North Carolina Revisited

It looks like they are on top of it in Wilson, NC. The local Wilson newspaper has come out with a strong editorial condemning the North Carolina version of the “Local Government Fair Competition Act” Yes, that’s exactly the same misleading name given Louisiana’s BellSouth-authored version. Creative and original, these guys are not. (Previous LPF coverage of Wilson: 1, 2)

And the similarity is more than skin deep as is demonstrated by the following points from the Wilson editorial:

While some of the provisions can be justified, others are transparently intended to discourage cities or counties from creating competing networks, such as the fiber-optic network the city of Wilson is already installing.

Yep, they understand the basic purpose of this sort of legislation. And the essay covers other oddities we will recognize:

The bill… would for the first time require the N.C. Utilities Commission to regulate a municipal function. None of the usual municipal utilities — water, sewer, electricity or natural gas — is regulated by the Utilities Commission, which was established to protect consumers against monopolistic corporate giants. Because consumers are also voters and can change leadership at the next election, municipal utilities have been considered self-regulating.

In Louisiana the PSC is forbidden by the constitution to regulate municipalities. So we get around it by requiring that they do all the work of regulation but hand the legally indefensible segment over to the (drumroll, dramatic cymbal clash) the legislative auditor. (Hunh? Loud raspberry.) More similarities:

The bill also requires a public referendum on any financing for the system. Because these networks are expensive (Wilson’s estimated cost is $28 million), financing will be a necessity. While the bill requires a referendum, like a general obligation bond, it does not allow municipalities to repay the bond in the manner of a general obligation bond. In fact, it might make it impossible to repay the bond.

The bill forbids securing or repaying the bonds with anything other than revenues generated by the enterprise. It forbids paying any costs related to the bonds from “the local government’s general fund or public enterprise funds.” Because those are the only kinds of funds a municipality has, the bill essentially forbids making bond payments. And because it requires these networks to pay the equivalent of corporate and other taxes to the general fund, it requires the enterprise to subsidize the city.

Ok, this part sounds like the original version of he Louisiana bill in which BellSouth (now AT&T) set up the neat Catch-22 of 1) requiring an elaborate study 2) requiring that the study be paid for from revenue derived from the new utility. So in in order to plan to get the new utility up and running you had to already have the new utility up and running. Yossarian would understand perfectly. (And so should the people of North Carolina.)

The editors of the Wilson Times understand; they close their editorial with:

If this bill passes, cable monopolies will be unstoppable.

Lagniappe: Apparently the city council there is pretty enlightened as well; they’ve passed a unanimous resolution opposing the proposed law.

Just Not True: Cable Rates Not Falling in Texas

Here’s something to think about:

Competition has not led to lower basic cable-rates in Texas. (MultiChannel News)

That’s the long and the short of it according to a study by the Texas chapter of NATOA.

Two years ago Texas’ Telephone companies (basically SBC (now AT&T) and Verizon) used the Texas legislature’s famous penchant for failed deregulation to initiate a national push to move control of cable franchise from local communities to the state. The phone companies’ purpose was to avoid the demand that cable companies serve the entire community—and not just the most profitable part–if the companies wanted to use the right-of-way property owned by the community to turn a profit on the people living there. Local counties and municipalities consistently insisted on this principle….and the new state “regulators” (deregulators) do not. Louisiana dodged a bullet last year when Governor Blanco vetoed a similar bill approved by our legislators.

The Texas legislators were promised that they’d see “competition” and dramatic reductions in prices in exchange for removing local government’s ability to determine what is done with local property. And as the phone company juggernaut rolled through state legislatures they promised state after state the same — and told them it had worked in Texas, the first state in the union to enact such a law. They told that story about the success of competition in the halls of Congress as well. It was easy to believe; after all everyone knows that competition brings lower prices.

Except it hadn’t worked. And it still isn’t working….

You can take a look at the data gathered by the Texas chapter of NATAO. What is clearly shown is that the cable companies are not lowering their rates to compete with Verizon and SBC/BS/AT&T’s very limited rollout.

This is very similar to the disappointment that has accompanied the fashionable deregulation of electricity in a number of states. The data shows that the electricity is cheaper in the regulated states–and the gap is growing.

What’s wrong with picture? Why hasn’t “competition” worked? Legislators across the nation have endorsed the politically correct argument raised by the monopoly corporations that owned the electrical and telecom wires and bet their citizen’s money on the faith that deregulation would lead to falling prices. They, and their constituents, have lost that bet. And a whole lot of people are trying to make sure that the public does not notice.

Here is a hard truth: The blind faith that “deregulation” leads to true price competition is a false faith. In natural monopoly markets regulation–or public ownership–is the only real way to establish fair prices. Utility markets are monopoly markets…and giving the monopolists free reign won’t lower prices–quite the contrary. Utility deregulation is a failed experiment.

It is something the country as a whole ought to be thinking through rationally. The honest solution is to reinstitute real regulation where markets don’t work. Most places don’t have the resources to resist the drain on community wealth that private energy utilities and private telecommunications utilities represent. But a few communities, like Lafayette, can choose to opt out of the mistakes that the rest of the country is making. Lafayette has done so and will have its own locally-regulated power and telecom utilities.

Lafayette made the right choice on July 16th two years ago.

Saturday ToDo: Stealth Programming for Kids (& You)

Ok, so it is late on Saturday for a Saturday Something ToDo posting. So sue me. 🙂 If you’ve got some kids in the youngster to adolescent range to entertain over the long Memorial Day weekend you might really want to give this one a try.

And it is a great one: A new addictive Educational Toy called Scratch. It lets kids (and adults who are young at heart) build nifty animations. You can draw your own characters with some included tools or import a photo to use as an avatar. Then put as many as you like on the same “stage” and animate them. If you like what you get you can always upload it and share.

Oh, did I mention? It’s a free download.

While all that is cool, the real secret is that it is all driven by a pretty complete programming language. (Don’t bother to tell the kids, they won’t be impressed) It’s a dead easy way for kids, or anyone, to really get a feel for programming and standard programming structures. And that, actually, is the point. (Again, no need to play this point up with the kids.) The program is the brainchild of Mitch Resnick and his “Lifelong Kindergarten” lab at the MIT Media Lab. It is an inheritor of other nifty software devices like logo, lego-logo, mindstorms robotics (also recommended) and squeak. They all focused on giving kids easy access to fundamental programming tools in a environment that made learning a natural product of activity rather than an exercise is abstraction and memorization.

I could try and explain how it works but it’d be much more effective for you to go to the BBC article and play the video found there. (You can read the excellent story too, but that is less immediately informative than the demonstration.)

Then travel to the Scratch website and poke around. If you’d really like to get a picture of the motivation behind Scratch then play the Real Media file that tries to explain the purpose of the program.

Download the program (OSX or Windows, Linux upcoming). I mentioned that it’s free, right?

Play. Give it to kids to play with. Sit back and watch them tinker a new little world into existence.

Obligatory bandwidth/philosophy plug: Being able to generate, trade, and interactively collaborate on making things–not just consuming them–is one of the best reasons to want real bandwidth. It’s our kids who will live in the promised land. We will only catch a glimpse of the world they will be able to create.

[Thanks to both the friend and the son-in-law who pointed me to this one over the last week.]

More on the Bonds

The Advocate covers the Fiber To The Home bond presentations in New York this morning. Sounds good! Apparently the visit went well and Durel and Huval returned feeling good about Lafayette’s prospects for a favorable bond rating.

Some of the recent local contretemps were frankly discussed:

Last week, attorneys for the plaintiff in that lawsuit, Elizabeth Naquin, suggested that Lafayette might be subject to further legal action should it proceed in the manner it’s planning to issue and pay back the bonds.

Durel said he thought the timing of that suggestion was an attempt to spook the bond markets into a higher rate.

Ottinger said Lafayette officials discussed with the bond market representatives the possibility — or lack thereof — of another lawsuit stalling the project.

The Louisiana Constitution prohibits further challenges to the ordinance that authorized the bonds to be issued, Ottinger said.

Good. Being upfront about the opposition is the way to go in most cases and I’m sure honesty served them well here. The bond guys have done their homework and asked the next obvious question:

The bond market representatives also wanted to know if LUS was prepared should the existing telecommunications companies in the area start practicing “predatory pricing,” in an effort to undercut the new LUS venture, Durel said.

That is, indeed, the next issue; and that for which the people of Lafayette should prepare. The incumbents tried this in Bristol and it didn’t work. I suspect that the folks in Louisiana will recognize the ploy as easily as did those in Virginia.

It’s all good so far:

“The bond rating agencies and the bond insurers were impressed with the depth of information and analysis we had as well as our passion, and the community’s support, for the project,” Huval said. “We received favorable comments about LUS’ proven track record in managing the deployment of large projects.”

Let’s get on with it!

Light a Candle For Lafayette

The Advertiser carries a brief report on the state of the fiber bond rating process currently going on in New York.

The initial reaction from bond rating agencies that will rate revenue bonds used to finance the project was positive, LUS Director Terry Huval said…

A good rating means that Lafayette is a good risk to potential investors. It also means the city’s bonds will have a lower interest rate and will cost less to pay off.

That’s good news. This is vitally important. Though they are low profile, these negotiations will determine the cost of the single most expensive element of the fiber to the home project: the cost of the money. A good bond rating will mean a low interest rate.

Seriously, go light a candle. (I’ve got a St. John the Conquerer candle that I save for special occasions. It didn’t seem to hurt during my dissertation defense. 🙂 I’m going to go light it now.)

Lafayette, LA to Wilson, NC: Fight It!

Does this sound familiar?:

Wilson, NC is getting hit with aLocal Government Fair Competition Act” written up by their local incumbents (AT&T and Comcast) that intends to keep the city from expanding its current, successful fiber optic ring to provide its citizens with a little competition to the current phone and cable monopolies and the internet duopoly.

Sounds mighty familiar. That is exactly the title of the bill that has cost the people of Lafayette millions of dollars and which has delayed Lafayette’s fiber-optic project by 3 years. Without this law Lafayette’s citizens would be using their network now; instead we are just starting after a long obstructionist battle waged by the incumbents–all of which was enabled by the “Local Government Fair Competiton Act.”

Lafayette, Louisiana to Wilson, North Carolina: FIGHT IT. No half-a-loaf compromises, no handshakes, no backing off when offered a “grandfathering” clause.

People of Wilson: You cannot expect your opposition to honor any commitment it makes in conferences. They didn’t in Louisiana and you shouldn’t expect it in North Carolina. Without such a law you are free to make your own decisions and take responsibility for them. Such a law gives the incumbents the opening they need to sue you based on a law they have drafted. The incumbents will not hesitate to return to the legislature in the very next year to further “fix” the bill to disadvantage localities. They will use the law to pursue lawsuits that they cannot win. They will use lawsuits to simply delay project and they will use lawsuits to try and pursue interpretations of the law other than those they agreed to in conference. (Things got to such a pass here that even the legislator that skirted the rules to sponsor the bill later complained that the incumbents were suing over things that had been settled in favor of the municipality during compromise discussions!) You DO NOT need the “bigger, smarter guys at the statehouse” to protect you from yourselves. DO NOT buy the line that this sort law “protects the local taxpayer” or that it “levels the playing field.” It intends to shift your control of local resources away from local citizen-owners and to a compliant state house; you can protect yourself quite well without their dubious help, I am sure. It intends to establish rules that would cripple your local utility’s ability to compete; rules that the incumbents would rage against should anyone dare suggest applying such to them.

From the Wilson Daily Times Article:

City of Wilson officials and the North Carolina League of Municipalities are seeking to kill a bill that would place what they say are undue restraints on municipalities establishing “communications services.” Wilson officials expected some legislative opposition when they started planning to provide broadband services to the city.

The bill, called the Local Government Fair Competition Act, places several obstacles in the way of local governments seeking to provide services such as broadband Internet, telephone and cable television. The bill is sponsored by state Reps. Drew Saunders, D-Mecklenburg, Hugh Holliman, D-Davidson, Harold Brubaker, R-Randolph, and Julia Howard, R-Davie. Lawmakers representing Wilson County have not sponsored the bill.

Some of its provisions include requiring two public hearings where the city’s business plan would be available, including cost analysis and four-year projections. Also, a special election would be held to allow citizens to decide if the city should establish any communications service. Such a service would also have to be self-supporting and could not be subsidized by the city’s electric fund.

“There is no good reason for this bill,” said Ellis Hankins, director of the N.C. League of Municipalities.


City attorney Jim Cauley said the House bill was written and supported by the telecommunications industry and is “clearly designed to protect their pocketbooks at the expense of the public good.”

“In the interest of corporate protectionism, it will create such a barrier to the construction of municipal broadband infrastructure that many citizens will not have access to high-speed fiber-optic services in the foreseeable future, thereby making our economic development efforts that much more difficult,” Cauley said.

I hope the people of North Carolina will learn from Lafayette’s experience and kill this ugly example of “corporate protectionism.”

“Weather Channel to return to basic cable”

The Weather Channel is returning to Cox Communications’ basic cable lineup in time for hurricane season.

So says this morning’s Advertiser. That’s good news as we head into hurricane season.

Those with long memories will recall that Cox pulled the Weather Channel in the middle of hurricane season last year in a public relations gaffe that it is difficult to credit that ANY company, even Cox, could make a year after Katrina and Rita ripped across south Louisiana. That move caused a firestorm of criticism—that extended from letters to the editor to a command performance for Sharon Kleinpeter before the City-Parish Council. But last year Cox held firm.

It was part of a larger disturbing trend. Lafayette and the rest of Acadiana was being completely brought into line with the Baton Rouge market to create a single large entity dominated by the interests of Baton Rouge.

In both markets the channel guide was moved off basic onto a $30 dollar a month more expensive tier. In Acadiana the weather channel was also moved up (Rita not withstanding) to that tier. (Cox New Orleans, a different division, had the good sense to leave the weather channel alone in their area.)

Also at issue was the single French channel. It was moved up to a more expensive tier associated with sports. (Hunh?) This in a city where 13% of the population tells the census they speak a French dialect in the home. (The “large” Spanish-speaking population got a new 10-channel tier in contrast.)

Rates were raised on most services with Lafayette getting larger increases to bring them into line with Baton Rouge.

Local people were unhappy, to say the least.

The Advertiser story repeats Cox’s explanation that the channel was moved to make Lafayette more like Baton Rouge. While that wasn’t particularly well-received (Acadiana has no desire to emulate Baton Rouge, quite the contrary) there were other explanations at the time. A more complete explanation of the impulse to unify Baton Rouge and Lafayette lies in the size of the large new, unified advertising market Cox would create by combining Louisiana’s two most dynamic economic markets.

Moving popular and useful channels like the Weather Channel, the Channel Guide, and the French channel up into substantially more expensive tiers was meant to push as many people as possible off the cheaper tier which is still watched by regulators and whose valuable analog bandwidth is lusted after by the programmers. –Each analog cable channel can be made into many digital ones. Both short-term profits and long-term strategic goals make this a financially advantageous move for Cox. (If not for Lafayette.)

The changes to the lineup and the concurrent rate increases were all about increasing Cox’s bottom line.

The weather channel replaces an all-ads-all-the-time channel at 22 that often is used to promote Cox products–and had kept its privileged place in the basic tier when the French channel and the Weather Channel were expelled. This was a change that the Lafayette City-Parish Council suggested during the dispute but at that time Kleinpeter said legal issues made that impossible and her claim went unchallenged. Apparently it wasn’t so impossible after all.

At one point Kleinpeter explained the community’s vocal distress with:

“It’s just change. People don’t like change”

That was never anything but a breathtakingly arrogant response. One that only a monopoly could make. Apparently Cox is now taking the upcoming competition from LUS a tad more seriously as we head into this year’s hurricane season.

You can chalk the change up to the mere promise of locally sensitive competition.



We are in the final days…of TV1.0. The signs are everywhere. Most recently, I received an invite (thanks to a sympathetic reader) to beta test Joost–a combo software client and web-based content library that allows the user to demonstrate for themselves that the old way of doing things is numbered.

TV1.0 is the familiar old broadcast model of one broadcaster sending to many, passive “receivers.” TV stations send their signal out and we sit and watch it. Defined by limited spectrum, there were only a few channels, shows appeared in their set time slot, for the defined number of minutes less the minutes devoted to the ubiquitous ads. Shows are designed to appeal to the broadest number of people and offend the fewest. Cable changed very little except that it gave you more channels. PBS introduced the idea of voluntary subscription support–but remains in other ways locked into the broadcast model as well.

There’s lots to hate about this model of video. (And I’ve been happy to jump in; see “Die TV. Die! Die! Die!” or “Why You Want Real Bandwidth”.) I’ve called the emerging model “DV” for Downloadable Video. The basic idea is that when bandwidth is no longer scarce (e.g. when we have fiber to the home) and we can download video to our hearts content, then the reasons for the old, annoying way of getting video will go away and new forms will emerge that cater to our obvious interest in watching shows whenever we want to, unlimited by advertiser-defined time slots, and uninterrupted by ads. Shows can be designed to appeal to the passionate viewer and world-wide, cheap, direct-to-consumer distribution can be counted on to provide an audience to support even the most specialized shows.

Joost plays in to this because it has become the most credible contender for long-show, commercially-produced content king. (YouTube has the short piece, self-produced end of the DV market pretty much sown up–and in some ways is even further into a DV1.0 world.) Joost first hit the news as the brainchild of the same guys who brought you the telephony-disrupting Skype and terrified the music and video businesses with Kazaa. The trick in all these enterprises was leveraging the unused bandwidth of customers using an idea described as peer-to-peer aka P2P. In return for the downloaded service you get you let the network use your spare uploading capacity.

Joost uses this technology as well and so holds down their main operating costs…but the real splash came when they began to sign up real, long-form content and supported it with in-video advertising. That gave them both content credibility and a visible business plan–something no similar competitor has. The jury is still out on whether long-form content has to be supported by advertising that is embedded in the download or whether, like YouTube, advertising can be on the supporting web page or whether, like iTunes, a pay-per-view model is possible.

Part of what is interesting about Joost is that they are setting up to be a very social site. They’ve got chat, you can invite friends, and there is an API for new widgets that could further extend the ability to hook into IP services and RSS feeds. This opens doors. Conceivably one could invite friends from all over the country to watch the same show or sporting event and chat online while it was playing. No doubt “clubs” will arise focused around particular shows and scheduled meetings. RSS will allow for further amalgamation and integration with other services and video feeds.

But the proof is in the pudding; or in this case, the viewing. I recently sat down, played around with the (very slick) interface and actually settled in to watch a commercial TV/now DV show. It played at full screen on my laptop–there was noticeable blockiness but no actual hesitations even though the feed was being relayed over my wifi. Cox had provided me access to the first real, commercial television show I’ve streamed down and watched in its entirety over the internet instead of watching it when it was scheduled to be on cable. It’s a sign. We’re in the final days of TV1.0.


(Like the idea and have found by clicking through that Joost is still in beta and requires an invite from a user? Happy days: GigaOm’s influential NewTeeVee blog has the pull to get a simple sign-in sheet for its readers. You can use it too.)

Incidently, there are other, less high-profile startups trying to do something similar. The Joost page on Wikipedia points to several. I’d particularly recommend the Democracy site and player.

Slime: Naquin & Attorneys try to Drive up Bond Costs

Slime. Unprincipled, low-life slime.

That is the mildest and kindest epitaph that I can manage for Elizabeth Naquin, her Plaquimines attorneys and the incumbent corporations who are pretty obviously paying them off. The only possible purpose for stirring things up right now is to drive up the costs of the bonds that are to be marketed in New York next week. And that is plain, flat, wrong.

According to Kevin Blanchard over at the Advocate the attorneys for Naquin (BS/AT&T and/or Cox?) have shot off emails — to the media — threatening to sue Lafayette at some unspecified future moment over the plan to fund the construction of Lafayette’s fiber network. That plan has already been approved by the court of last resort, the Louisiana Supreme Court, and the objections raised have already been dismissed. Further, according to the Louisiana constitution the bond ordinance becomes immune to challenge when it is validated and that immunity extends to:

“the validity of the . . . means provided for the payment of such bonds and the validity of all pledges of revenues and of all covenants and provisions contained in the instrument or proceedings authorizing or providing for the issuance of such bonds, and as to all matters adjudicated and as to all objections presented or which might have been presented in such proceeding, and shall constitute a permanent injunction against the institution by any person of any action or proceeding contesting the validity of the bonds or any other matter adjudicated or which might have been called in question in such proceedings.” [Legal citation from Ottinger’s press release]

That is pretty conclusive. Let us be very plain: No one and no “thing” can challenge a bond once it has been validated and issued. The constitution is clear; no matter how defective a bond ordinance might prove to be, it cannot be changed after it has been validated and sold. The business plan supporting it is incorporated into the ordinance and becomes a contract with the bond holders. NOTHING can be done to change it. (Even if the court hadn’t already ruled on the question.)

So this is clearly FUD–an attempt to sow Fear, Uncertainty, and Doubt. It cannot be a valid legal objection and would only result in ridicule if actually brought before a court.

The real question is: WHO are they trying to scare now? And the answer is plain: the men who will sit across the table from Lafayette’s representatives setting up the bond sale. They would like to make those men fearful, uncertain, and doubtful. They hope those men will condition the bonds in such a way as to force millions more in interest costs on the people of Lafayette.

That the “lawyers” (aka PR agents for BS/AT&T and/or Cox?) are sending reporters multiple emails with their threatening “news” the week before the Lafayette team is set be in New York setting up the bond sale makes the whole slimy thing disgustingly transparent.

To this point I’ve been willing to do no more than say that Naquin and her attorneys are pretty transparently serving the interests of AT&T (nee BS) and Cox. There is no money in a successful suit for Elizabeth Naquin and very little for her ambulance-chasing “personal injury” lawyers. With the Supreme Court decision they have lost all hope of ever being paid a penny by LUS or LCG on this case. Yet still they spend money on lawyers–money that cannot bring them any return. This has been an expensive lawsuit to carry forward–backed by a team of lawyers from several law firms, none of which are noted for their charity work. Someone is paying for this. Who benefits? Cox and BS/AT&T benefit. Who is hurt? The people of Lafayette.

Naquin is a new resident in Lafayette and clearly not a woman of means. She has been unwilling to make the slightest effort toward explaining to her neighbors why she wants to stand in their way and cost them millions of dollars in extra expenses to implement a decision that the people overwhelmingly approved in an hard-fought election.

This is a case made for investigative journalism. Who is Elizabeth Naquin? Why does she not have the decency to publicly justify the cost she is imposing on her new community. What is her connection with BellSouth and or Cox. What is her work history? When exactly did she move to Lafayette and why? Who is actually paying the expense of this series of lawsuits and threats? Are corporate funds or money from anyone employed by the incumbents involved. Are public relations firms involved in passing money on to its recipients? Which ones? What about Naquin’s repentant ex-ally, Matthew Eastin? Who recruited this student? Where did he get the money to pay his “share” of the expenses while he was involved? Did he pay anything? Was he asked to? How much?

Really…these lawsuits are going to cost the citizens of the community millions of dollars. It is now past the point where there is any possible legal or ethical rationale that could justify the continued legal harassment and hence no conceivable reason to not thoroughly investigate this situation. (Recall the feeding frenzy about much less expensive irregularities at the airport commission?) There is a big story here somewhere; anyone can smell it and the people deserve to know. (ULL journalism students, anyone?)

I’d like to know more–if anyone out there can shed any light on this please let me know. Here or via email.

Without discussion or public comment…

The bond issue is rolling through “without,” as the article in the Advocate notes “discussion or public comment.” That’s as it should be–the decision to go forward was made directly by the community during the July 16th referendum two years ago; the council’s proper role on this issue is to execute the will of the people.

The introduction of the ordinance this week is a means to expedite the passage of the ordinance as soon as final conditions are set by the bond market after next week’s trip to New York by the LUS/LCG personnel who will make their presentation to a group of major bond brokers. (Say a little prayer for the home time–if the bond agents’ conditions are favorable it could mean a huge interest savings for the people of Lafayette over the life of the bond issue.)