Fiber fight – Archived Lafayette Pro Fiber blog

9.6% — William Theriot shouldn’t be respected as a councillor (by his own estimation)

9.6%
Percent of District 9 voters who sent William Theriot to the City-Parish Council in November 2007. The district had 18,452 registered voters, with 17.9 percent (or 3,307) going to the polls; of those voting, 1,773 or 54 percent went for Theriot.

Why is this significant? Because Theriot loves to question voters’ mandate for LUS Fiber, pointing out as recently as the Sept. 27 council meeting that it was “62 percent of the 18 percent that showed up to vote.” Applying that logic to Theriot’s district, 11.16 percent of city voters in Lafayette approved LUS Fiber, while fewer than 10 percent of District 9 voters sent him into office. Now that, Mr. Theriot, is anything but a mandate.

Theriot, the incumbent in the District 9 Councillors race, has long been hostile to LUS Fiber and is fond of saying that the overwhelming 62% to 38% victory for fiber after a long and bitter campaign was waged against it by the incumbent corporations wasn’t really the last word on “the people’s” judgment of the matter because the numbers didn’t add up to an absolute majority of all the people who could possibly have voted.

Elections go to those who care to show up and exercise their rights. That’s the basic democratic principle and always has been. Theriot’s (and others’) game-playing with this has always left a bitter taste in the mouth…so discovering that Theriot is less legitimate (by his own standards) than the fiber he criticizes in this way underlines just how hypocritical this line of attack is and always was.

And make no mistake, this line of reasoning—one which continues to be touted by anti-fiber crowd—has always been the height of hypocrisy. The nay-sayers wanted to force a vote on the rest of us because they, Cox, and BellSouth thought they could easily use the money and power of the huge corporations to win in the referendum. They failed, miserably, to convince the community that they were right. A vote was what what they claimed to have wanted and we can be certain that they’d have been happy to have said “the people have spoken” if they’d won. It was always hypocritical for Fiber 411 and those that said Lafayette couldn’t succeed and shouldn’t try to turn around and decide the vote they claimed to want so badly was illegitimate because they lost.

Here’s the real kicker: William Theriot shouldn’t be voting on anything to do with any of the LUS’ utilities anyway. He doesn’t represent any significant portion of the city. His ideological grandstanding over the LUS rate hikes and his snipping on fiber is a significant part of what broke the longstanding “fair-play” agreement between Lafayette Councilmen and the rest of the parish Councillors that the full council would endorse what a majority of the city Councillors thought was best when voting on purely city issues.

I wrote a detailed post on this back when it was all going down back in March of 2010.

His obstinacy—and to a slightly lesser degree, Councilor Bellard’s—is the most immediate reason that we are faced with a deconsolidation vote on October 22nd. So if you are in Mr. Theriot’s district and have discovered that you might suffer if the city of Lafayette withdrew from the current arrangement and became its own city again then you have only to look to your own councilman for the proximate reason those within the city don’t think that the present arrangement can be trusted.

“Subsidizing” Makes a Return Engagement—With a Twist

To begin at the end of today’s LUS Fiber budget hearing: all the old nonsense about “subsidizing” LUS Fiber returned again today. And, surprising no one, it came riding back in with Tim Supple. Supple’s long history of opposition to LUS Fiber has long included this particular falsehood. To give the devil his due Tim was definitely goaded by councilman Keith Patin after Keith and fellow rural member William Theriot failed to come up with a sufficiently news-worthy phrase during the questioning. Tim tried not to answer in the simple affirmative for a couple of rounds while Patin repeatedly pressed him to phrase his characterization of the LUS financials as being a subsidy that had to be being paid for by “somebody.” Supple finally caved and said it was, indeed, just like subsidizing Parks and Recreation as Patin suggested.

That, of course, is utter nonsense. Nonsense that Terry Huval immediately spiked. A loan that must be repaid with interest is nothing like using tax monies to support Parks and Recreations. But Huval really shouldn’t have had to lay that out. A subsidy would illegal under state law. If LUS were breaking that law both Cox and ATT would make sure we all knew by suing us again. It’s silly to have to treat it as a sensible question.

For those who weren’t following this blog way back when the recurring issue of subsidization first arose way back in 2005 the idea was supposed to be that any publicly owned fiber utility would obviously and necessarily be subsidized by the public. The idea of a publicly-owned competitor being subsidized by taxes was promoted by BS (BellSouth, now ATT) and Cox as “unfair” and an affront to their two monopolies of phone and cable service—which they characterized as “free enterprise.” That was nonsense from the beginning—plenty of utilities are run without subsidies, including LUS’ electrical and water divisions and plenty of private companies are actually subsidized. LUS never, at any point, planned on using Lafayette taxes to subsidize the new utility. But the idea that some municpality might was one of the tools that BS/ATT and Cox used to convince the Louisiana legistlature to pass what would become known as the Municipal Fair Competition Act (or as I prefer: the (Un)Fair act). That state law outlawed any cross-subsidy. But only for LUS–Cox is free to subsidize from its extensive newspaper holdings and ATT from its wireless division.—Hence my preference for (un)Fair. There has been no subsidy, and if there was any half-rational way to characterize anything that has happened as a subsidy Cox and ATT would be happily suing Lafayette—yet again.

Subsidy with a Twist

But as a by-blow to all this an interesting subsidy did emerge. But it runs the other way…LUS Fiber is subsidizing LUS’ other divisions and through that, indirectly, Lafayette city-parish government.

Again it all goes back to the (un)Fair Competion Act. One of the things put in that act during negotiations is a concession that LUS Fiber would be able to borrow from LUS’ other utilities just like any other corporation could set up internal borrowing arrangements. This is not a subsidy, it’s a loan—with real interest. One of the efforts to raise an issue by Messrs Patin and Theriot centered around “imputed” taxes. Those are extra costs that Cox and ATT got the state to require that LUS include in order to force LUS to raise their price to customers (you!) above the actual cost. (Yes, really. See this. And these.) The idea was that LUS should have to pretend to pay taxes that it doesn’t actually pay when setting its pricing—and include those fake costs when competing against Cox or ATT. PSC regulations (not the law) requires LUS Fiber to send those monies to the larger LUS. So LUS utilities is holding money LUS Fiber earned. LUS electricty, water, and sewer loans it back to LUS Fiber—at interest. The net effect of this is to subsidize LUS’ other utilities on the back of the new utility, LUS Fiber.

That’s the only subsidy uncovered today.

You can’t make this stuff up. Only in Louisiana.

Double take…Cox & French TV5

Just before Christmas I did a sharp double-take when thumbing through the Advertiser with our morning coffee—Cox was running expensive full-page, color ads promoting TV5 Monde, the french channel. While I didn’t spit out any coffee I was taken aback. Cox, you see, has never before pretended to be a friend of Lousiana’s French speakers and this kind of promotion is a particularly galling extension of the corporation’s continued attempts to ingratiate itself with the Lafayette community after taking a brutal hit to its public relations image during the fiber referendum battle.

One of the mistakes Cox made during the fiber fight was a set of channel changes that included moving the French channel from basic cable into the stratosphere of channel 226, a location that required both a set top box rental and a the purchase of a special, costly, upper tier add-on package. In a city where the last census showed that 13% of the people spoke french in the home that seemed, and seems, pretty outrageous. Many of those speakers will be in our poorer communities and will be disproportionally older and on fixed incomes. If you speak french as a first language, or are simply determined to keep Louisiana’s francophone heritage active this change was a huge blow…making mass media access to french content more obscure and more expensive. At that time—soon after the storms—Cox also moved the weather channel off basic cable and up into a more expensive channel package. These, and changes to the on-screen channel guide were all intended to drive users off the cheaper, bandwidth intensive lower channels and up onto the more lucrative digital channels that required a rental set top box.

Needless to say people weren’t happy with these changes which pretty blatantly were the sorts of decisions made by corporate honchos in Atlanta who were unappreciative of the local cultures or the facts of life for those living in the Gulf’s vulnerable coastal cities. (See examples of LPF coverage @ A, B, C.) After complaints across south Louisiana (in New Orleans, Baton Rouge, and Lafayette) Cox moved the weather channel back onto a cheaper tier. But TV5 has been permanently moved to an expensive upper-tier ghetto where it is paired with, of all things, a set of specialty sports sites.

The contrast between LUS and Cox on this issue is stark. If you want TV5’s French language programming and have access to LUS Fiber then your best choice is LUS…it’s on a basic tier that doesn’t require the rental of a set top box or a more expensive digital tier. On Cox you’ll need to rent a digital box to get service and opt for a specialized, mostly sports, package.

The Cheapest Packages with TV5 from LUS Fiber and Cox:

—LUS Fiber: on Expanded Basic @ channel 71: $46.95, no set top box: $0, Total: $46.95
—Cox: on Advanced TV Preferred @ channel 266: $64.98, required set top box: $5.25, Total: $70.23

LUS advantage: $23.28 a month or $279.38 a year…

And that’s before you add on other one-time charges. Suppose that, in reaction to Cox’s full page ads in regional newspapers, your old Tante Sue is so delighted at the prospect of French TV that she decides to take the plunge and get some of that cable television. She’d be hit with a connection fee of $53.95 (and possibly various and sundry other cabling fees to get service where her TV is). Even if Tante already has Cox and only has to upgrade to digital to get that channel back she’ll still pay $53.95 to only upgrade to digital! Cox, your ersatz “friend in the digital age” doesn’t particularly want to come visiting…and charges accordingly. And you’ve got that silly extra set of sports channels to click through. So if you want to watch some of your TV in French you’ll end up paying $333.31 more to buy it from Cox than you would if purchased it from LUS during your first year.

Now maybe Tante Sue already has that fancy digital TV stuff and only has to switch to the package that contains it…but she’ll have to give up one of those other “packages” to switch into the “Sports and Information Pak.” So she sits down and has to decide to give up the Turner’s old movie channel or the Cooking channel, or…some other favorite of hers to get a channel in French. Or, of course she could upgrade to higher priced service to get the privilege of adding TV5. No doubt helpful sales agents will suggest that…and that will cost her an additional $6.00 dollars a month.

By contrast LUS Fiber doesn’t do all that contract, install fee nonsense. It’s simple—French TV is in a basic tier…you get it for no extra cost, no monthly box fee, and don’t have to give up other channels to get it. Pay for “expanded basic” @ $46.95 a month and add nothing on. End of story.

So Why?
Cox’s French language offer is simply not a credible competitor with LUS’. Which brings up the issue of why Cox is bothering to dump substantial advertising dollars into full page color advertising. Well, two reasons. 1) PR, “public relations.” It looks good to be promoting the French language, particularly in Lafayette, the largest city in the French speaking areas of Louisiana. It doesn’t hurt that such ads promote a sense that Cox “cares” about local people and local issues. Cox has been doing its best to counter the lousy PR it gave itself during the fiber fight and promoting French is an apple and babies sort of issue: who could oppose it? 2) through most of the area of Cox’s “greater Louisiana” district, which ranges from Gonzales through Baton Rouge and over to Lafayette there is a distinct, well-established French subculture. Somebody (finally) figured that out. There are certainly many “Tante Sue’s” out there and it wouldn’t take many of them being pushed to buy cable outside Lafayette or upgrade to digital or higher tiers to substantially increase Cox’s profit. And that, I imagine, is what clinched the argument with the higher-ups in Atlanta when the promotion was pitched.

The moral of this story is that there is a difference between supporting local communities and exploiting them…LUS Fiber is providing native language support to the traditional local communities with minimal barriers. Cox is providing French to burnish its local reputation and make some bucks. Motivation matters and Lafayette’s French speakers should be pleased to have a community-owned alternative to the national corporation that offers much better prices and more widely available placement for the French channel.

Lagniappe: Cox has tried (and failed) before to make cozy with Lafayette by pretending a fellowship with the french strand of our heritage; that much cruder era was exemplified by the infamous TJCrawdad. and the “down-home” ad that used an actor delivering the generic “hick” Arkansas accent and a Cox delivery van with Texas plates to tout their local bona fides.

Worth the Listen—Net Neutrality

Ok, here’s something for those of you that are aural learners or just like a good rousing speech…The FCC hearings in Minnesota on Net Neutrality.

Franken starts @ 17 minutes
Copps begins @ 31 minutes
Clyburn @ 55 minutes
Chris Mitchell @ 72 minutes

This one’s been making the rounds of the internet…you may well have heard remarks about Senator Franken’ speech or raves about FCC Commissioner Copps’ (An FCC commissioner got a standing ovation? Really!? Really… And deserved it. ) Both of those are well worth the time spent listening. Franken has lost none of his wry, dry wit in the transition to Senator and who knew that any nerdish regulator had the capacity to give a stem-winder like Copps did? The freshman on the FCC team, newly appointed Mignon Clyburn turned in a journeyman piece of work as well.

But the hidden gem is in the follow-up to the headliners. Don’t miss Chris Mitchell—friend of Lafayette and all-round advocate of community-owned networks—get in his licks. He makes his points—that regulation is a necessary check on the self-interest of corporations, that the FCC’s role is to regulate in the public, not the private interest, and that all communities should be allowed to own their own networks. The FCC has the authority to do all this and should, he avers. In the process he cites Lafayette for being a model of non-partisan, local decision-making and the best-value network in the United States. “…Lafayette, operates the absolute best broadband network, as measured by value; for less than 30 dollars a month anyone can get a 10 gigabit connection. Symmetrical….in St. Paul I have to pay 3 times that much to get anything like that upload.”

Of course, not all of us are willing to slow down and listen to an actual speech. Ars Technica has a very readable overview of the major players that includes the money qoutes from both Franken and Copps: “I believe that net neutrality is the First Amendment issue of our time,” from Franken and “I suppose you can’t blame companies for seeking to protect their own interests, but you can blame policy makers if we let them get away with it” brought down the house for Copps.” Clyburn made it crystal clear that she, like Copps, won’t stand for separating wireless data services from the internet. So, early in the game, two of the 5 FCC commissioners have made it clear that the Google-Verizion deal won’t get past their desk—and that’s amazingly good news.

“The Battle Is Raging for Control of the Internet”

Chris Mitchell of muninetworks.com and his compatriot David Morris have published an article on Alternet and the title says it all: The Battle Is Raging for Control of the Internet — and Big Corporations May Come Out on the Losing Side. While I’m not so sure an upbeat conclusion is appropriate just yet what is encouraging is that there is, increasingly, a visible public position that maybe, just maybe, communities and not massive multinationals should control local telecommunications networks.

When Lafayette first joined battle with Cox and BellSouth (now merged into an even larger AT&T) the cry raised here for local control and independence simply had no national resonance. The idea that local activists and local officials had joined to raise a flag in Lafayette against what was widely regarded as parallel phone and cable monopolies was exciting because it was so unusual…and, well, quixotic. While widely reported, the conflict was also viewed as a David and Goliath story—and while few expected David to win, the colorful locals and bulldog-like persistence drew bemused interest.

That attitude is fading, no doubt in part because Lafayette proved that David actually could beat Goliath. And, having beat Goliath LUS went on to offer stunningly fast service for shockingly little money—just as the little “David” had claimed it could and would. Increasingly, in reportage and on commentary boards I see people mater-of-factly taking positions labeling the incumbents monopolies and asserting that local, utility control is obviously to be desired. That’s not everyone, nor even beyond a few places a majority opinion. But it is visible and insistent and that’s a sea-change for the better.

The first paragraph of “The Battle is Raging for Control” has Harlod DePriest head of Chattanooga’s fiber deployment reprising Terry Huval’s role when he rhetorically asks:

“Does our community control our own fate or does someone else control it?”

You are supposed to know the answer to that question…and that, DePriest clearly believes goes without needing to be said, means that you should support him and his utility’s fiber to the home system.

The article walks through the now familiar argument: the big incumbents don’t have local interest at heart, Federal action has failed to slow the consolidation of local monopolies into a very small cartel of major national players with an implicit pact to not compete locally, as competition falls prices rise, without competition there is little incentive for the incumbents to make the upgrades communities need to sustain clean, fair development and control of their future economies….locals can, and indeed must, take matters into their own hands.

Incumbents have little incentive to lay new fiber. Their monopoly position allows them to continue to reap high profits while amortizing their investments in old technologies.

And when they do lay in fiber we are at their mercy. Karl Bode, a longtime reporter on broadband, notes that Verizon, which has laid the most fiber, has a very low tolerance for “towns or cities asking for much of anything in negotiations.” Verizon shunned Boston when it was asked to pay property taxes like everybody else. Wilmington, Delaware was rejected because it wanted to ensure the company would serve the entire community, not just wealthier neighborhoods. Pointedly, Verizon serves the affluent suburbs of Seattle, Portland and Baltimore, but not the inner cities.

The article is well worth a read, but I close with a bit that uses the advantages Lafayette has brought to its community as an example of differences local ownership and control can make:

Cox Communications, famous in Louisiana for regular rate increases, froze its rates in Lafayette for several years following the city’s initial announcement that it would offer telecommunications services. Meanwhile Cox continued to raise its rates in other parts of the state. The result was that even before Lafayette’s system began operating it had saved its residents and businesses nearly $4 million.

Now that Lafayette is offering citywide services, it is teaching companies like Cox a thing or two about next-generation broadband. In addition to offering the best value in the country (the fastest speeds at the most affordable prices), everyone on the network gets the fastest possible speeds to others within the city’s local network (100Mbps). This approach is spurring a wave of innovation as entrepreneurs and local media activists take advantage of unprecedented speeds throughout the city. Others just enjoy the opportunity to work from home, accessing their local office network as though they were still in the building.

Community broadband networks also offer subscribers something that few private networks do: symmetrical speeds for both upload and download. Internet offerings of telephone and cable companies typically have upload speeds that are about one-tenth of download speeds. Rather than encouraging a purely consumptive approach to the Internet, symmetrical connections allow subscribers to produce content as well, a hallmark of the modern Internet.

We are quickly beginning to take our advantages for granted here in Lafayette. Articles like these remind us that most of the country still needs to replicate the success we are enjoying here.

Lafayette, the NCTC, and National Policy

Both the Advocate and the Advertiser have posted stories focusing on the latest move in the Cox/NCTC versus LUS/LCG contest being gamed out in the courts. In this turn Lafayette is has filed suit to dismiss a lawsuit filed in in Kansas by the National Cable Television Cooperative (NCTC). That lawsuit was filed in an attempt to block LUS from pursuing a complaint with the FCC.

So…this is a suit to block a suit which hopes to block a filing at the FCC…there’s a legal logic in there somewhere I am sure. Or in the words of the Advocate:

Attorneys for Lafayette argued in court filings that the cooperative’s lawsuit is an attempt “to drag a Louisiana municipal public utility into court on the plaintiff’s home turf in an effort to avoid being held accountable for its conduct before the Federal Communications Commission.”

The Advertiser:

The FCC complaint by LUS Fiber argued that NCTCS engaged “in unfair, deceptive and anticompetitive conduct that has the purpose of effect of preventing LUS from becoming a member of NCTC and thereby obtaining the huge quantity discounts and other that NCTC negotiates for its members…” “We have stated in our pleadings filed today that the court should dismiss NCTC’s complaint in deference to the jurisdiction of the Federal Communications Commission, or alternatively suspend any further proceedings until the FCC has decided the case initiated by the Lafayette complaint,” city-parish attorney Pat Ottinger said.

The story closes, appropriately, with the note:

NCTC’s largest member is Cox Communications, LUS Fiber’s primary competition.

That Cox is engaging in anti-competitive behavior through its influence at the NCTC is the core of Lafayette’s public relations case; and, given Cox’s behavior here in Lafayette, it seems entirely likely. The fact that the other two cities that had initially joined Lafayette in its complaint, but were after filing suit admitted to the membership process, did not have the NCTC’s largest member as competition is damning. That these cities’ corporate competitors do not belong to the NCTC tends to clinch the argument.

In fact, that those other cities had competition that does not belong to the NCTC is a strong argument that more is at stake nationally than simply the interest of a mid-size, aggressive city somewhere along Louisiana’s cost and its huge corporate competitor. As I’ve pointed out previously, other members of the NCTC have engaged in the sort of anti-competitive blocking that Cox has used in Louisiana.

The NCTC used to be a mechanism for small, locally-owned cable networks and municipalities to get relatively fair programming prices for their customers. Over the years the market has changed and single-system mom and pop operations have all but disappeared as large and medium size “mulitple system operators” (MSOs) cable companies have grown by leveraged buyouts of smaller competitors—not by successful competition with other cable companies. Successful head-to-head competition requires building a better network and providing better services. (The route, incidentally, that Lafayette has chosen.) Buyouts only require taking on large debt burdens…burdens in fact so large that they can make finding the money to make major service upgrades very difficult.

Now the NCTC is run by debt-heavy MSOs, not mom and pop, local, cable companies. Cox is merely the biggest. Many other NCTC members are no doubt in the same structural position as Cox cable—heavily in debt—and many of those are in the smaller locales that may be actually losing population. These smaller municipalities could reasonably feel that they’ve lost the local businesses to which they felt loyalty to faceless corporations who do even fewer network upgrades than the small local businesses did. Those small cities and towns are the ones that, nationally, are most likely to consider investment in a fiber network an investment in their future.

The NCTC has a legitimate national function…lowering cable prices for the customers of small cable companies and thereby allowing local alternatives to enormous international telecommunications corporations to exist. The outcome of the current conflict over Lafayette’s membership will be a decision-point for the nation. Either the NCTC will provide that service for all small operators or it will turn itself into an exclusive cartel that uses its purchasing power to push out all competition.

That is a national problem; it is not simply a small side fight down in some damp part of Louisiana.

Correction: It’s been pointed out that Lafayette has not really filed suit in response to the suit. They’ve merely responded to the NCTC’s Kansas suit. Point taken. That is actually clear in the press release. I let a fun line get in the way of a close reading…mea culpa.

“LUS vs. Cox goes federal”

In a return to its he-said, she-said, sorta-kinda-neutral editorial policy on LUS Fiber the Advertiser runs a Saturday editorial on the exclusion of LUS from the national cable buying coop that manages to leave the vague impression that the Advertiser is piously favor of…of something good for our citizens. It sorta endorses whatever would be good without coming to any firm conclusion about just what that might be.

Come on…sure Cox is an advertiser who takes occasional full pages and all but really; no firm position on an obvious injustice? Where is the fire we saw late in the fiber fight? There was a time when the Advertiser had finally come to understand what was and wasn’t to the advantage of their community—and as a consequence what was to their own advantage.

I’m not asking for much here, just a dose of enlightened self-interest that can see beyond next week’s revenues. A newspaper can take its name all too seriously.

Sigh…

You can read it for yourself.

LUS Files Suit, Sorta…(updated)

LUS, for a change, has initiated a lawsuit. Or at least an FCC proceeding. Close enough.

In a press release issued today LUS outlined its case for the public. That release underlined the basic irony of the situation that LUS finds itself in: fighting for admittance to a coop whose reason for existence is to help small guys, like LUS, somewhat level the playing field with big guys, like Cox. It’s outrageous that Cox is in a position to try and block LUS. From the press release:

The concept behind the establishment of the NCTC was to allow small cable providers to aggregate their collective buying power for national programming, therefore providing an opportunity for more competition in the cable TV marketplace.

In a move that is reminiscent of the angry days of the fiber fight here in Lafayette Joey Durel blasts Cox’s willingness to block fair competition:

It is a sad day for the free market economy when a corporation hundreds of times the size of a small, community-owned enterprise will use every means necessary to snuff out competition so that they can go back to charging outrageous prices for services.

That’s from the press release, and really that’s pretty much all you need to know. But the complaint to the FCC is only marginally less caustic in its lawyerly way. A reader who’d like to savor the full flavor of this story is encouraged to read it through. But if you’re not in that group, I’ll be happy to replay some of the highlights…

I was intrigued to see that the complaint to the FCC had a politically timely overtone…the introduction begins by emphasizing that LUS depends upon video revenues to “provide ultra-high-speed broadband services.” Devising a high-speed broadband plan is the project of the moment for the FCC and Lafayette’s LUS received much favorable attention in Washington during the plans proceedings, serving as the national poster-child for local initiative for having provided ultra high-speed broadband at a shockingly low price.

The complaint outlines the history of the conflict; and a very suggestive history it is. Congress. The NCTC, the complaint alleges boasts of its inserting a clause into the 1992 Telecommunications Act that assured that the coop would be treated like a cable company by content providers by convincing legislators that this was the only way to insure fair competition between the little systems it represented and the mammoth national cable companies. But, a two-year “moratorium” on new members the NCTC opened up their membership…to Cox and Charter; two of the nations largest multi-system operators. Since that time they’ve apparently quit admitting new members that would compete with their present (expanded) membership.

[The NCTC and its dominant members] are now undermining Congress’s pro-competitive intent by using denial of membership in NCTC as an anticompetitive device to insulate NCTC’s existing members from competition by new entrants.

A footnote offers evidence that Cox and Charter aren’t the only members who have fought against local municipal competition…MediaCom, SuddenLink, Bridgewater Telephone have also engaged in their own versions of the anti-competitive behavior Cox has practiced in Lafayette.

Lafayette wasn’t the only municipal provider caught in this trap. Chattanooga, Tennessee and Wilson, North Carolina were similarly denied membership–right up to the moment that they demonstrated they’d bring a complaint in conjunction with LUS to FCC. Then, suddenly, they were notified that the NCTC had reconsidered. LUS and its lawyers draw the obvious conclusion and urge the FCC to do the same:

NCTC’s discrimination against LUS cannot be explained on legal or factual grounds. In fact, the only significant distinction between LUS and Chattanooga/Wilson is that LUS’s major rival, Cox Communications, is NCTC’s largest member as well as a prominent member of NCTC’s Board of Directors, whereas Chattanooga’s and Wilson’s major competitors, Comcast and Time Warner, respectively, are not members of NCTC.

…NCTC’s continued flat rejection of LUS’s membership application, despite LUS’s offer to join under the same terms and conditions as Chattanooga and Wilson, underscores the arbitrary, discriminatory, and anticompetitive nature of the Defendants’ practices. Indeed, to keep LUS out, the Defendants are even willing to go so far as to harm the membership of NCTC as a whole, as the addition of another qualified member would increase the bargaining power of the whole group.

There’s more in the complaint, including a series of emails between Lafayette’s lawyers and the NCTC’s explaining—or rather refusing to explain—why Lafayette was being treated differently, the text of the first joint draft of the cities’ complaint, and the text of the NCTC’s attempt to pre-empt the three cities legal action.

It’s a surprisingly readable and interesting document. And it will be very interesting to watch this go forward. Lafayette has asked for a quick and frankly pretty brutal judgment against the NCTC and the individuals and companies represented on the NCTC board. I look forward to seeing how these companies enjoy having their feet held to legal fire.

Update: Back during the fiber fight when Cox and AT&T were doing everything in their power to eliminate LUS as a possible competitor each ugly episode made national news. The push polls, lawsuits, and incumbent-promoted petitions were widely reported. No small part of Lafayette’s victory was the result of unremitting bad PR in the national press. Those days have returned and the current fight over NCTC membership has garnered extensive coverage.

Local:
The Advertiser: LUS files FCC complaint
The Advocate: LUS Fiber complains to FCC; Cable TV order asked
The Independent: LUS alleges ‘unfair, deceptive’ conduct by Cox, NCTC

National:
Broadband Reports: LUS Files Complaint With FCC Over Cox Blackballing
Broadband Breakfast: Small Town’s Telecom Drama Continues: Municipal Utility Sues Cable Group For Discriminatory Access To Programming
Telecompetitor: NCTC Membership Fight Stirs Up Controversy, FCC Asked to Intervene
FierceCable: LUS blames Cox because it can’t get into National Cable TV Co-Op

“LUS fights for acceptance”

Richard Burgess of the Advocate’s article is a good overview of one of the issues that have bogged down channel acquisition for LUS Fiber video offerings—a long delay in gaining membership in the cable purchasing cooperative that provides most small, local operators with reasonable wholesale prices for the channels they offer. It’s not just about getting channels at a reasonable price, it is sometimes about getting them at all. (In fact, getting its channel lineup in shape was so arduous that it was the factor cited in the late launch of LUS services in the first place…that, and not any technical or build issue, was the cause of the brief delay in launching the service from January to February of ’09.)

LUS has had an application in to join NCTC, the National Cable Television Cooperative, for a long time now. I had heard they were hopeful and that there was no legal way to deny their participation. There was a long period when the organization simply had a moratorium on new members that only “coincidentally” effected LUS. Other public power utilities with cable arms have joined the organization previously. The NCTC isn’t a small organization with little bargaining power; the alliance of generally small cable companies controlled what was the second largest subscriber base in the nation in 2004, ranking second only to market leader Comcast according to a public power white paper in 2004 (p. 29). The discount the NCTC can command has to be comparable to that which, for instance, Cox can command.

Cox….that brings up an interesting issue raised but not fully explored in the Burgess article. Cox is a member of the NCTC…but is most assuredly not a small operator of the type the coop was founded to benefit, being the third largest cable company in the United States. One would think that Cox would not be a favorite of the little guys…but Cox’s subscriber numbers surely dwarf those of any other member. And those subscriber numbers are an immense help in negotiating good wholesale contracts that benefit its smaller members. If Cox has threatened to withdraw it could be enough to seriously scare the coop. And that would, not incidentally, mean that Cox is seriously afraid of LUS’ competition and even more afraid of what the success of Lafayette could mean for other communities contemplating doing for themselves what the big boys refuse to do for them.

The article makes it clear that Cox is indeed the suspected villain in Lafayette’s version of this story:

City-Parish Attorney Pat Ottinger said in a memo dated May 21 to City-Parish Council members that the cable cooperative’s denial of membership to Lafayette seems to be “a conscious effort to discriminate against municipalities” that are trying to launch their own cable, phone and Internet services.

Ottinger also notes in the memo that Cox Communications, a competitor of LUS Fiber in Lafayette, is among the cooperative’s largest members and has a seat on the board of directors….

Ottinger, in his memo to Lafayette council members on the issue, said the cooperative might be reconsidering its denial of membership for the other two cities “but has continued to refuse to allow Lafayette to become a member.

“It is my understanding that the only distinguishing factor is that Cox is not the competing cable provider in those areas,” Ottinger wrote.

Burgess offers Cox a chance to reply which they decline citing pending litigation but nonetheless piously declare:

…Cox has always embraced competition in Lafayette.

Now that, at least, we know is a bald-faced lie. Cox did just about everything imaginable to keep LUS from starting a competing service—from writing laws to funding an ugly push poll. Cox is not your friend in the digital age if you hale from Lafayette.

“Lafayette and a Level Playing Field”

Chris Mitchell over at MuniNetworks.org has an excellent post up on Terry Huval’s recent testimony before Senator Landrieu’s Small Business Committee. I’ve been swearing I was going to get to an extensive post of my own on this subject for a week but Chris has done a fine job with it. Mitchell is one of Lafayette’s national partisans, a major force driving muni networks nationally, and recently attended Fiber Fete here. He knows our project and knows the national scene. Go to the post, read it, and return here for some local color…

You did go, didn’t you?

Ok, since you’ve already seen Mitchell’s take on the trials and travails of “probably the best citywide network in the US” and the national implications of the battle I’d like to focus on some points that will be especially salient to a local audience…

First, notice that the battle isn’t over. Huval reveals that Cox continues to try and undermine the local community:

“Cox representatives were recently active in attempting to undermine the future of the city’s century-old electric, water and sewer utility system. During a recent rate increase effort for these traditional utilities, Cox representatives were lobbying Lafayette council members to oppose the rate increase in order to adversely affect the utility system’s future viability. All of these examples indicate an underlying strategy to hurt the city simply because the city voters dared to choose to authorize the building of their own telecommunications system.”

During the referendum battle a new saying grew up on several local blogs including this one: “Never trust a word they say.” I hope the current crop of local politicians has learned that lesson. These guys are NOT “your friend in the digital age.”

Both written and video versions of the Huval’s testimony before the hearing “Connecting Main Street to the World: Federal Efforts to Expand Small Business Internet Access” are available. Though I appear to be assigning a lot of work today, both are essential reading/viewing for those that might want to understand Lafayette’s role in the current national debate over broadband as well as the history of the project.

The written version, the “for the record” version is, as is common, much more extensive than the three minutes that the LUS director was allowed before the panel. What is revealed there is a blow-by-blow history of the conflict with the incumbents. The dust has settled enough now that it can be read with a fresh sense of outrage—and a definite sense of pride for city’s accomplishment.

Two points found in the written testimony are worth underlining here: Twice Huval takes the opportunity to say that internet portion is the main emphasis of LUS Fiber and makes clear that Lafayette anticipates a single converged service: True Broadband which Huval defines as symmetrical service of 100 Mbps and above. That shows a clarity of understanding that few in the private sector can afford. Lafayette understands that in the end what the public wants and needs from our data utility is carriage; separate services will be allowed to die when their time passes.The second notable point takes Washington to task: “It is unfortunate that the national policies of the past have failed to even approach a world-class broadband system.” It is perfectly possible to build exemplary world-class networks in the United States. If it can be done in Lafayette it can be done anywhere in the US and the community’s accomplishment is, in this context, an indictment of the political will of the rest of the country.

The video record, as short as it is, is also entertaining. There are three parts worth reviewing for current purposes: 1) The three minute testimony, 2) Huval’s response to Landrieu’s question regarding the role of municipalities, and 3) The “free shot” closing remarks Landrieu granted Huval and the other participants.

The makeup of the panel on which the LUS director appeared was interesting in itself…two of the participants were a former Senator (who got to speak long) and a former Representative (who was cut off). They now “represent” the broadcast and wireless industries respectively. Also included were a representative of CenturyLink, the Monroe company which recently purchased Qwest and a representative of wireless broadband ISPs.

Huval is called at minute 117 of the video and opens his testimony by briefly addressing his salutation to Landrieu in French—to considerable amusement. His comments on the path he hopes the federal government will take are worth repeating:

“We believe that the simple measure of trying to get complete shackles off local governments to provide these services will have the greatest impact on getting broadband out…We have a solution to this problem.”

The senator responds by exhibiting her pride in project and making the point that Huval was testifying at her request in order to provide a place at the table for municipal services.

At minute 136 Huval is given a chance to extend his testimony to the point of allowing local governments to play a role in providing competition.

In his closing remarks near the end of the session the director explains the value of symmetrical upload speeds as a particular advantage for small businesses who can get into the game affordably if a local provider will offer these services affordably, citing Lafayette’s surprising commercial prices and terms. A company like Golfballs.com has “a huge entrepreneurial opportunity.” He closes, though, by returning to the attack on the incumbents, saying that those who would “play games with the system…that shouldn’t count anymore.”

Lagniappe:
At minute 140 or so the guy from CenturyLink talks about Qwest’s long-haul and the ability the new Centurly Link now has to support small places with middle mile backhaul, data hosting, and web-based services. The representative of the company made it clear that his corporation was willing to deal aggressively to offer local ISPs and video providers backhaul on Qwest’s national fiber backbone. To show his bona fides he revealed that the new company was planning to use CenturyLink’s policy of setting local bandwidth managers in place to try and replicate the success the company has had reselling fiber-based capacity. Because that backbone is so widespread—it goes to many places where CenturyLink does not have a competitive business—having local, aggressive managers on the ground in small localities could be a major factor in giving local communities and small ISPs access to affordable backbone. And, yes, CenturyLink now has major backhaul through Lafayette…both over the basin toward Baton Rouge and south to New Orleans along the railroad tracks. Maybe Huval caught Mr. Gerke for a chat after the session?