big advantage through this all has been that it doesn’t have to make its money back on the 3 to 4 year schedule that private businesses do. It was planning to stretch out its repay of start-up costs for 20 years. Services offered through private providers will simply be more costly. Any competition that might occur would be in the range above what LUS would need to make its payback. LUS doesn’t need to charge any more than that, but must charge at least that much. Private providers profits must be added onto that fee.

Further, the track record of such public infrastructure/private providers hasn’t proven stellar–in places where legal requirements force it on cities the big private companies refuse to use the network and the new “competitors” don’t do a good job of keeping or promoting use. Fully public networks that are treated as a public utility have been much more reliably successful.

It’s not particularly politically correct to notice it but LUS has already tried the public/private arrangement and it hasn’t worked very well. LUS currently wholesales fiber optic connectivity around the city. While the project earns money and repays its construction costs prices at the retail level have been high, few providers have taken advantage of the possibility, and almost all those who are wholesaling LUS bandwidth are using its low prices to buffer its costs in providing very high-end expensive services to a very few large users. Tim Supple himself used to complain about the high costs and use it to unfairly imply that LUS’ costs, not his providers profit margin, was high. (If he’s now happily using fiber I’m guessing that position is defunct too.) The robust, cheap market in small-business bandwidth that LUS hoped private retailers would develop hasn’t happened. The market has simply not risen to the occasion. Everyone is looking, instead for easy pickings. Investing 125 million of the people’s money in order to provide self-seeking entrepreneurs with a cheap way to cherry-pick the high end is not a good use of the community’s money–and not what people voted for.

It’s a bad plan–and a weak business proposition to put the payback for an expensive capital investment in the hands of people who don’t have any interest in paying back the capital and whose only interest in the system is to make short-term high-markup profits.

The ray of sunshine
Underneath this talk about an open network is the one bright spot–it edges closer to acknowledging the actual power of a dense Fiber to the Home (FTTH) network. By abandoning earlier claims that what the private providers are willing to give us is plenty good enough for Lafayette the opponents start to admit that we really do want and need a big bandwidth network in Lafayette–and that the public ought to own it. If we hadn’t seen similar positions turn back into simple oppositions to any public plan at all I’d be encouraged. But, as the history shows, its hard to take the admission as very heart-felt.

The real power of fiber networks:
What we still haven’t come to grasps with as a community is that a fiber-optic network will be enormously powerful. It is that power that has united BellSouth and Cox; they at least understand that a publicly-owned fiber optic competitor is more terrifying in Lafayette than their largest private competitors. Lafayette’s success in a pure form would break up their cozy monopoly-duopoly dance and put into play real competition across the entire range of telecommunications services. Prices would be lower and the fiber network, once installed, would have practically unlimited ability to expand. Future service expansion would only require an electronics upgrades. With LUS leading the way it is quite likely that other cities would see the advantage and follow suit. If enough communities did so it would be very hard for the private providers to come up with the capital to match them–and the capital markets would almost certainly not consider it a good investment; even if successful the payback would be too long for the bankers.

So the private corporations are right to fear a fiber optic network. They know quite well that the first fiber-optic network in any area will have a price and capacity advantage that will make it effectively unstoppable. In most cases an effective monopoly will be the result with the fiber network owner taking any connectivity business that it wants. Nobody likes a monopoly but fiber is coming, it will be dominant, and the only real question will be who owns and controls it.

We are lucky enough in Lafayette to have a choice: we are positioned to own our future. I don’t think there is any real question of what the right decision for Lafayette would be: We shouldn’t hand any part of that control over to anyone whose interest are no our own. Keeping it public will mean endless wrangles in the council but sticking with a public plan will yield a system whose only interest will be in serving its owners: the people of Lafayette.

The letters complaining about Cox cable continue to roll in to the Advertiser. (A recent letter complained about slower-than-advertised internet speeds.) The latest is basic:

The recent “changes” brought forth by Cox Communications are nothing more than extortion-to a captive audience…

It’s time we end this business’ strong-arm tactics. Vote with your pocketbook!

Given that Cox continues to insist that the people of Acadiana never should have had those “extra” channels in the first place and continues to wave away local anger with the explanation that “people don’t like change”–ignoring the idea that locals really are losing losing popular, long-standing stations that people feel are valuable– it’s easy to understand why people are frustrated.

Cox made this change for the money and for its operational convenience. Had they been willing to take a little less money and do a little more work there’s no technical reason they couldn’t have continued the old setup. That’s hard for Cox to admit but, on the balance, being honest would be better for them in the long run; right now they are training their customers to not believe them. Or, of course, they could have tried actually sacrificing just a little to keep their customers happy.

But that would be the behavior of a company with enough competition to keep them honest.

And we don’t have that. Yet.

Larry Amy is back at it again. Connoisseurs of the fiber fight will recall Amy’s time on the stage during the anti-fiber fight. In a series of letters mostly found in the Independent Amy started out a simple ideological opponent of the plan (expressing the idea that fiber is good but private corporations should control it) but rapidly matured into a proponent of wireless who dismissed fiber as unexciting and embraced wireless as a cheaper alternative. Mike Stagg, a principle on these pages, responded in the Independent to the later-stage Amy claims about LUS’ fiber plan. Readers who’d like a little refresher on that basic argument of fiber vs. wireless are referred back to Mike’s essay.

The ongoing problem with Amy’s various analyses is that he wants his reader to believe his opinion is based on technical rationales rather than his ideological position. There’s nothing wrong with having ideologically-based judgments on political issues–unless those commitments lead you to misrepresent the evidence you place before the community.

In this case it is simply untrue that the chief problem with LUS’ fiber that the business plan is not viable. The evidence is overwhelming that the fiber plan will be successful–not based on what its proponents say but on the level of panic displayed by BellSouth and Cox who have, at each and every turn, opposed the plan and when they failed taken action to delay the plan’s implementation and have pursued laws, regulations, and lawsuits designed chiefly to drive up the costs to local citizens who purchase LUS’ product. If you have any doubt as to the financial
viability of Lafayette’s plan you have only to look at how the specter of competition from LUS has driven to blood-enemies into an alliance to oppose the express will of the community.

That’s proof I think anyone not blinded by ideology could understand.

As to Amy’s return to the theme of “wireless is the wave of the future:” he’s missed the mark. Big Broadband is the wave of the future. Really big broadband at 100 meg to a gig or more. It will enable astonishingly cheap “downloadable” high definition “TV,” telephony that you will hardly recognize as it integrates itself into all sorts of appliances and, most significantly for the present discussion, wireless mobility. It remains uncertain whether WiFi, WiMax, or some form of cellular 3G will dominate in that wireless space. What is certain is that if it is to be available to the whole community with even the bandwidth capacity of current wired services–say 5 or 6 megs–it will have to be funded by a dense fiber network.

We need to build the crucial technology, fiber, first. Wireless built on top of a real broadband network will be not only cheaper but vastly more useful.

The fiber fight, appears to be heating up again, at least in letters to the editor. It’s worth noticing that the arguments against are the same that failed to convince Lafayette before the election.