Category: Local

Why no Google Fiber for Baton Rouge? (Updated)

The folks in Baton Rouge are probably asking themselves why they didn’t get Google’s gigabit fiber network. After all for a while the Facebook page “Bring Google Fiber to Baton Rouge” had more fans than any in the country and there seemed a pretty large groundswell of support. There was a heavily rewritten AP article in the Advocate that interviewed a BR Chamber officer and recounted the history of local public involvement. (Unfortunately not online check p. B-6 of 3/31/11 paper.) It all seemed so hopeful. The Chamber held out hope that Baton Rouge might get in on the second round.

I don’t think so. At least not until we put our own house in order.

Here’s at least one reason that Google avoided Louisiana:

See Kansas? It’s Green. Texas and Arkansas are Red. Louisiana is a sickly Orange. Google is only going to green states. This map has nothing to do with solar energy or recycling. The green denotes a place where there are no state-wide legal barriers to a community building and owning its own fiber-optic network. Red states absolutely forbid it. Louisiana is among those who are hostile but do not completely outlaw the idea. (Witness Lafayette’s ongoing battle.)

Google wants to strike out and do something truly different. They are frank about thinking the Cox’s and AT&T’s of this nation haven’t done a good job and that local communities can do better and should be helped to do so. Google has no reason in the world to go to a state that tries to make the sort of community involvement they count on illegal.

They aren’t coming to Louisiana until the “(un)fair competition act” is abolished. If Baton Rouge (or New Orleans, or Shreveport or Bossier, or any of the other Louisiana cities that applied) want to have a shot at Google’s second round the first thing they have to do is get their own house in order.

Repeal Louisiana’s (un)fair competition act…

(Check out the great map at muninetworks.com from which I grabbed the above illustration. It chock full of valuable, if depressing, information.)

Update 4/1/11: Stacy Higginbotham, tech journalist extraordinaire over at GigaOm, covers the Texas version of this story. Apparently Austin had a very credible, widely supported effort to get their city picked. The local organizer thinks:

“Austin caught their eye for all the right reasons, and we had support at the highest levels with the involvement of the mayor and the city manager, but given the Texas limitations on municipalities getting involved in network, there was only so far we could go,” Rosenthal said. “So I look at the Texas Legislature, because they really put us in a box with regard to Google, and every response the city gave had to be measured within that box.”

Yup, I expect he’s exactly right. Texas forbids muni networks. Google is doing this to encourage muni networks. The are NOT going to pick a city in a state with lousy laws that forbid what they are trying to get other municipalities to do. That’s only common sense.

Update 4/4/11: Take a look at what the paper in Kansas City, Kansas thinks were the reasons that its city made the cut. The story, understandably, tends to focus on drama and secrecy but there are some very interesting nuggets in there about the underlying factors that might have favored KCK once the first cuts were made.

Update 4/4/11, 8:15 PM: As part of the ongoing discussion in the comments I reviewed the Louisiana law constraining muni networks. There I found what I thought I remembered: The law explicitly includes the sort of public-private partnership that Google is undertaking in Kansas City. So anyone who is murmuring that Google could do a project similar to the KCK one in Louisiana simply has not read the law. You can bet that Google has. See the element of the law which defines a public-private partnership as one that must adhere to all aspects of the law at RS 45:844.47 B(3): “Through a partnership or joint venture.” If Baton Rouge wants Google to consider them in the second round they’ll want to repeal this law first.

“LUS Fiber now available to most of city”

Regardless of the title “LUS Fiber now available to most of city” the real story is that LUS Fiber has officially finished its build out.

“We were planning initially to have the build out finished by March or April, but we completed it ahead of time and on budget,” said Terry Huval, LUS Director. “We’re on every public street now.”

Mayor-President Durel added his remarks to the occasion:

Durel described the technology as “the infrastructure of the 21st century,” and said most of the country won’t have comparable services in 15 years.

“In 1896 the people of Lafayette voted to bring electricity here,” Durel said. “Where would we be if we didn’t have the leadership and community support we had back then? What we’re doing today, we’re doing for Lafayette 50 years from now.”

Now the build is essentially complete; further expansion of the system to some larger buildings and apartment complexes will look more like retail installs than full-scale infrastructure construction.

It is a pivotal moment in the project.

It is time to turn our attention to what we can do with our new network. Attention within LUS has necessarily been focused on getting the thing built. Now the focus can move to longer range questions. It’s both a happy day and a day for serious reflection.

Pat Ottinger, City Attorney, Steps down

Pat Ottinger, the city attorney through the entire (successful!) fiber fight is stepping down. The media are all carrying the story; you can look at fleshed out versions from The Independent, The Advertiser, and The Advocate.

Ottinger is the unsung hero of the fiber fight. He worked long hours and fought tirelessly to make sure that Lafayette got the chance to make its own future in spite of well-funded corporate lawyers, Cox, BellSouth and their stooges in the state legislature. His work was instrumental in defending what we had won after the referendum battle. Lawyers don’t get much glory; that’s not the sort of profession you go into if glory and adulation are what makes you run. We’ll surely get a more complete run-down on his accomplishments in the coming weeks as editors put together their stories and in that larger history the legal battles that swirled around Lafayette’s decision to build its own future will be far from the only story. But that is the one I’ve watched closely and I can say without reservation that Lafayette was well-served.

The city has lost a real public servant, one whose earnestness and self-evident competence should serve as a standing rebuke to those who’d disparage those among us who choose to serve.

Lagniappe: I spent a few minutes looking through old LPF stories…the first one to mention Ottinger by name is worth your review as an example of the value of having an Ottinger on your side: The City replies to the BellSouth lawsuit

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.

LUS Fiber Refer-a-Friend v2.0

LUS is doubling down on its referral promotion. You’re probably familiar with the initial version of this social marketing idea—in that one a friend would cite you as the person that gave them a referral to LUS and LUS in return pulled 50 dollars off you bill. Nice! Version 2.0 doubles that by making sure both you and your referring friend get the benefit. And, apparently you can get that referral credit for as many friends as you convince to sign—up to the amount of your bill. Since the fine print says that you get your 50 bucks in 10 dollar increments over 5 months that means that you could get your bill zeroed out for nearly half a year if you can convince all the cousins to join up and they’d get a nice discount as well…something to talk about over the holiday table! But you have to do it by January 30th when the promotion is slated to end.

Scuttlebutt has it that the initial referral program was very successful. I’d expect this one to be at least twice as popular.

You can check out all the details at the LUS website or, if you prefer, you can listen to Dee Stanley give you the pitch at 291-8100—a robo call from Stanley is what put me onto the new launch.

This is a natural form of social marketing for any tight-knit community. If you’re the geek in the clan or the one who always knows where the best deals or in your group people trust your advice on matters like this already. Word of mouth advertising is always the best way to get new customers anyway. Turning referrals into a win-win for both sides is bound to be popular. This makes a lot more sense in a real community like Lafayette than spending the same bucket of money on conventional advertising. Everyone understands that you have spend money to acquire customers but instead of spending it on fancy advertising it makes a lot of sense to hand the money spent acquiring customers back to the members of the community that are making the project a success. I know that a more standard campaign has to be coming, and eagerly await it, but there is something very right about this being LUS’ first move.

It’s a good deal all around. And the 50 bucks deal is just a good example of the larger process: we all save when our friends and neighbors join up and support the community resource. The more customers LUS Fiber gets the more accounts its expenses are spread over and the lower everyone’s rates can be.

Market Share – The Independent Weekly

20101124-cover-0101The Independent has published its second and final installment in the series on “LUS Fiber — where it stands and where it’s headed.” This one focuses on the immediate road ahead. The issues are ones that would be of interest to an partisan of Lafayette: marketing, market share, financing, the competitive landscape LUS Fiber has created, and innovation.

This series marks the beginning of the inevitable “friendly critique” of LUS Fiber. Supporters—not detractors—are beginning to voice disagreement with LUS over specific points while continuing to be broadly supportive. That’s the beginning of a more healthy relationship between LUS Fiber and its public. The inclination of supporters, and that includes a large majority of the citizenry, has been to close ranks with LUS against the (accurately) perceived hostility of the incumbent providers to our venture. That supportive criticisms are now being made of the still unlaunched advertising claims, and the sort of innovation that LUS has is seen to have encouraged is probably a good thing and indicates that people are seeing LUS Fiber as an accepted, “normal,” part of the landscape. Now I’m sure LUS is not feeling nearly so secure just yet and would prefer a longer stretch of reticence from the public but it should take some comfort in the implied confidence such quarrelsome talk represents.

Apparently some in the marketing community want a bang-up, high tech projection of LUS Fiber’s advanced network and object to what they see as the stodgy utility orientation of the ads they’ve seen. Just to stoke the fires of community discussion: I disagree with both sides either/or… I’d like to see ads that first, emphasize the home-town, local benefits that owning our own fiber accrues and that includes the utility orientation that LUS projects, then, second, I’d like to see the evokation of civic pride in what we’ve got and that in turn includes bragging on the unique aspects of our network. I can see why we can’t have, and benefit, from both. The point though is until recently all I heard was how badly people wanted to see some, any marketing strategy enacted. That the situation has matured to the point that we can now disagree over the style of a marketing strategy is a happy development.

Similarly others in the space between tech and business want to see LUS pursuing Google and the likes as it opens the public network to innovation. Shoot, so would I and have long advocated that the city pursue a Google “internet in a box” located on network. But I am located in the space between tech and community and would see the real potential for innovation occurring around decisions to give us all 100 megs of intranet bandwidth (check!) and opening the set top box to internet access…the really innovative things, in my judgment, will involve pulling in greater levels of participation at higher levels of usage. But again, until recently folks were just looking for “innovation” — arguing about what sort of innovation we should emphasize is a good sort of disagreement…and one that LUS should be proud (if not always comfortable!) to have inspired.

There’s more in the article worth looking at and discussing but none of the financial stuff beside upping the take rate number to 30% strikes me as news.

The real news is that we are beginning to talk about our network openly enough to disagree. And that’s a good thing. A very good thing. Just not a comfortable one.

LUS wins first round with NCTC re FCC (But what about the FTC?) —Updated

LUS has successfully argued that the National Cable Television Cooperative (NCTC) was wrong to attempt to use the Federal Courts in Kansas to prevent LUS Fiber/LCG from complaining to the FCC (or the FTC or, well, anybody they want to) about the NCTC blocking their bid for membership. The case has been thrown out of court with the Federal Court in Kansas stating that it had no jurisdiction and, further, that the planitiff the NCTC was really trying to use the courts as an inappropriate battleground or as way to try and establish a decision before a case is actually brought—neither of which is legitimate:

The timing indicates that plaintiff is attempting to use this declaratory judgment action for purposes of procedural fencing or to provide an arena for a race to res judicata.

Backstory:
Folks who’ve followed the long fiber fight in Lafayette (currently in its seventh year) will recognize this as the latest iteration of the incumbents using the court system to delay LUS Fiber from moving forward. The consistent result for any case pursued to final appeal has been for the final decision to find in LUS’ favor. This is simply the latest instance in which the real result, and likely the only really intended result was to cause delay and expense for the people of the city.

The immediate backstory for this instance is that LUS and two other municipal fiber to the home providers had been denied entry to the NCTC which provides their coalition of small cable firms with prices for content that are competitive with those the large multi-system cable companies are able to get. LUS had to wait during a two year moratorium on new members was put in place during 06 and 07; the moratorium was extended multiple times. LUS Fiber then immediately applied for membership when the NCTC lifted the moratorium on new members. But the NCTC quickly inducted two very unusual new members completely at odds with their previous membership: large cable corporatons Charter and, yes, Cox Communications. LUS and other muni providers were put on indefinite hold—their applications simply not responded to—far in excess of the organizations own deadlines for acting on applications. LUS and the other muni providers finally signaled their intent to ask the FCC for relief on the grounds that this exclusion from the cheaper prices available through the “small provider” coop amounted to anti-competitive behavior. The NCTC quickly offered to admit the other two cities on the condition that they drop their complaint. Neither city faced competition from either Cox or Charter who now had members on the board of directors. They agreed. LUS, who does compete with the largest (brand new) member of the NCTC was not offered membership and the basis for refusal to act on LUS’ application has yet to be explained. Except, of course, by the Lafayette utility which unambiguously points to Cox. No denial or confirmation has been offered by the NCTC.

(If that recounting was too condensed or abridged please take a look at the account on “Stop the Cap” What makes their take even more interesting is the fact that the author has a prior, at one time supportive, relationship with the NCTC. His judgment is damning.)

The Case at Hand:
The NCTC asked the court for a “declaratory judgment” that would have precluded LUS/LCG from seeking any of the remedies that its FCC filing said were possible. Those ranged from asking the FCC for redress, to asking the FTC to withdraw its letter stating that the NCTC was not in restraint of trade, to requesting congressional review, to seeking redress under Louisiana law. The court walked through each claim by the NCTC and essentially found that the plaintiffs, the NCTC, asked the court to assert an authority it did not have—and to effectively reach a decision in advance of having a case actually presented.

Consequences, FCC:
So the complaint to the FCC will not be blocked. When Lafayette will hear back on that is anybody’s guess but the filings with the Kansas court claimed that they thought that the chance of having to go beyond the FCC to receive satisfaction were small. That sounds like confidence to me. That confidence is reinforced when I realize what a potential “nuclear option” the NCTC is risking if LUS and Lafayette were to go to their second option…

With LUS’ complaint cleared to go forward what the NCTC has to decide is what they’d risk by allowing their pro-Cox position to be struck down by the FCC. Mainly it would seem to be that they’d lose their much of their current ability to arbitrarily deny an applicant membership. Their defense would have to put up some sort of reason to deny—something which they haven’t deigned to do to date. Each potential defense, and were Lafayette’s response successful, endangers an excuse which they might want to use at a future date. (For example: it would be risky to try and claim that LUS is using a different, IP-based technology from the rest of their clientle both because that isn’t entirely true—IP is already embedded in much cable tech and they’ve admitted other muni providers using identical tech—but more worryingly because the loss of this excuse would endanger their ongoing policy of refusing to admit small, local telephone companies that are beginning to offer video.) Letting the FCC reach a conclusion on this matter is an open-ended risk for the NCTC; they can’t know how far the new FCC under Genachowski will go. Openly stating that they are excluding competitors of current members would be even more risky, especially if they are successful—where the Federal Communications Commission might let such blatantly anticompetitive activity slide if it thought it served some higher purpose related to its telecom-related mandate it is unlikely that the FTC would be happy to hear that the NCTC had explicitly changed its raison d’être to one that is intends to exclude competitors in order to gain an advantage for its members. The central purpose of the Federal Trade Commission is to prevent collusion in restraint of trade..more on this below.

I won’t be surprised if we soon hear that the NCTC has decided to let LUS join provided they drop their FCC complaint.

…Especially if they consider that even a refusal to act in Lafayette’s favor on the part of the FCC might have truly dire results if the city has to go to its second option.

Potential Consequences, FTC:
The second avenue of redress mentioned by the city’s lawyers was asking the Federal Trade Commission to withdraw its “business letter.” That pretty much mystified me until I dug up the latest version of the FTC’s letter. As it turns out what the letter does is to certify that the FTC does not think that the NCTC operating practices constitute an illegal restraint of trade that would lead them to start enforcement proceedings. But reading the letter makes it clear that its all pretty tentative and as I read it I started to wonder if the new size and constitution of the NCTC after it has bulked up and changed its nature by bringing in some of the nations largest cable companies (it now constitutes the largest group of customers in the nation) would change the FTC’s view. And then I hit the final substantive paragraph, reproduced in full with my emphasis:

For these reasons, the Department has no current intention to challenge the NCTC’s proposed procedures for jointly negotiating national cable programming contracts for its active members. This letter expresses the Department’s current enforcement intentions, and is predicated on the accuracy of the information and assertions that you have presented to us. If the conditions you have presented are substantially changed—if, for example, a major MSO or a DBS provider were to join NCTC or there were other significant changes to NCTC’s active membership—the conclusions we have drawn would no longer necessarily apply. In accordance with its normal practice, the Department reserves the right to bring an enforcement action in the future if the actual activities of NCTC or its members prove to be anticompetitive in any purpose or effect in any market.

That has GOT to send a chill through the hearts of the bureaucrats that head up the NCTC. And may well explain the panicky legal response to LUS’ simple notification of intent to take their complaint to the FCC that the court has here so easily dismissed. Perhaps the FTC, not the FCC, is the entity they really fear. The FCC would merely make them play fair. The FTC could destroy them. That they’ve exposed their organization to such a danger should frighten the NCTC membership. And should thoroughly frighten its membership. If LUS/Lafayette were to pursue this it seems very likely that the FTC would have to seriously reconsider its reassurances. After all the NCTC has admitted not one but two major MSOs (mulitple system operators)—Cox and Charter. And it is acting rather transparently in the interests of one of them. That seems like a huge risk for the NCTC take. Playing a game of brinksmanship with LUS could easily lead to the dissolution of the coop. Something which wouldn’t bother Cox or Charter; they’ve always had the heft to go it alone. In fact they’d find it a lot easier to compete with any of the little guys who now take advantage of the better prices the coop offers. It’s win-win for Cox and Charter—either they gain a price advantage over little LUS that competes with Cox or they gain a price advantage over all the little guys when the coop fails to meet FTC standards. It’s hard to avoid concluding that the little guys that the coop was once run to benefit have been snookered.

Conclusion:
At the end of the day the real question remains unchanged; the lawsuit did not serve any real purpose but delay and to drain the resources of the defendant:

With respect to plaintiff’s malicious prosecution claims, a declaratory judgment would not clarify the legal relationship between the parties with respect to the question at issue: whether plaintiff broke the law when it denied defendant’s membership application.

Does LUS/LCG and Lafayette have grounds for claiming that this was frivolous lawsuit? I have no idea. But it certainly has proved, in fact, if not in intent, meaningless.

(Court order link via the inestimable Baller-Herbst List…)

Lagniappe:
The Lafayette legal team has released a press release that outlines their take on the victory in Kansas.

Update:
The Advertiser, the Advocate, and the Independent have all weighed in with responses to the LCG press release.

The Independent Covers LUS Fiber

The Independent published a cover story on the state of LUS Fiber, the first of two in a series. The article, entitled “Waiting to Connect” tallies the issues and missteps of the first two year or so of its service. As you’d expect the story focuses on the dramatic moments—and those are the ones where things did not got smoothly. Those things that worked out exactly as planned…like an ambitous roll-out schedule that for launch and final buildout that many loudly doubted could be done went of with only minor hitches. That’s not “news.”

The Independent does a the community the service of searching out the details on many of the glitches those of us in the community saw occurring but did not understand the background that might explain them. So if you were curious about the set top box debacle–you get a partial explanation here. There’s also mention of why that last small bit of the network isn’t yet complete…contractor troubles. Cox’s game-playing with the NCTC (which reflects very much to the discredit of both Cox and that cooperative) is treated in greater detail. A reason for the larger-than-expected basic tier is laid out plainly and its relation to costs and the NCTC mess clearly shown. It’s good to get these kinds of explanations.

But it shouldn’t need to wait on the local news weekly for supporters to find out these details. LUS needs to be much more open with its constituents-customers. That they are local and trusted is by far their greatest advantage. By avoiding talking about their problems LUS makes the problems “theirs” instead of “ours.” A very large mistake. Look at the support that immediately flared up when the unjust exclusion of LUS from the national cable coop was made public–or even the minor flap when Cox played snit with the “I’m proud of LUS Fiber” signs. Both of those, to be plain brutal, were marketing opportunities. LUS needs to seek the support of its citizens…and can only do that if it is much more open than its competitors.

LUS Fiber Video Rate Increase

LUS Fiber will see its first rate increase as of November 24th according to a letter from Terry Huval. That letter was posted on October the 15th and is making its way to subscribers.

Only the prices for higher-end video services are being raised—phone and internet services are not. The letter I received mentions only changes to the “Digital Plus” tier (from $58.31 to $67.82 monthly) and to the premium movie channels, Cinemax (to $7.78), Starz/Encore (to $10.85), Showtime (to $12.11) and HBO (to $14.81.) The Digital Plus tier is LUS’ most extensive and highest priced offering. It seems that the lower-priced tiers are not changing at this time. [Update: Amanda McElfresh at the Advertiser has the fuller story in a short piece posted in the afternoon of 10/18; there she notes that all the video tiers were being updated:

Expanded basic tier will go from $39.95 per month to $46.95 per month, an increase of $7

Digital Access will go from $46.44 per month to $54.95 per month, an increase of $8.51]

It will have been about 22 months since LUS first began service when these initial increases show up on peoples’ bills; November is a somewhat traditional time to see cable rate increases and generally they come in yearly—or such was my experience while I was on Cox. (Cox’s most recent rate increase was 11 months ago in November of last year; that included increases throughout Cox’s video offerings and price increases to its internet offerings as well.)

LUS explains the changes as a consequence of the rising costs of programming, complains that it has been shut out of money-saving deals by its exclusion from potentially money-saving deals available to members of a cooperative of small providers. Readers will recall that there was quite an uproar about The Nation Cable Television Cooperative (NCTC) not too long ago—LUS has filed a formal complaint with the FCC and while it is not mentioned in the letter to its customers LUS, in both its filings and its public messages basically blamed Cox. Cox joined the coop after the fiber referendum where LUS won the right to build the system. Cox’s new membership in one of the nations largest cable systems was highly unusual for the organization—which originally was formed to allow smaller operations to compete with huge corporations like Cox. Cox now has a seat on the board. The whole thing smelled even odder after the two other municipal fiber utilities that had originally been denied membership along with LUS were admitted after joining in the preliminaries to the FCC complaint. The only visible difference between LUS and the other two cities was that Cox was competing in Lafayette—and not in the other two cities.

National News Connects…
While the ongoing battle over Coop membership surely played a role, it’s unlikely that price increases could be put off indefinitely. Video programming is simply expensive, and getting more expensive yearly.

For instance, technology and business news on the internet was rife with stories about how the Fox network was locked in a showdown with cable giant Cablevision over the upcoming programming contract. Fox is allegedly more than doubling in price this year from 70 million to 150 million and Cablevision is refusing to go along. Fox’s channels all went dark today exciting angst from sports fans. But what roiled the internet was that Hulu was briefly forced to cut off internet access to Fox shows for Cablevision customers—and only for customers of Cablevision. So if you bought your internet connection from Cablevision you couldn’t get last weeks programming from Hulu….even if you used AT&T or the DishNetwork for video. That didn’t last long, Hulu was allowed to open up access again rather quickly. But it raises real network neutrality issues. But perhaps more importantly, Fox was willing to flash the knife in this conflict, showing the cable companies that it controlled internet access to its programming with the implicit threat that it could go over the head of the programmers at the cable companies and take its content directly to users if it so chose. Large pipe internet connections have started to shift the balance of power between content providers and the cable companies. We may have just seen the first shot in a war that makes cable companies much less powerful. Many people anticipate that cable will not be able to avoid being cut out of its powerful—and profitable—role as the necessary link between consumers and producers. The Fox network just fired a warning shot across the bow of not only Cablevision but all of the national cable companies.

Update 10/19/10: The Advertiser has posted the official, it’s-in-the-paper version of the rate increase story…

LUS: Who Governs?

The question of who governs LUS—and apropos this blog, LUS Fiber—was raised last night at the meeting of the Lafayette charter commission. Terry Huval, LUS director, suggested that he favors some sort of governing board. This drew sharp questions from the commission and featured articles from both the Advocate and the Advertiser. The Independent blog weighed in early alerting readers to the meeting and offering useful background information. But AOC, as part of its desire to inform the public, has uploaded the full meeting to the web and I’ve embedded it here:

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The stories, understandably, focus on the sure-to-be-contentious issue of governance. It’s a source of conflict because LUS’ governance is the point which most clearly illustrates the reasoning of those who are pushing for deconsolidation, for giving Lafayette back its own city government. LUS was owned by, and arguably was the most valuable asset of the city of Lafayette back in the days before consolidation. The clear intent of the new consolidated city-parish charter was to keep control of LUS in the hands of the city. In pursuit of that goal LUS was to be governed by the LPUA—a panel made up of all the members of the city-parish council whose district contained at least 60% city residents. Almost immediately, however, legal opinions were sought and contradictions were found between those sections that gave control of LUS to the LPUA and those that gave control of “all” functions to the full council. A subtext here is the general tenor of the time immediately after consolidation— a “we can all get along” feeling was apparently widespread and when bond attorney’s voiced a feeling that bond issues would be look stronger if both the LPUA and the full C-P Council approved them that principle was quickly generalized to all governance matters. With a few tweaks to the implementation details that has been how LUS has been governed since.

This all blew up recently when LUS asked for the first electric rate hike in more than a decade. Arguably (and I do so argue) the ensuing deconsolidation conflict grew from the fact that ideologically conservative Bellard and Theriot, rural members of the council with few city citizens in their districts, refused to honor the majority decision of the LPUA to grant the hike. That resulted in a squeaker vote and served notice that the traditional ways of working around the deficiencies of the charter could no longer be relied on. People began looking for ways to “fix” the problem by fixing the charter. But once that Pandora’s box was opened the issue quickly morphed into one focusing on sovereignty for the City of Lafayette—a new city-only council, a real mayor for the city, and total city control of city assets. LUS has become a secondary issue for most of those passionate about issue but it remains the biggest practical problem, and among those whose bent is practical and pragmatic a solution to the problem of LUS governance would go a long way toward ending their worries.

(Unintended consequences alert: Bellard and Theriot are the councilmen most passionately opposed to deconsolidation. It’s a practical not principled position. The new ideological conservatives are supposed to be all for smaller government and moving power closer to the people as a matter of principle—and deconsolidation would do both. But Bellard and Theriot have the practical problem that their largely rural constituencies would be the ones left without resources in a new, rump, parish government. So, principle aside, they are against it. If they’d been old-fashioned conservatives earlier and honored the tradition of allowing the LPUA to decide on matters relating to the city utility they’d not be in this position today.)

What was interesting in Huval’s presentation lay as much in what he did not suggest as what he did.

What was suggested (@ 1:16 minutes in the above video) was drawn from data offered by the American Public Power Association (a body of which Mr. Huval is a past president):

  1. 44% are run by an appointed Board
  2. 28% are run by an elected Board
  3. 28% are controlled by the Council or local equivalent

The Commision had asked Mr. Huval to suggest a range of alternatives and this is what he offered in response. Huval clearly did not want to wade in any deeper though he seemed, in several remarks, to favor some form of a board. For instance, he remarked that he’d recommend, and repeated this recommendation several times, that a condition of membership on the board be residence in the city of Lafayette. At another moment he was also clearly concerned that it was at least possible for a council to be made up representatives who, even if their districts were mostly in the city, were not themselves city residents.

What was not suggested was any of a range of alternatives that had been batted about and which were mentioned in passing by Commission members. Specifically: proportional voting. In such a scheme all members of the council who had any city citizens in their district would get a proportional vote on the LPUA/Council on matters relating to LUS. So, in one example, if Representative A had a 20% city constituency then he’d get 20% of a vote and Representative B, whose district was 80% city would get a vote that was 4 times as large as A’s. Bruce Conque, a commission member who’d floated such a suggestion, was not present at this meeting.

Also not suggested were ways of dealing with the issue by simply changing the charter to take away any ambiguity as to the governance of LUS. It should be a relatively simple matter to make LPUA control explicit. Why that should not be explored more specifically is a matter for speculation. How much of the bond-worthiness of the city and the parish is due to having the large and stable income of four utilities to stabilize its income?

Nor was there any discussion of separating the traditional utilities—which operate as a municipal monopoly and the LUS Fiber division which operates in a much more competitive environment and under a vastly different set of constraints. State law already separates LUS Fiber from the rest of LUS for many purposes (part of the infamous (un)fair competition act) and discussion of the value of a separate LUS Fiber board would seem in order—even if it were finally decided that was not the way to go.

A lot of the questions asked by the Commissioners centered or touched on the role of LUS in encouraging or discouraging annexation of developing areas into the city. Mostly this centered around water (which is now being sold to surrounding areas at a rate that is higher than the retail rate in the city!) LUS Fiber, which is too young to have an historical role to play in that story was largely unmentioned. But it should be clear that LUS Fiber adds significantly to what the city of Lafayette can offer unincorporated areas. What isn’t being discussed is how LUS’ tight ties to the city have limited the growth of the utilities themselves. To the extent that the people of the community own their own utilities they keep local money at home and can use the resources to best serve the people of the community rather than the best interests of out-of-town investors. LUS has traditionally been seen as a huge benefit to the town and then city of Lafayette and it is often cited as a partial explanation for the way Lafayette moved past larger, but less progressive cities to become the hub city of the region. Is there any way to extend those benefits to others in the region without being unfair to the people of the city of Lafayette? I’d hate to see the value of public ownership stifled by peculiar historical arrangements. Of all the suggestions so far put forward the most easily adaptable to allowing the utilities to benefit the people outside the city limits would seem to be proportional voting. It’d make sense to separate LUS Fiber and the other utilities so that they could advance at differing rates. (It is my understanding that bond covenants which entangle all of the traditional utilities would likely make it impossible to separate out the water service from the electric. I’d be happy to stand corrected.)

Interestingly, the current dustup isn’t the first time the issue of LUS governance has been raised locally. The local League of Women Voters (full disclosure: I’m an active member) recommended an oversight board as the “final recommendation” in their extensive study of LUS Fiber’s potential for the community. Interestingly Terry Huval was at that time adamantly opposed to the idea, attending a public meeting SLCC called to discuss the issues raised by the report chiefly to make the point that such a board for LUS Fiber was not a good idea. It isn’t clear what has changed between then and now…beyond the uncomfortable realization during the rate hike discussion that LUS could no longer count on the city-parish council to honor what city councilors thought best for the utility.