Category: State Video Franchise

ALERT: Call or Email Your Legislators

Please begin the process of defending Louisina’s local communities by calling or emailing your legislators with your objections to the “Consumer Choice Television Act.” It is lousy law intended to benefit a single large, out-of-state corporation whose burden falls especially hard on Lafayette and small communities across the state. This will be a long fight in our legislature with the opening shot fired tomorrow during the Senate Commerce committee’s initial hearing.

The Story:
The Louisiana Legislature is about to make a mistake….one the state avoided in 2006 when a smilar law was rejected a law that was also supposed to promote cable competition. That year a similar bill became law in North Carolina. The effects have been disastrous.

Back in ’06 BellSouth, already in the midst of being sold to AT&T, lobbied hard for a bill that would have moved control of the rights-of-way that belong to local communities to the Louisiana legislature. AT&T told legislators that they were so eager to bring competition to the cable industry that they needed the legislators in Baton Rouge to relieve them of the “burden” of negotiating contracts with local communities to use the public’s property for their new business. They assured the legislators that their law would would not hurt customers or communities but would instead provide wholesome competition.

That year the law was turned back in Louisiana. But succeeded in North Carolina. The Tar Heel’s experience tells us that North Carolina did NOT get more competition. Two years later AT&T has still not applied for a single state-wide video franchise. Just as in Louisiana, prices continue to rise and no new cable service was deployed by the phone companies in rural parishes. But it did make a difference in NC–just not the difference AT&T lobbyists told legislatures it would make. Though AT&T did not use their law to get into the cable business the cable companies used them to get out of their contracts with local communities–117 at last count had switched to the state franchise that was more “generous” with the rental of local communities’ land.

The state collected only 62% of the rental that corporations had formerly paid local governments for the use of public land. That shortfall in revenue had to be made up locally. In spite of lobbyist promises PEG channels (like Acadiana Open Channel) were no longer fully supported. Without a local contract citizens with a complaint were told they should talk to the secretary of state–or sue some of the nation’s largest corporations.

Lafayette is the largest city in the state of Louisiana that will be effected by this law. New Orlean’s, Baton Rouge, Alexandria, Shreveport, and Lake Charles will all retain their rights to control their own property. Only the smallest communities — and Lafayette — are being asked to take this risk to placate a corporation which, frankly, does not need give-aways from the state of Louisiana to profitably conduct its business.

North Carolina’s legislature got taken and the customers and communities of the state bore the brunt of that mistake. Please spend a moment to encourage your senators and representatives not to follow in that path. The first hearing (but not the last!) on this bill is scheduled for tomorrow. A quick phone call to the office to leave a message or an email to your legislator will let them know the public is waking to the problem.

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How To:
Your most effective contacts are always your own legislators. They represent YOU and generally do listen to constituent voices.

To find your legislator, email, and phone number jump to the legislative search page; enter your address and use the resulting links to jump to your Louisiana House and Senate representatives.

Also:
Consider letting the senators and house members who will recommend or not recommend this bill to their colleagues know your opinion of this legislation.

The Senate Commerce Committee’s members are – Sens. Duplessis (chair), Crowe (vice chair), Alario, Nick Gautreaux, Marionneaux, Michot, (Lafayette) and Scalise. The Senate switchboard is (225) 342-2040.

The House Commerce Committee—
Arnold, Jeffery “Jeff” J. Chairman
Waddell, Wayne Vice Chair
Badon, Bobby G. Lafayette Member
Hardy, Rickey Lafayette Member

The interest of communities in Louisiana and the interest of huge telecommunications monopolies are not the same and our legislators should be encouraged to vote in their constituents interests, not the interests of a single company that would rather change the rules than play by them.

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.

Cherry/Red

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.

“Vehemently Opposed” To AT&T’s Law

As you were warned on these pages AT&T’s state-wide video franchise bill is back again. The title: “Consumer Choice Television Act” is as deceptive a label as the infamous “Fair Competition Act” that the same corporate players used to attempt to kill competition from LUS when the network was little more than an idea. The idea that any law that the state legislature could pass would change the fundamental economic situation so much that AT&T would change its investment plan for rural Louisiana as consequence is a dumber idea than most that come out of the capital building.

The Louisiana Municipal Association (LMA) has come out as “vehemently opposed” to the proposed law. (They’ve issued a dramatic alert to their members calling for local officials to talk with their senators in advance of the Senate Hearing on the 23rd.)

They are right to do so.

It is an astonishingly bad idea.

In a nutshell: 1) It’s astonishingly bad policy, 2) such laws don’t work, and 3) there’s no need in Louisiana anyway.

1) ASTONISHINGLY bad policy:
The state legislature proposes to take local property—our rights of way—from the governments that own and maintain them and substitute the Louisiana legislature’s idea of what would be good for each community for what the people of the community have decided would be best.

This is plain flat bad policy and the law should be defeated for this reason and this reason alone: the guys in Baton Rouge should NOT be deciding what we do with our own property.

Even worse the plan is the “brainchild” of a single huge out-of-state corporation whose sole motivation in our state is find a way to get the most money out of our people while putting the least into building and maintaining their network here. Our state government should not be in the business of handing over local community assets to private enterprise.

The legislature overriding the will of local communities and telling them that they can’t use their own property in the way they see fit in order to benefit some private concern simply cannot be justified.

But justify it they do… or at least try to. Which brings us to:

(The Justification)
The justification for telling local people to “act right” is that big brother in the state house is just doing this for your own good….(You knew that, right?)

Here’s how it works: AT&T told their lobbyists to tell our legislators that keeping local governments from writing their own contracts about using Lafayette’s and Bunkie’s and Folsom’s rights of way along the roads and ditches they own and maintain will “encourage competition” in cable TV. The idea is that AT&T is just too big a guy and too important to ask to talk to the mayors of little Bunkie and Folsom if they want to want to use local property. It takes too much time and they’re busy. The AT&T execs flatteringly let it be known that they’d much prefer to deal with the “big boys” over in Baton Rouge and not trouble with all those tedious little people in backwoods. Dealing with the actual owners might have been good enough for all those cable companies who’ve been doing business locally for decades but it is beneath the dignity of the phone company.

As god is my witness! Really. They won’t tell the story just like that but the basic rationale for the whole thing is that it just takes too much time to go to all those local people and that they’re so anxious to give us competition that they just can’t stand to wait. (Don’t expect any legislator to notice that when they tried for this law two years ago saying they were just raring to go and offer every town and crossroads “competition.” They weren’t so eager that they used those two years to actually negotiate. Legislators should notice that they haven’t been so eager to compete that they have actually done any negotiating in any town that law would have effected.—That’s not what we call eager in my part of the state.)

What they don’t mention much while they are promising the moon of quick competition in return for imposing state control is that they’d also, just incidentally, like to see a few fine-print items included as well like to avoiding certain fees, paying for public access channels like AOC, providing services to the owner of the land (your local government), and having to deal with being brought to heel for lousy customer relations by those little councilmen and, most of all eliminating the requirement that if they are to use the people’s property to offer their product that they have to offer it to all the people–not just the most profitable few….they’d like all that eliminated while you’re at Mr. Legislator. (wink, nod)

What’s more: the legislators of 19 states have bought this sort of stuff. Starting with our neighbor Texas back in 05. So there is at least the beginning of the a record as to whether or not this thing works.

It doesn’t. At least not quickly. And, least we forget, working quickly was the rationale….

2) Such laws don’t work.
Some studies which have relied on asking the telephone companies whether or not they’ve rolled out more services because of these laws have, to no one’s surprise, found that the companies tell you that yes. Of course they’ve rolled out more services. AT&T says: “All the expansion that we’ve done is because of those nice guys in the statehouse. We’re mighty grateful, too.” These studies don’t ask about rollouts in comparable locales that don’t have such laws.

Note: Verizon, who actually was eager to build new Fiber To The Home networks and actually is offering advanced new services over much of the the Northeast lost an attempt to get the feds to pass a law similar to the one proposed in our state and (gasp) is actually negotiating, quite successfully, with the local owners of the land they want to use. Of course, the explanation might be that they are actually radically upgrading their system and want to use it to offer new services, and really can’t afford to wait. Unlike, frankly, AT&T. Who, on the evidence, just wants to slide by on the cheap and easy road.

If asking the phone company if they did what they promised they’d do when the solicited favors from state legislators resulted in “discovering” that they had kept their promises, studies which actually looked at hard figures had a radically different result. The whole point of competition is to lower prices, right? So if these laws work you’d expect lower prices…or at least no rise in prices. –Incidentally, not even AT&T is willing to say in public that it will offer video services in those rural areas that cable companies don’t currently serve. Extending service is NOT on the table…only, supposedly, “competition.”

But on prices, which is a nice hard measurable, Texans haven’t gotten much of that competition thing. Since their “Consumer Choice” law came in their cable prices did not fall at any point and have actually risen substantially. Keep in mind that the Feds year after year issue findings that document that in those rare places where real head-to-head competition exists between cable companies the prices for cable are substantially cheaper—and AT&T (then BellSouth) showed those statistics to legislators two years ago. If real competition was going on you’d expect cheaper prices. It’s just not true. If the law worked you’d expect cheaper prices.

But: Such laws don’t work.

Lagniappe: Texas was first to the slaughter and our neighbor but, hey, these laws don’t work in North Carolina either. And the telecos aren’t even pretending to build out there.

But even if this lousy public policy could be justified, and even if these laws worked the truth is:

3) There’s no need in Louisiana anyway
If AT&T is being truthful when it says that it just wants to quickly be able to get services to the poor, suffering little people of Louisiana (without having to actually talk to any of them) then you’d expect that they’d be thrilled to have an easy, quick way to bring almost all of the people of the state under a quick and easy franchise. And the fact is that this law won’t speed up much of anything….

AT&T has made it perfectly clear that it isn’t about to roll this out to everyone that has an AT&T telephone in their home. That would be too expensive. In fact they plan to serve, mostly what they call “high value” customers. And to serve as few as possible of their “low value” ones. That’s what they tell their investors, and lying about investments can get you put in jail, while lying to legislators…well, that’s a sport in Louisiana.

All in all they plan to serve, eventually, about 50% of all their current customers…In individual states that are rich and densely populated that number will be substantially higher. But in poorer, rural states like Louisiana you can count on it being lower. They just don’t want to bother and when they have to be honest about this they say so.

So let’s generously say that they plan to serve maybe 40% of Louisiana.

Which 40%? Well the “wealthy cities” a reasonable person might guess. Densely packed, relatively wealthy cities are where major buildouts are occuring.

But, and here is the real kicker: Those cities aren’t available in Lousiana. New Orleans, Baton Rouge, Shreveport, Alexandria, and Lake Charles are all “old home rule charter” cities. The legislature can’t force any such law on them. Lafayette was also included in the exempted cities in the 06 law and you can expect our legislators to work for that again. Even if they don’t succeed this time (and I’d be surprised if they don’t) AT&T would be foolish to spend a small fortune to beef up its network so it could remain the least powerful network in Lafayette. (Both LUS and Cox will have much more capable networks than the one that AT&T hopes to upgrade to.) So the big cities of Louisiana, comprising 35-40% of the population will live in places where AT&T will have to deal with local governments anyway.

In fact Baton Rouge has already negotiated a franchise agreement already. (And did so surprisingly quickly and apparently painlessly…see the bottom of the linked post.)

That 35-40% of the population is most of where AT&T will want to build anyway. And the LMA has put together a simple model franchise, it has gotten over a 100 of the remaining cities and towns to invite “cable competition” from their telephone company and to promise a quick and easy deal. That’s a pretty credible invitation, if you ask me. I can’t imagine the local councilman, alderman, or police juror who could manage to be reelected if he was seen blocking competition for the local cable company!

No, there is no real need to run over the rights of local communities to accomplish the goals a state-wide franchise is supposed to serve. AT&T doesn’t need and probably won’t use state-wide franchises–just as it hasn’t used them in rural, relatively poor North Carolina.

But perhaps, as in North Carolina, the cable companies will benefit. Though the North Carolina legislators were assured that municipalities would not loose revenue, they did–they retained only about 62% of their former income from the lease of their land to cable companies as cable opted out of their contractual obligations to local communities and adopted the “good deal” offered by the legislators’ law—a law that was supposedly passed to encourage the telecos to offer new, cheaper services which, in fact, they have not. That didn’t work. No competition. Higher prices. Loss of local income. But the Legislators got the warm satisfaction of having been patted on the back by the big boys at AT&T.

North Carolina’s legislators were played for fools. And their people were the ones who suffered. I’d hate to see Louisiana follow that path.

You can do your bit to help by calling your legislators and urging them to oppose SB 422.

The LMA says it well:

There’s ample time between now and April 23 to speak to your Senators about this harmful legislation. If your Senator is on the Commerce Committee, please contact him or her to discuss the measure. The Senate Commerce Committee’s members are – Sens. Duplessis (chair), Crowe (vice chair), Alario, Nick Gautreaux, Marionneaux, Michot, and Scalise. The Senate switchboard is (225) 342-2040.

Lafayette residents, in particular should note that Michot is our senator and Gautreaux is one of the Acadiana caucus senators. Both should hear your plea. While you’re at it also oppose HB 869 by Rep. Arnold and HB 1009 by Rep. Ellington. Arnold’s bill focuses narrowly on giving control of local property to corporations. Ellington is a special case: this house member was term limited out of the senate where he was the guy who signed his name to the (un)Fair Competition Act that would have prevented Lafayette from building its fiber network had it passed in the form that Ellington submitted. To see him carrying AT&T’s water by introducing the house version of this franchise bill is completely in character.

“AT&T, EBR approve TV deal”

Well, that was fast! The day before yesterday we noted here that AT&T through its astroturf subsidary TV4US had launched the public relations champaign to support its statewide video franchise law. This morning we see the first substantial political move in the upcoming battle. Baton Rouge has cut a deal with AT&T and so is taken off the board in an early first move of the chess pieces.

AT&T, according to the Advocate, has reached a franchise agreement with the East Baton Rouge City-Parish government to provide cable TV (aka “video services”) in the parish. Follows a summary of what seems to be going on with the caveat that all I have to go on is the article…I can’t find the ordinance or contract online as I would be able to in Lafayette—anyone have access?

AT&T will have the right to offer its new “U-verse” services (site, overview) in the parish for 5 percent of revenues to the general fund and .5% of revenues to support public, educational, and governmental channels (PEG channels). Presuming that turns out to be correct (and enforceable) its a good deal on two of the three major issues that any locale should consider: a fair price for the rental of public land and support for local media. Realizing any actual benefit from those two will depend on the third leg: the product being offered to a sizeable number of citizens. AT&T has long made it clear that they do not intend to offer this product to just anyone…instead they want to offer it chiefly to their “high value” customers and less than 5% of their “low-value” purchasers. (Fiber To The Rich, FTTR) If you figure out the implications of what they told investors back when this plan got underway they only intend to offer this product to about half of their current population base. Baton Rouge and other wealthy centers in generally cash-poor Louisiana might get U-Verse in rich neighborhoods but I’d be surprised if it went much into North Baton Rouge and Scotlandville. That might prove a difficult thing for Mayor Kip Holden to explain.

A bit of unease about the part AT&T was unwilling to promise might well, in turn, explain the secrecy with which this deal was constructed and the stealth with which it was executed. Holden received the council’s blessing to negotiate on Wednesday with no (that’s NO) discussion, and was able close and announce the deal on Thursday. The fix was in. (*) What didn’t happen was any public discussion of the pros and cons of the deal offered by AT&T–discussion which might well have lead to uncomfortable demands that the city-parish require AT&T to actually serve the citizens whose property AT&T wants to use. Such a requirement is part of Cox’s deal…but not, I have to strongly suspect, part of the deal with AT&T.

And, speaking of Cox, what about the cable companies? Where do they play in this game? A smart reporter will try and delve into that question. AT&T is using its extraordinary influence in the legislature to push two very bad video bills through the legislature. By comparison the cable companies have relatively little influence. What’s curious is that Lafayette is the state’s largest community to whom these bills will apply. Should Lafayette succeed, as she did two years ago, in getting herself excluded along with other older home rule communities the five largest metro areas of the state comprising the wealthiest 35-40% of the state’s population will have to have local franchises anyway. Since no one (except deliberately naive legislators) actually believes that AT&T is going to provide video in rural regions the question has to be who will really benefit? One devious answer would have to be: the cable companies. They will be able to drop their local franchises with the communities that actually own the land they want to use, pick up a state franchise at a 30% discount in fees and NO local obligation to serve PEG channels. In other states like North Carolina where the phone company waged a bitter war to win the right to a state video franchise they didn’t make use of it and filed few such requests. On the other hand their supposed cable opponents made out like bandits snatching up state franchises which allowed them to drop the more demanding local ones. The end result was no significant new competition, no price drops, and a huge drop in income to local municipalities.

Somebody in North Carolina got taken…..and the grifters are on the prowl here

(*)Revealing tidbit: The wikipedia section on U-Verse vailability was updated to include Baton Rouge on the 25th, two days before Baton Rouge supposedly concluded the deal and one day before the city-parish council approved negotiations. Not surprisingly, the prescient anonymous editor who added Baton Rouge to the list of cities was operating from a “BellSouth” (now AT&T) URL. The fix was in….

TV4US Astroturf Org Active in Louisiana

Well, we knew it was coming. The legislature is coming back in session and the latest push to take take local municipal property rights and hand them over to AT&T is back.

In the grand tradition of misleading advertising this is euphemistically called “statewide video franchising reform” and it is, of course, nothing of the sort. The good thing about this year’s version, otherwise the same as last year’s, is that 1) we’ve seen it before and 2) we can now show how the phone companies have failed to provide the promised benefits after they pushed through similar laws in other states. This being Louisiana, and the governor being who he is, we can’t expect mere rationality to put the quietus to this. But this time those legislators that decide to be tools of outside corporate interests will have little room to pretend to be merely encouraging “competition.” Such laws have not resulted in price reductions (in fact prices have risen) or much new service.

TV4US, an astroturf organization funded in part by AT&T kicked off the campaign yesterday with a press release critiquing the cable companies price rises over the last 8 years and attacking Kathleen Blanco’s veto of the earlier version of statewide franchising back in 06. Regardless of how you feel about the cablecos (cough, cough) this attack on them is pretty dishonest…the release trumpets price increases going back to 2000 and then (presto chango) implies that the big jumps they list are somehow caused by the governor’s veto…in 06. They don’t use the 06 to 08 figures because, in fact, the price rises since the veto are quite modest. But that doesn’t stop astroturf organizations from trying to confuse the issue.

TV4US claims to be a “grassroots” organization but it is nowhere composed of locals. Instead it is a national lobbying group specializing in pretending to be local when, in fact, it is a small national lobbying group funded by the corporate interests it serves which springs up “local” organizations wherever AT&T wants a law passed. (The phone number listed in the press release is located in lobbyist central: Washington, DC.) Hence: artificial grass: astroturf. TV4US runs large scale advertising campaigns and engages in push polling (something we here in Lafayette are familiar with). They are actually pretty sloppy about all this. In Michigan they tried to present a petition was riddled with people who objected to being so listed–including members of the legislature who actually were in opposition. The new “Lousiana” website is a great example: it is supposed to be a local website but is actually a carbon copy of Florida’s website (which in turn is clearly a simplified clone of the national one). The copying is painfully obvious. When you get to the back pages like the “independent voices” section (gag) the logo is Florida’s and the content in the “take action” section is about Florida. The contempt for Louisiana is pretty stunning. We’re so dumb that we’re going to believe this is an honest grassroots organization? A better fake would at least show some respect.

That doesn’t mean that our legislature won’t be happy to pretend to fall for it and to use the cover that faux “grassroots” support supplies one of the state’s largest campaign funders. But what is disappointing is that the media is likely to simply repeat and amplify the misleading nonsense that TV4US puts out there. In fact, that has already started. This morning’s Advocate has a front page story on the “news” that broke a month ago: Cox is going to raise rates “$3 dollars or more.” If you travel to the end of the story what you find is that what happened to make that newsworthy just now was that “nonprofit” TV4US issued a “statement” criticizing cable companies and Blanco yesterday—a statement no doubt timed to coincide with two sets of bills: those first bills hitting consumers and several bills hitting the legislative docket. (See, HB1009, SB422, and HB869) This story was planted. The reporter would have been wise to dig into the background of TV4US—a simple google would get him all the background he needed to treat the story with appropriate caution.

Look for more of the same as the battle is engaged. The last time through it took some time—too much time—for the municipalities and the rural police jurors to wake up to threat. The reportorial crews were also slow to react though toward the end a savvy reporter seemed finally to grasp what was going on.

We’re in for another fight. Look for Tom Ed McHugh of the municipal association and the posse from the police juries to ride again….

AT&T & Cox should reconsider state video franchising

Tis spring and the legislative season is opening in these United States. Our Louisiana silly season won’t begin ’til April but many state legislatures are already in session. An article in the Jackson, TN newspaper reminds us that phone companies are still up to their old tricks. Last year the telephone companies launched a nation-wide push in state legislatures to take control of local rights-of-way away from the cities and counties that own them and create state-level privileges for phone companies who wanted to get int the cable TV business.

Background
Most important of these privileges was state permission to avoid the build-out requirements of towns and cities-local governments that have, for pretty obvious reasons, consistently insisted that if a business wanted to use local property to make a profit off its citizens then offering service to all the citizens was a non-negotiable starting point. “All of us or none” was the stalwart principle. In various places the phone companies have conceded to every other demand from monetary rewards to PEG channels. But they are not willing to give up the competitive advantage over the cable companies of skimming off the cream of the local market. They want to take the most profitable customers and move on with no assurance that their “competition” will ever reach most of the community.

Our legislature fell for it and only the governor’s veto pen kept the state from writing into law a bill that would have solidified the digital divide between poor and rich as well as between rural and urban for at least a generation. (In fairness to individual legislators, it should be said that there was a truly inspirational confrontation on the floor of the Senate. Friends of the people went down kicking.)

On the evidence of what is going on elsewhere this season in places like Tennesse, Wisconson, and it seems likely that Louisiana will again see an attempt by AT&T to ram through a state-wide video law that favors its interests. While AT&T (then BS) found tough sledding early in last season’s attempt to pass such a law after partnering up with Cox and the cablecos they managed to pass a law fairly easily. The new, cableco-approved version would have allowed cable companies to break their contracts with local communities in order to use the same advantages offered the phone companies. The cable companies apparently thought that, on the balance, the new advantages over communities was a decent trade-off for the benefits the bill gave the phone companies in their competition with cable. (Did that dark alliance clue in the legislative majority? No.)

So I expect the AT&T-BS/Cable coalition to be back at the trough this year. With the FCC rule that gave the phone companies most of what they failed to get from the last congress now in jepordy from a resurgent Congress there is no reason to think that the incumbents won’t continue to try and get what they want from the local yokels they’ve taken before.

But whoa up a moment: is that really wise?
Things change. That article from the Tennessee paper contains a suggestive paragraph:

One advantage of the state legislation, however, is that Jackson Energy Authority [JEA] would be able to expand its cable and Internet services outside of its present designated service area, Farmer said.

JEA is Jackson’s equivalent of LUS–the fiber-laying, incumbent-slaying upstart. Incumbents take heed: Lafayette’s own muni fiber optic network is now assured. EATel, the locally owned rural phone company, is building its own fiber network on line between New Orleans and Baton Rouge and has made clear its ambitions for expansion from the beginning. St. Charles parish is contemplating building its own network and looks to Lafayette. Rumors about New Orleans Fiber In The Sewers (FITS) continues to make the incumbents slumber fitful. It’s beginning to look like a trend.

Any and all of these entities could take advantage of the same (still unfair) privileges that for which AT&T/BS has been angling.

That’s not what BellSouth intended. When that law was originally proposed NOBODY that could compete with BellSouth would have benefited. The late inclusion of the cable companies didn’t really change the competitive landscape much. They are already built out as much as they think profitable, new challenges from them were unlikely.

AT&T/BS might want to rethink its position in Louisiana. They’ll be enabling folks who might (gasp!) actually decide to compete with them–and compete at their own game with superior technologies. If the phone company succeeds legislatively what is to keep EATel from deciding to serve, with real fiber, the new mushroom ring around New Orleans–but only the wealthier new suburbs, the local cream, and doing to AT&T what it plans to do to the cable companies: cherry-pick the most profitable areas and leave the rest for the incumbent providers. What’s to keep St. Charles from doing its own network with support from Lafayette’s backend facilities–right down to using LUS’ billing and branding systems? What’s to keep LUS from aggressively moving into every non-incorporated new subdivision in the parish using its now-pervasive fiber backbone that feeds the schools? What’s to keep LUS from being invited into cities as full competitors in places that like what they see happening in Lafayette? With a state-wide franchise: Nothing, Nothing, Nothing, and Nothing.

No doubt LUS, as a municipal entity itself, will not be willing to move into a city without negotiating with the local authorities and sharing income. But that might be a big advantage in the long run. If AT&T really manages to come in, cherry pick the cream, and stiff the cities on income and services it will be a painful, ugly thing as cities take the hit in franchise income. (The cable franchise is usually 3-5% of gross revenues–a critical component of local discretionary revenues.) LUS (and similar entities its example may spawn) wouldn’t have to extract nearly the profit the incumbent desire and could afford to be generous with services and profit-sharing. That could prove very attractive to places abused by the incumbents inevitable move to squeeze the municipalities once the cities are stripped of bargaining power by state or federal takings.

Maybe AT&T will still think the advantages it gains over cable are worth the competition it courts by promoting a law that will give every small public or private entity in the state a license to compete in every corner of the state on an ad hoc basis. Maybe. But a year later it is clear that the decision is no longer a no-brainer with nothing but upside for the company. As the old saying goes: Be careful what you wish for.

Cox’s (and the other cableco’s) rationale for backing AT&T’s law this time around is even less clear than it was last year. The emerging pattern of AT&T predatory build out policies in other states (predicted here at LPF) is now obvious: they take the best and leave the rest for the cable companies who have already built their networks to serve the entire community and have to carry that extra overhead.

Cox Baton Rouge, which now includes Acadiana, is particularly vulnerable: On the south it faces EATel, a local phone company which makes no bones about it desire to bring its FTTH-based cable competition to rapidly growing–and lucrative arc of outer suburbs developing south and east of Baton Rouge. That ambition was spoken before the storms devastated New Orleans and made those areas the new home to much of the population of that metropolis. Should EATel secure that arc it’d be posed to eat into the densely populated segments of the city–but not with AT&T’s barely capable DSL-based offerings but with full throated fiber to the home. On the Western verge of that territory it is now certain that Cox’s largest profit center in Acadiana, Lafayette, will be a profit center no longer. Inevitably LUS’ expansion will come out of Cox’s established base; with few exceptions every cable customer LUS gets will mean a lost subscriber for Cox. That nightmare is visible on the horizon. In short order Lafayette will be one of the least profitable networks in its system, supported by a subscriber base that is a fraction of what headquarters has grown to expect.

No, Cox does not need to add to its troubles by supporting a law written by its deadliest enemy.

Cox has allied with the wrong side. Here’s what would be much smarter: Ally with the Louisiana Municipal Association and the parishes. Join them in suggesting a pre-emptive law that protects local rights and keeps AT&T/BellSouth from securing unfair competitive advantages.

The outlines of such a law aren’t hard to see and could be based on a law suggested by local governments last year. That law offered to put a 90 day “stop clock” on any negotiation with a new competitor, assuring that no one could be unreasonably delayed in entering a new market. If an agreement couldn’t be reached quickly all the competitor had to do was agree to sign on to the same contract the incumbent cable company already had. Easy, fast, efficient, and transparently fair. It was, of course, rejected out of hand by the phone company. Their interest lay in securing advantage, not a level playing field.

This year’s version could look like this, for starters:

  • It should be based on the current local franchise; preserving local control of local resources.
  • It could lay out a reasonable timeline for a full build-out to match the current cable footprint. Small communities could expect to be served by a full competitor in three years and larger cities in, say, seven. That would remove the most anti-competitive aspect of the law, and the one that puts the established incumbent at a permanent disadvantage.
  • It could include a time clock (the cities are willing to agree to 90 days) after which the default “established contract” goes into effect–that would mean no long delays of the sort the phone companies claim to be worried about.
  • The default contract could include certain standard modifications such as: a “revenue neutral” clause for the city; meaning that the extras, like PEG monies, channels, service networks and the like would only have to be provided once…not twice. This could include a clause allowing the new entrant to pay the current provider for providing their pro-rata-by-subscriber share of these services or allow them to take over a portion of the responsibility directly as they expand and acquire the capacity.
  • Also standard could be clauses that provide real, automatic, penalties for not meeting contract requirements like one mandating buildout. To make sure that both cities and competitors are motivated to insist on contract adherence the default contract could have escalator clauses built into the monies paid the city and the incumbent if they failed to meet their promise to compete fully and fairly.

It would make a lot of sense for Cox and the state cable association to get together with the municipal and parish organizations and promote a bill that protects their rights and competitive interests while giving the phone company the quick and easy route to competition that they claimed they wanted last year.