WBS: “Fiber optics backers say expect some obstacles”

“What’s Being Said Dept.”

The local paper in Salisbury, North Carolina published an article today that featured the head of Lafayette’s utilities, Terry Huval. Of interest to the folks in Salisbury was an overview of the difficulties and rewards inherent in building a community-owned fiber-optic network. Huval and representatives from Dalton, Georgia’s successful fiber optic network, along with the CEO of the fiber engineering firm involved in both builds, laid out the case for publicly-owned fiber; assured the citizens of Salisbury that they could expect opposition from the incumbents; and pointed to Lafayette’s success in attracting new jobs and Dalton’s 70% penetration as proof of that the concept could work.

As intriguing as such a presentation must be, more interesting to those of us from Lafayette is the odd sensation of looking at ourselves in the mirror that such presentations provide and realizing that that is how we look to others. Some tidbits to whet your interest:

Huval detailed efforts by the private cable providers to have special state legislation passed against Lafayette’s initiative and several costly lawsuits aimed at stopping the project.

“We spent $3.5 million with nothing to show for it,” Huval said of legal defenses.

But Lafayette officials figured they saved cable subscribers $4 million in deferred rate hikes during the court fights, he said.


Lafayette already has landed a Canadian call center, which employs 600, because the company was attracted by the fiber-to-the-home venture. Other companies are on the horizon, Huval said, waiting for more of the system to be installed.

He predicted the high-tech opportunities will bring more of Lafayette’s college kids back home.


Huval, Cope and Salter all said a fiber optic system is the telecom infrastructure of the future, even if wireless improves in capacity and becomes more reliable. The capacity, speed and dependability of wireless will never approach the fiber broadband, they said.

Salter predicted wireless will keep growing in use but not for the wholesale application of bandwidths.

Huval described wireless as “too finicky,” and too often affected by weather. Making it subscriber-based would be a bad idea, he added.

An interesting story, and well written.

Sharing The Wealth

Terry Huval is in Salisbury, North Carolina today sharing what he has learned with the city council there. The Salisbury Post has the story:

Part of Salisbury City Council’s annual retreat Thursday and Friday will concentrate on what the future might hold in the fiber-optic cable business.

As part of its schedule Friday, council will have a panel discussion from 9:45 to 11 a.m. on “Inventing a Brighter Future with Fiber.”

Guest panelists will be Terry Huval, director of utilities for Lafayette, La.; James Salter, chief strategy officer with Atlantic Engineering Group; and Don Cope, president and chief executive officer of Dalton (Ga.) Utilities.

Huval later will be guest speaker at Friday’s luncheon at City Hall. His topic will be “Rolling Out Fiber to the Home; Adopting a Winning Strategy for Your Community.”

Salisbury is hearing the voice of experience at its retreat. Lafayette just launched the nation’s largest fiber project. Atlantic Engineering did the engineering work for LUS (as well as many other municipal projects—especially those in the South). Dalton is one of the oldest (and most successful) municipal FTTH projects.

Salisbury is well down the road toward initiating its own FTTH project and will be blazing a path of its own: Salisbury does not have a municipal power utility, an advantage that other cities engaged in such projects have had. It has had to negotiate a pole attachment agreement with the local power company and will have to build up an entirely new utility. The challenges don’t end there: it is also setting up to pursue a public bond offering in these difficult times. They sound determined in North Carolina.

“Officials say new cable law not consumer friendly”

No s**t Sherlock Dept.

The Alexandria Town Talk today ran an article on local challenges to the recently passed “Consumer Choice for Television Act.” Sadly misnamed, the new law was written by the telecom companies and promoted by the same bevy of folks in the legislature who gave us the Local (Un)Fair Competition Act that was aimed at Lafayette’s fiber-optic network. That should tell you all you need to know.

But since we all want more, eager folks that we are, here are the gory details:

On Aug. 15, a new state law switched your local government’s authority to negotiate cable franchises to the state.

More accurately, the law voided local control of locally owned rights-of-way and transferred the ability of local communities to do what they think best with their own property to the state. And not only that, but:

instead of negotiations, cable companies now will have almost automatic access to a new market simply by filing an affidavit with the Louisiana Secretary of State’s Office.

Because the Secretary of State’s Office will have only a ministerial function, there is no regulation such as that performed by the Louisiana Public Service Commission on utilities, city officials said.

What that means is that NOBODY, not even the secretary of state in which your local property rights are parked, has any real ability to exert control over a local monopoly like SuddenLink in Alex or Cox here in Lafayette. The effect is to hand local resources over to private corporations for . . . well, for nothing.

Except, of course, the promise of competition.

Which is not forthcoming. You’ve not seen a single mention of any new competition being encouraged by the new law. And if North Carolina’s prototype law is any evidence (1,2, and especially 3) you’re not going to, either. Two years after their law was passed, there is next to no new real competition and exactly zero such new competition from the likes of AT&T (who pushed the legislation on the basis that they were so eager to get started offering competition that negotiating with all those little local communities was just a pain and a bother). On the other hand, North Carolina’s cable companies have dumped their local franchise obligations by the hundreds and grabbed the state charter. Net result: no new competitors for the cable corporations and fewer local obligations or responsibilities for the monopoly cable guys.

The same story is unfolding here in Louisiana.

In Alexandria a lawsuit challenging the law is being filed by the city. The story behind that story is that SuddenLink (the cableco that grabbed Cox’s smaller properties in Louisiana when Cox sold out most of its smaller, less capable systems) is not meeting its contractural obligations to the community:

. . . during the latest negotiations between the city and Suddenlink Communications, which the company ended when talk about the new law began, the city asked Suddenlink to deliver on its promise to set up a customer service office within the city where consumers could pay their bills.

Officials also said the new law leaves them wondering about the future of the Government Access Channel and whether or not the city eventually could stop receiving a franchise fee. Suddenlink’s current agreement with the city ends on Sept. 14.

According to the story the Louisiana Municipal Association has already filed suit:

Alexandria not only plans to file a lawsuit but also will file friends-of-the-court briefs on other suits being filed by several entities against the law, including the Louisiana Municipal Association, Police Jury Association of Louisiana and Lafayette Consolidated Government, officials said. The LMA filed its lawsuit last week.

McCormick said her organization, which represents Suddenlink, Cox Communications, Charter Communications and other major players in the industry, will intervene as an interested party in any court challenges.

Local readers will note the inclusion of Lafayette. Good. As I understand it, Lafayette’s claim differs a bit from that of the others. Alexandria, apparently, is suing on the basis that its right to govern its own affairs is granted by the ’74 state constitution. Lafayette can also claim local governance rights from an earlier constitution that the current constitution grandfathers in . . . rights that are greater than those granted in the ’74 version. (The law in question explicitly exempts those pre-1974 municipalities and so places like Baton Rouge and New Orleans retain their franchise rights.) Lafayette wants to establish that its city-parish merger didn’t extinguish those rights. What we see are multiple fronts on this issue. The LMA and the Police Jury Association are, I presume, looking out for the rights of non-home rule municipalities (most of the little guys). Look for the Alexandria suit to carry the flag for post ’74 home rule cities. Lafayette, as is common, will carve out its own path.

But the bottom line is that the communities appear to be mounting a major legal fight and are going to support each other’s efforts. That can only be a good sign for the people of the state.

Video franchise bills all take; where’s the give?

The statewide video franchise bills up for consideration in the Louisiana Legislature are, in fact, bad news as John and the LMA (pdf) have made clear. But, based on the 2006 experience where only Governor Blanco’s veto prevented a version of this legislation from becoming law, I also believe it is clear that some form of this legislation is going to pass again this year and Governor Jindal will sign it into law.

First, let’s make clear that while AT&T is the prime mover of this legislation, the cable industry is on board. That’s because this legislation or a subsequent package will ultimately give cable companies the same freedom to cherry-pick and red-line neighborhoods that the phone company is seeking with these bills. They’ll demand a level playing field.

It was no accident that Cox Communications announced its latest rate increase just as the Legislature was heading into its Regular Session. That enabled the various astroturf movements to begin flooding newspaper editorial pages with letters to the editor, condemning the cable companies and singing the praises of competition.

Think of this as a choreographed fight for the benefit of the viewing audience, rather than a brawl. The cable companies and AT&T are partners in this dance. Cox stepped on a lot of consumer toes in order to make them receptive to the competition paeans that the phone company allies would produce.


That ability to selectively deploy new network technology is the heart of the issue.

How do I know this? Because John and I sat in on the 2006 negotiations on that year’s version of these bills when the phone company (still called BellSouth at the time) flatly refused to deal on offers that did not free them from community-wide build-out obligations.

What does this mean for communities? It means, for starters, that the State of Louisiana will become the official enforcer of the digital divide in our state; that is, enforcing that divide will become official state policy codified in the law.

Under current law, local governments have been able to require community-wide build-outs in their negotiations over franchise agreements. Under the three bills being offered in this session to create the statewide franchise, there will be no community-wide build out obligation.

That means that AT&T (but more likely, cable companies) will be able to deploy their new network technologies only in those neighborhoods that they believe will be most receptive to using it. Yes, I think cable companies will be the primary beneficiaries of this legislation because AT&T is not going to be making huge new infrastructure investments in Louisiana. They are carrying a heavy debt burden now and expecting things to slow down as the national economy moves into recession.

But, cable companies are already pretty well deployed across the state. Look for them to work to amend the legislation to allow them to selectively deploy new network technology in the communities where they are already in business under existing local franchise agreements. This will be a particularly attractive path for companies like SuddenLink that bought older networks in slower growth markets from Cox (Lake Charles and Alexandria among them) shortly after the Atlanta-based media company went private.

Consumers As Shields

AT&T and its allies are using the well-being of Louisiana consumers as the poster children for their argument to be relieved of the onerous burden of local franchise agreements. But, those are crocodile tears. In fact, most consumers will be losers as a result of this legislation.

How so?

It flows from the freedom phone and cable companies will have to bypass those neighborhoods that they deem not sufficiently attractive to them to warrant their network investments. When the insurance industry did this, it was called red-lining. When only the best neighborhoods are targeted, it is cherry picking. It is the preferred corporate way.

The fact is that there is no commonality of interest between these companies and most Louisiana citizens — or, for that matter, the best interests of the state. AT&T, Cox and others are focused on return on investments. Which is all fine and good for their stockholders. It is the American way.

But, there is a divergence of interests between the profit motives of those companies and the best interests of communities, particularly when it comes to the issue of access to modern network technologies. Access to those technologies is essential for the economic success of individuals, businesses and communities. With the video franchise legislation, the Legislature will be saying to the phone and cable companies that it is just fine with them if those companies want to exclude certain neighborhoods and communities from access to these technologies.

Combined with the burdens and limitations imposed on communities to act in their own interests on the matter of network technologies via the Municipal Fair Competition Act of 2004, the Legislature (and presumably Governor Jindal) will be handing over control of the economic fates of communities and neighborhoods to companies like AT&T, Cox, SuddenLink and others.

Where on the hierarchy of priorities — for investment, for deployment of new technologies, etc. — of those companies does the fate of those communities rank? With the limits placed by the so-called Fair Competition Act, this is a vital question because communities will have little or no recourse to the decisions that these companies make on matters about access to advanced to technologies.

Where’s the ‘Give’?

The statewide video franchise legislation would give the phone and cable companies everything they want. What are they giving up in exchange for this largess? So, far, nothing.

Recognizing the political reality that a few hundred dollars in campaign finance contributions from the phone company buys a lifetime of loyalty from legislators, I don’t believe there’s much chance to defeat this legislation. Some form of a statewide video franchise will emerge from this session and Governor Jindal will sign it.

Viewed from that perspective, what can communities take away from this battle? As matters stand, there is nothing in this legislation that benefits communities. As the record in North Carolina shows, consumers are not going to get benefits of competition that is, supposedly, at the heart of this stuff.

Legislators need to take their eyes off the corporations for just a few minutes and think about their constituents. The statewide video franchise will consign some number of citizens — primarily in middle and low income neighborhoods, to second class digital citizenship by relieve phone and cable companies of the obligation to include those neighborhoods in their new network build-outs.

This is a public policy disaster in the making that runs against the efforts of the state to upgrade the quality of the workforce here. The network tools needed for workers to fully participate in the connected workplace and the global economy will not be available to every one, only instead of a market failure, it will be the direct result of public policy.

The Fairness Doctrine

There is a way to lessen the negative impact of the statewide video franchise legislation. That would be to restore to communities the right to act in their own self interests in matters of network technology access.

That is, those interested in closing instead of widening the digital divide in Louisiana should move to amend this legislation to include a repeal of the Municipal Fair Competition Act of 2004.

The logic of this is rooted in the points made earlier: the interests of the phone and cable companies are separate and distinct from the interests of communities and, indeed, the state.

The only entities that are obligated to act in the interest of all citizens in communities are local governments.
As Lafayette has demonstrated, local governments have the technological skills and the financial means to act in their own self interests in the arena of network technology. LUS is in the process of deploying its fiber network now. By the end of the year customers will be able to sign up to get levels of network services that no other community in the state — and only a handful in the country — will be able to access.

Other local governments must have the freedom to act in the interests of their own citizens rather than be forced to stand idly by as these network builders shunt aside the interests and aspirations of large segments of their citizens.

The Municipal Fair Competition Act is a relic of a soon-to-be bygone era when phone and cable companies proclaimed that they sought to serve entire communities. Local governments should be freed to act to respond to the needs that these corporations are fighting for the right to ignore.

Repealing the ‘Fair Competition Act’ is a fair trade off for passage of statewide video franchise legislation. Doing so would free local governments to act on the interests of the community that the phone and cable companies do not share.

Amend the statewide video franchise bills to include a repeal of the Municipal Fair Competition Act. It’s in the best interest of Louisiana.