The Money’s in the Bank

The sale of LUS fiber to the home bonds officially “closed” Thursday both the Advocate and the Advertiser report. LUS sold $110.4 million in revenue bonds to support the construction and intial costs of the network. As in “closing” on your home or car loan what this really means is that the money is in the bank and you can take possession of what you’ve been sold. In this case LUS (and the rest of us) is “buying” the use of the money. Now they can begin spending money.

Expect the pace of things to pick up.

The papers report that spending will begin on planning and on the early construction of items like the warehouse necessary to store construction equipment and the head-end building that will be the electronic heart of the new system.

Attentive readers may wonder what happened to the $125 million that the voters approved two years ago. Why only $110.4 million? The easy answer is that new cost projections are lower as a consequence of the delay are less so they are borrowing less. But while that is central there is a bit more to consider as the following from the Advocate indicates:

The $110.4 million in bonds are based on projections of what it would take to build a system if half the market signed up for LUS service.

The savings in technology and interest cost mean that should LUS exceed that 50 percent share of the market, it could make it easier to pay for further expansion with cash instead of another bond issue, Huval said.

The hope of LUS has always been to make LUS Fiber a utility, that is for LUS Fiber to be a ubiquitously available service run in the public interest. It is part of the history and community orientation of LUS to hope and believe that it will be the dominant provider of telecom services in Lafayette. While that level of subscription is not essential to the network’s success as a business (that figure is in the lower 20% range) a subscription figure above 50% is clearly what LUS desires. Based on subscription rates to other locally-owned, advanced telecom systems that hope is not particularly grandiose. Bristol, Va.’s system has recently had to retool its network at a real additional cost to accommodate higher that expected “take rates.” Consequently LUS has always taken seriously the potential for rapid subscriber growth—especially after having been endorsed by 68% of the voters. Heavy, early, buy-in from the community means a much higher initial cost to be paid for from the bonded money at a time before income really starts to roll in. The cost to run fiber from the street to the wall of your house, install the electronics box there, and connect up your home is a large, fixed cost that the business intends to pay off over time. (Huval estimated that cost at $6-700 recently.)

So part of what it means to ask for less money from bond market than you were authorized to take by the voters is that you believe that you can keep up with the hoped-for take rates at more cheaply as a consequence of lower interest rates and lower equipment and installation costs than you originally thought. This is good news.

The most dangerous moment for LUS might well be the moment of its biggest success. If LUS gets a huge initial subscription bulge that prevents it from showing a quick profit (as it pays off all those expensive but income-producing $6-700 dollar investments in new customers) AT&T, Cox and its agents are no doubt waiting to make use of the incumbent-written “Local Government (un)Fair Competition Act” to try and “prove” that LUS not making a profit (precisely because it is dominating the market) and use clauses in their their law ostensibly inserted to “protect the citizens” to shut down their local competition. LUS has apparently decided that this is not worth worrying about at the 125 million dollar level–only the 110.4 million dollar level. Having to worry about such nonsense at all adds cost to the build and is yet another reason why this special interest law should be repealed.

Oh, by the way…am I the only one to notice that LUS had the authority to take home $125 million dollars—authority directly from the people—but chose to only use $110 million of that authority? That its “excuse” was the best of all fiscally responsible reasons: that it wasn’t going to cost that much so they didn’t want to burden the people with the expense of what would amount to a safety cushion? Where are all the nutcase jobs who were sure that the project was going to be incompetently and corruptly handled? Are any of them rethinking or moderating their stand based on the evidence? (Thanks, I needed to get that off my chest.)

“Cheap wi-fi too slow”

“Cheap wi-fi too slow” so says :

Bill Tolpegin is vice-president of planning and development for the municipal networks unit of Earthlink, a US-based company that built municipal wi-fi networks for cities including New Orleans, Philadelphia and Anaheim and has been asked to devise plans for networks in San Francisco, Houston and Atlanta.

This is in line with Lafayette Pro Fiber’s long-held position—wireless broadband as currently conceived is not a viable substitute for a wired network. But that’s a pretty shocking comment coming from a major player in the muni wifi business who has been selling wifi as if it were a subsitute (not an addition) to a powerful wired system–What Tolpegin is saying is that his companies networks are too slow. Why? The answer is instructive for Lafayette:

He says the wireless mesh technology advanced as enabling wi-fi to quickly and cheaply cover wide areas can only do so at very slow speeds…

The mesh is slow because it relays data from access point to access point, he says. As traffic hops over these networks the available bandwidth is quickly consumed relaying data back onto a faster, wired network, greatly reducing the bandwidth available for each user.

The only way to get around this problem, Mr Tolpegin says, is to create “injection points” on mesh networks where data is transferred to a different network in order to relieve the wi-fi mesh of the need to carry all data, all of the time.

Translated: mesh networks need to consist of less mesh and a higher percentage of nodes that tie directly into the high-speed, wired, backbone. Mesh technologies, which promised a cheap infrastructure built on few–hence cheap–backbone connections isn’t panning out in practice.

There’s more:

Earthlink has struggled to find commercially viable ways to make the task easier. “Nobody has high-bandwidth, low-cost networks that deliver,” he says. “They are not telling the truth, not even the WiMax vendors.”

The answer, he says, is far denser deployment of wi-fi access points.

So Earthlink’s hard-won experience tells people two things about building high-speed wireless networks:

  1. minimize the mesh, work as close to the wired backbone as is possible
  2. maximize the density of the nodes

Lafayette’s unique situation—with the wifi provider running a massively capable fiber network down every street—allows us to take a slightly different perspective on these truths. Because we will make an extremely capable network available to every user at a very reasonable price there will be little pressure to make the wireless network in Lafayette struggle to provide “dsl” or “cable” equivalent capacities for fixed uses. We’ll have fiber at our fingertips for in-home and business use. Should we want wireless inside our house we can easily provide it for ourselves. The wireless network can be “freed” to be the wireless, mobile extension of the full network—not a low-priced substitute for it.

With LUS both the fiber owner and the wifi provider, it relatively easy for Lafayette to follow Earthlink’s advice about minimizing the mesh. Earthlink has to pay, every month for every drop off the hardwired network and for the bandwidth it consumes. Lafayette will only have to pay once for the hardware drop and the incremental cost of using that bandwidth will be very nearly zero to the extent that taffic remains within the LUS network . Earthlink and LUS will be in radically different fiscal postures and the advantage is all to LUS (and her customers). In fact, LUS already appears to be planning to minimize the mesh in its network—the intial order was for a 1:1 ratio between fiber fed nodes and “radio-only” nodes. (The story says that Earthlink is struggling toward a 2:1 ratio between backhaul feed nodes and radio-only ones.)

Earthlink’s advice about node density is, no doubt, also a good one. I’ve no idea how densely LUS is planning to pack our network. But it is worth noting that what they are buying with denser placement is faster speeds–wifi speeds fall off dramatically as you move away from the node. Because Lafayette’s wireless mobility system will not be burdened with being an adequate subtitute for a DSL or cable system—as it is when it is introduced as a cheap alternative to those products—we’ll be able to consider a density that works best for wireless’ unique mobility functions. Currently those applications center around data and voice and require less bandwidth than video. (Though video, albeit small video, appears to be coming.)

All in all Lafayette’s decision to emphasize building a fiber network as the best choice for a community network seems more prescient every day. Wireless is not an ideal technology for your primary network; its best role is to be hung off an advanced wireline network to serve those mobile purposes fixed wireline connections cannot fill. And, as an additional, ironic benefit it turns out that the most economically sustainable way to get a cheap, truly high-bandwidth wifi network is to commit to building your own fiber to the home network first.

Lafayette is doing it right.

Fiber Bonds Authorized

I attended last night’s “special and historic joint meeting” of the Lafayette Parish Utility Authority and the City-Prish Council and can report with considerable satisfaction that Lafayette’s fiber to the home project is now a done deal. With the now-ritual dual votes–first the LPUA votes and then the whole council votes on the same proposal–the official stamp of approval was put on the sale of bonds that was all but completed as the councilmen voted. That vote, as pro forma as it was, removed the last potential legal impediment to the construction of our FTTH network.

Both Blanchard of the Advocate and Taylor of the Advertiser have published accounts of the story they’ve covered since April of ’04. They’re both worth your read.

The executive summary on the story: only 110.5 million of 125 million authorized by the people was offered for sale and all but 20% of them were sold as of last night. They went for 4.9%–considerably under the 5.5% anticipated by the business plan. A successful sale…

From the Advertiser:

“Certainly this is a day we’ve all been waiting for,” said LUS Director Terry Huval…

The City-Parish Council and Lafayette Public Utilities Authority authorized the sale of $110.4 million in revenue bonds to build the much-anticipated, controversial fiber-to-the-home project.

Lafayette Utilities System received a favorable bond rating of A2 from Moody’s and A-minus from Standard and Poors, said Jerry Osborne, bonding attorney for LUS. The 4.9 percent interest rate is better than what was available two years ago but not as good as a few months ago, he said.

From the Advocate:

Low interest rates are the sincerest form of flattery,” Osborne said.

Three years ago, LUS presented a business plan as part of a required feasibility study that showed the project would be successful with 50 percent of the market, borrowing the money at a 5.5 percent interest rate.

The actual 4.9 percent interest rate is lower, meaning it will cost less for LUS to borrow money.

Additionally, in the three years since the project was first proposed, the cost of technology has fallen, LUS Director Terry Huval said. That will all make it easier for LUS to meet its goal to provide its bundled services at 20 percent below what its competitors charge, Huval said.

The Advertiser:

Officials expect to close on the sale of the bonds June 28. Within 18 months, the first LUS customer should be receiving high-speed Internet, telephone and television service through the fiber optic network. Two years later, all LUS customers who want the fiber service should be receiving it, Huval said.

Customers may be connected faster than that since the technology for installing fiber and connecting homes has advanced in the years that the project was delayed by lawsuits, he said.


“This has been a long struggle, a very difficult journey,” [Bond Attorney] Osborne said…

“I think the next four years is going to be something to see around here,” Council Chairman Rob Stevenson said

Amen to those sentiments.

Update 6/13/07: My wife and I just put in an order for our very own “Communications System Revenue Bonds, Series 2007, City of Lafayette, State of Louisiana” fiber optic bonds. Call your agent and you too can own a piece of the future.

The INDsider: LUS sells fiber bonds


The bonds to build Lafayette’s Fiber network are being sold as we speak. LUS is moving ahead aggressively to get their money and to get going.

The scoop from the Independent Blog:

LUS’ long-awaited bond sale for its fiber-to-the-home project should be nearly wrapped up by the end of the day. The bonds were priced and put on the market yesterday and today.

On bond rating and pricing:

..Standard and Poor’s gave the project an A- rating and Moody’s awarded an A2. Both ratings are only one step below LUS’ regular bond rating of A and A1. But with bond insurance, purchased through XL Capital, LUS still receives a AAA rating with investors. This all translates into an interest rate slightly under 5 percent for the $110.45 million in bonds LUS is selling for the project. In its original feasibility study, LUS had projected having an interest rate of 5 1/2 percent.

“We were very pleased with those results,” Huval says. “We’ve got the best rating we could have hoped to have gotten out of this.” He adds that the bond agencies spoke highly of both LUS’ ability to handle large projects, such as the two new generating plants that were built on time and on budget, as well as the merits of the fiber initiative.

Those are great ratings and the interest rates are within the plan’s guidelines. Messing up the bond issue was the last, best hope of the incumbent opposition to inflict a little more pain on Lafayette before the build begins. That attempt failed. (But we should be mindful that the delay has and will cost the people of Lafayette real money in addition to the original offense of standing in our way. Holding a grudge, for at least awhile, is appropriate.)

—The train is picking up speed as it leaves the station. Alllll Aboard!


Update 6/13/07: This week’s issue of the Independent is out today and contains a longer version of this story.

Council to Approve Fiber Bond Ordinance

It took three years to get here, but the Lafayette City-Parish Council is expected today to take a big step toward making the fiber-to-the-home project a reality.

The council and Lafayette Public Utilities Authority are scheduled to meet at 4:30 p.m. today to adopt an ordinance authorizing the sale of bonds to build the fiber project. The meeting is at City Hall, 705 W. University Ave.

That the news as the Advertiser represents it. If things go true to form both the LPUA and the council itself will vote to approve sale. The LPUA, a subset of the council made up of city-of-Lafayette members, is the official governing body of LUS and hence the new telecom utility division but the approval of both bodies has been sought in the past, “just to make sure.”

It will be an historic vote that will clear the way for the bond sale. After tomorrow all that will be left is proceeding to the actual sale…and building the system.

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.)

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.)

WBS: “Lafayette, La., takes broadband to the air”

MuniWireless, an influential website focusing on municipal wireless projects, discusses LUS’ upcoming wireless project in a recent post:

After 18 months and $1.5 million in legal fees, the city of LaFayette won the right to build an FTTH network for its residents. Now it’s forging ahead to add wireless service.

They go on to talk about an eventual build that will cover the entire city an provide wireless services for municipal and utility workers and eventual public safety applications. The muniwireless movement has been regrouping–free public wifi turns out to be a dubious economic proposition–and proponents are now urging municipalities to focus on just such muni services as the “killer app” which makes such wifi clouds justifiable. Lafayette is out in front of that trend; and it is satisfying to be seen as ahead of the curve.

As discussed here previously, municipal services are not the complete story. WiFi will also eventually be offered to the public, most likely as a very low-cost addition to home or business internet service. And, precisely because LUS will own a dense fiber-optic network, it will be able to fund an “extremely robust” bandwidth. That stands in direct contrast to most muncipal systems where the dirty little secret is speeds are lousy–not because wifi isn’t capable of blistering speeds. It is. Speeds are lousy because the links to the backbone are, for physical and financial reasons, kept to as few as tolerable and the link speed is shared among many users on multiple mesh-dependent repeater nodes. LUS’s network won’t be like that. The initial buy of wifi radios was set at just about half “gateways” directly connected to fiber and half “repeaters” that hand off directly to the gateways. LUS’ network will be capable of amazing speeds. In a conversation with a guy at the Tropos TechSouth booth I asked about the expense of each gateway. As it turns out, Tropos’ gateways are just repeaters with a switch flipped. Further, the device to interface each gateway to the fiber is really cheap–so there is very little cost advantage for a fiber network owner like LUS to “make do” with fewer gateways. LUS will have real speed available. LUS’ “generous” attitude makes it likely that such speeds will be offered to the community.

The wireless portion of our network alone will make us the envy of every tech type in the country.

When you add in a fiber to the home network with the lowest tier at 10 megs of symmetric bandwidth and full insystem intranet speed connections between all subscribers (so the techs were saying on the floor of TechSouth) people will be blown away.

There will, quite literally, be nothing that compares with the integrated fiber and wifi big broadband system we will have.