Friday, December 31, 2004
Lafayette will be at the forefront of technology as the century blossoms. Add that to the list of things you are grateful for tomorrow.
And don't forget your black-eyed peas and cabbage. We could still use the luck....
I'm off to the country for simple food, good family, and to watch grandchildren be amazed by fireworks. Y'all have fun!
"Bells dig in to dominate high-speed Internet realm Consumers could pay if giants squash rivals like tiny Lafayette, La."
"It's the dark side of the fiber story.The author and the critics are right of course, the incumbents drive to eliminate competition is what unifies recent news about municipals, the FCC, and state laws. And, in truth, even "their billion-dollar plans to deploy broadband networks" is in equal parts about stifling competitors and resisting their competitors' attempts to stifle them. The Bells and the the Cabelcos both realize that once fiber has replaced their different delivery models and the digital/IP revolution has resulted in undifferentiated services that their current uneasy, limited duopoly competition will collapse into a cutthroat regime with eventual regional monopolies the likely outcome. They are all determined to be the last monopoly standing.
The regional Bell companies have made much of their billion-dollar plans to deploy broadband networks across the USA. But they're also quietly trying to erect hurdles that would make it hard for anyone to compete with them -- at least not very cheaply or easily.
Besides municipalities like Lafayette, the Bells are going after their phone rivals, Internet access carriers and major metro areas -- anyone with an interest in building services that might compete with the Bells.
Critics say the Bells' efforts are a direct attack on competition and that consumers could be the big losers. "
The article does a fascinating job of walking through the recent history of how the Bell systems have done their best to eliminate competition. This is the sort of recounting that responsible journalist everywhere should be doing. The so-called "even-hand" reporting that reports "evenly" on what each side says about each separate little conflict amounts to lying to readers. It is this sort of story, one which traces out the history behind the little conflicts, that gives the readers the big picture they need to begin to understand what is being done.
The story told is not pretty. According to this article the Bells' stewardship of our premier communications network has left the US lagging badly in broadband availability and in the cost of it. (The US is about 15th in the world in usage and the Japanese telecos offer fast DSL at 50 megs for about 15 dollars a month.) The Bells turn around and use this abysmal situation to implicitly threaten federal regulators that if they don't get their way they won't be able to overcome the gap they've allowed to grow. They do the same to state legislators, with the recent Pennsylvania mess being a good example—there the state legislature handed over municipalities rights to build telecom utilities to Verizon for its approval. If Verizon says no, the cities can't go forward. Verizon will never willingly give permission to compete with it and has effectively eliminated a whole segment of market competition. (At telecom urging many states have already forbidden municipal entry, (e.g. Texas) and others have forbidden municipalities to deliver profitable retail services, (e.g. Utah)) The Bells, which gave up rights to use their networks as exclusive monopolies when they wanted entry into the lucrative long distance market, have been trying, and succeeding, in regaining that control without giving up their long-distance service. Regulated resellers like AT&T and EATel have been pushed out of the market by FCC permission to raise rates well above the standards implied in the initial agreements. The FCC had earlier said that the Bells would only get back control if they built a whole new system untainted by their generations of monopoly control. That is, a fiber optic network. Even so, as the story documents, BellSouth has managed to get around that limit and reimpose monopoly control well short of actually building what it had promised. The cellular competition that the Bells tout is often owned by them--Cingular, for instance, is partially owned by BellSouth (the rest by SBC) making that competition an in-house thing. The top three cell companies are owned by the Bells. As the Feds allow the number of competitors in the wireless market to fall you can rest assured that the healthy, price slashing competition that existed there will give way to the same sort of tepid managed competition we see in other markets dominated by 2 or 3 fat, comfortable players. If cell phone companies were ever competition for the Bells they won't be soon. Though not covered by this article, the Bells' attempt to use the FCC to evade local pole fees and franchise fees that cable companies have to pay when they offer cable TV is another transparent attempt to put their competitors in an untenable position. (See my earlier "phone sharks" posting for details.)
So the Bells have been engaged in obvious attempts to thwart competition. This sort of story which uses an example like Lafayette as the emotional touchstone to a to a well-documented history that shows how the strategy is pursued does a good job of informing the public about the real telecom story and avoids the all too common exchange of press releases that passes for journalism.
An valuable point seldom raised in public is that even in situations where we do not see outright monopolies but only one or two bloated corporate "competitors" usually results in much of the same problems we associate with pure monopolies. This lesson is also told using an historical example:
Experts say they worry about diminished competition in broadband services. Unless others are allowed to step into the fray and aggressively compete, broadband could fall under the control of just two players, just as the cellphone business did for many years. With just two cellphone carriers per market, operators tended to keep their prices high.What goes unsaid in this article focused on the Bell's behavior, is that the current duopoly situation with regard to broadband in most parts of the country of cableco and Bell company is not in any real economist's estimation the sort of competition that you need to produce the benefits of free enterprise. These guys are gaming the system--to our disadvantage.
If regulators aren't careful, the same could happen to broadband, warns Mark Cooper, research chief at the Consumer Federation of America. ''Two is not enough for real competition,'' he says.
Cooper notes that the U.S. cellphone business, which was a legal duopoly for years, turned competitive only when the Federal Communications Commission decided to issue up to eight licenses per market. The entry of six hungry players upset the status quo. And it caused cellphone prices to plummet -- a boon for consumers.
Since 2000, though, the wireless business has consolidated. Once Sprint and Nextel complete their merger, there will be just three major wireless carriers.
''It's just too easy for two or three players to figure out how to avoid lowering prices,'' Cooper says.
The article wraps around back to Louisiana at the end, revealing an issue I haven't seen reported elsewhere:
BellSouth, meantime, is working all the angles.The mindlessly cheerful hypocrisy of the incumbents is just stunning. If the Bells aren't monopolies any more because of competition like that which LUS offers then LUS certainly can't be a monopoly. It really angers me when these folks treat me and my community like fools by handing us junk like this and expecting us to treat it seriously. This sort of reasoning is the sort you see from a young jerk determined to do as he pleases and arrogantly unwilling to even come up with a believable excuse. It's good to see Lafayette standing up to their bully-boy ways. They are in for a surprise if they think Lafayette is going to roll over for them.
The carrier recently told local regulators in Lafayette that it thought they should use the FCC's ''Part 64'' accounting requirements, which have long been imposed on local phone companies, as a benchmark for establishing rules for the city. Lafayette countered that those rules would create a costly and unnecessary burden.
Within days of making that argument last fall, BellSouth turned around and asked the FCC to relieve it of the Part 64 requirements for its broadband services. The carrier complained that the rules were onerous and outdated, noting that they force phone companies to maintain 'extensive and tedious'' records.
BellSouth insists that it's just trying to look out for the interests of local taxpayers in Louisiana. It points out that the city-owned electric utility is a monopoly, and, as such, should be treated like one.
''We're just saying that the local utility ratepayers should not be cross-subsidizing this new business that they want to get into,'' says McCloskey, the BellSouth spokesman. ''They are a monopoly, and they should be regulated like one.''
According to McCloskey, the communications giant ''is no longer a monopoly,'' which is why it's asked the FCC for relief from Part 64 rules. ''We're a different kind of animal,'' McCloskey says.
Durel has it right: "they have to get out of our way, because we are not going to stand down on this."
YES. Rally round the flag boys. The right is on our side.
Thursday, December 30, 2004
In yesterday's post I focused on the Lafayette portion of the story. Seeing Lafayette recognized so favorably at the national level is very gratifying. The quarrel I'd have with that part of the story is that it presents Lafayette as a small rural town. The title and subtitle in the Forbes layout is revealing: "Bells dig in to dominate high-speed Internet realm; Consumers could pay if giants squash rivals like tiny Lafayette, La." Maybe from the perspective of the writer it is a small town...but playing the story that way leads to a more substantial mistake: in making Lafayette just another rural town it misses the fuller reason that our story causes concern for the telecom monopolies. Lafayette is actually a small to medium-sized city that lies at the center of a large rural network — it gets telecom services in the second or third tier. It will be the largest municipal fiber project in the nation. By no one's estimation is it small potatoes. But its surrounding communities may never get the same quality service; they are fourth tier and below. However, Lafayette seems psychologically poised to provide services to the outlying regions. Not immediately, it needs to secure its own system; but the signs are there that regional leaders are thinking in terms of expanded service even at this early stage. Should it move forward in that realm as briskly as it has moved forward at home the dominance of the incumbents could be threatened not just in Lafayette but regionally.
National attention on regional networking has focused on networks connecting municipalities like Utah's Utopia and Iowa's proposed network. I for one think these exciting efforts and likely to succeed. But they are based on an unfamiliar and untried consortium model—the consortium builds the backbone, individual cities build out their own internal networks. The business model is generally one of leasing bandwith and hoping providers will appear that are profitable enough that they can afford the rent that pays back the bonds taken to build the system. While there might be ideological and idealistic reasons to prefer this model it is clear that as a simple business model it is not as strong as a single entity owning the network and providing the essential services that run on it. Even the mayor of Provo, which is making great strides with a consortium model, remarked at the councils first vote for fiber that Lafayette's business plan is stronger. (State law prohibits Utah's cities from delivering retail services.)
The potential model we see emerging in Lafayette could be very different. And perhaps much more threatening to the traditionally conditoned sensibilities of the bureaucrats that run these large corporations. What they might well see in LUS is full blown, locally popular, all-fiber competitor whose business model does not depend on anyone's success but its own. LUS has chosen to own the well-established services, just as do BellSouth and Cox, but also to sell bandwidth to all comers for new services. The bureaucrats see a steady competitor with a long history of being a successful municipal producer in a sea of private electrical providers. Cox and BellSouth have tried to push the idea that their opposition is based in their certainty that LUS will fail and a concern for the citizens in the area. (A concern which is more abstract than real as recent news symbolically demonstrates.) But it seems much more likely that the incumbents concern is not that they look at LUS and see an oddball business arrangement they think unlikely to succeed but instead that they look out and see something very familiar--except that LUS is more popular, passionately local, publicly owned, and very, very patient about its rate of return. I think they see a competitor that scares the socks off them.
I have to believe that they are astute, if misguided, and recognize LUS as the potential hub of a regional network that could threaten their dominance throughout Acadiana. The business potential is too obvious. Less visible to these executives is the history of technology penetration in rural areas: small cities like Lafayette got electricity, a local phone exchange, and a little cable company and that service radiated into the surrounding areas. There is no reason to think it can't happen again.
Here is the lead to the story, Bells Dig in to Dominate High-Speed Internet Realm:
"To hear BellSouth talk, high-speed fiber lines are the way of the future. So why is it so determined to stop Lafayette, La., a rural community in the heart of Cajun country, from installing its own fiber?
Joey Durel, Lafayette's mayor, has been asking himself the same question. His city plans to build an advanced broadband network to offer voice, data and video for Lafayette's 116,000 residents. BellSouth is trying to kill the project. And it's getting help from Cox, the local cable-TV operator."
''We have the opportunity to do something great for this community -- and in a state that needs a big win,'' Durel fumes. ''They have to get out of our way.''
It's the dark side of the fiber story.
Nice, no? And the theme is repeated at closing:
You can't buy press like this.
Mayor Durel says the city isn't backing down.
''This is much bigger than Lafayette,'' Durel says. ''This is about economic development for us. This is about future-proofing our city.''
''This is not personal,'' Durel says. ''It's not like they're bad-mouthing my mother. But they have to get out of our way, because we are not going to stand down on this.''
If you scroll down to the bottom of the page you'll see credit given to USAToday. You immediately assume that the USAToday article is the source of all the nifty quotes from Durel that you haven't seen elsewhere. The problem with that idea is that there hasn't been any USAToday article on Lafayette's project—yet. If you paid close attention to AOC's broadcast of Tuesday's council meeting you would have caught a Durel in a little misstep that likely explains the oddity. He announced that Wednesday's USAToday would have a front page article on Lafayette's project. That would have been a coup beyond measure--the front page on the nation's largest circulation newspaper is a BIG DEAL. A few minutes later, however, Durel had to retract the announcement. A big wave as he put it, (The Indian Ocean Tsunami) had claimed the front page. But he said it has been rescheduled for this coming Tuesday. Apparently RedNove got an advance copy. I, for one, will be looking for it come Tuesday. If the RedNova 'teaser' is any indication it should be exciting.
Update: As a commenter notes, the story is also online and Forbes--and I have found it elsewhere. The RedNova story is USAToday story, not one that uses the USAToday story as a reference. More in the immediately following post.
Cox is "Your Friend in the Digital Age?" Sure....... With friends like these who needs enemies?
A Wardville family whose home was destroyed by a fire on Christmas Day has been told they must pay 500 dollars to replace cable television equipment lost in the blaze.Do you think a small, locally-owned company would act this way? (Much less one that was owned by the customers?)
Wednesday, December 29, 2004
I'd wanted to do something thoughtful—you know, reflective, intelligent and mature. (Tounge planted firmly in cheek.) But I put if off and it didn't happen. And now that week's Independent is off the stand. And you can't easily get the story online because the Independent's web presence has been reduced to a joke. (I'm not being mean; I'm being literal.) Mea Culpa. Mea maxima culpa.
Tell you what....if I can't find a pdf of the story somewhere online I'll do penance by working it up myself. Either way look for a copy here. The story really is excellent and if you look on the bottom of the pile in your local dive or convience store you might find an old copy. Pure Louisiana; it's a local color, high tech mashup. This is the sort of story I show friends in Illinois or Delaware when I am trying to explain how something that would be an confusing contradiction somewhere else is treated as "colorful" and natural in Lousisiana.
Scare up a copy or come back by.
What's most interesting to our readers is not the KATC links but the copious comments on the issue that inevitably follow. Natives of Lafayette will alternately be annoyed and amused but it will surely invigorate your day to take a look at how other people view our conflict. I highly recommend a visit. (And would love to hear what your reactions are here.)
But the responses seldom rise to the level of broad humor that techy DJ type from New York took it in his comments. He was irritated by Neal Breakfields remarks that fiber in the diet is all one needs and kicked it up a notch by producing both a visual and aural "mash" of Breakfield. It's a hoot. Take a look, (scroll down, you can't miss it) and take a listen.
While that's a hoot the poster immediately below, pcsdma, presents a more serious accusation: evidence that Breakfield once ran a spam faxing operation out of Lafayette. Look at the links and make your own judgment.
The Advertiser runs its story pretty much as a straightforward report. The article, Citizens speak up on LUS plan, Many say digital divide needs to be considered now, sets up as clean summary of what happened in the order that things occured.
The Advocate's version of the tale LUS seeking to close 'digital divide' works some parallel strands into the mix as well. Blanchard reports that LUS is setting up a team (my impression is that work has begun) headed by Walter Guillory, executive director of the parish housing authority. He also reports that the chamber is looking into the digital divide question this year. Menefee, spearheading the project, tells me the effort is already underway and that the chamber will be taking an "inventory" and publishing a report in the spring. I'm not sure just what that means but it should be interesting. There's more interesting detail and quotes in the story. Take a look.
A passing note: Both of these stories report an exchange between councilmen and Durel on the digital divide that focused on Durel advocating working parallel to the plan of the network rather than tightly integrating digital divide issues into the plan itself. The councilmen tended to be looking for tighter integration. To my way of thinking what is needed is both integration and parallellism with the committment (and the money) built into the business plan but with the details of the digital divide plan developing in parallel and continuing to develop even after the network is built. I'm not too sure the apparent opposition is very real.
But what caught my attention and apparently was missed by the room was that Durel touched off that part of the discussion by noting that rural digital divide issues couldn't really be addressed until the network was built because until then it couldn't be extended. That's uncontestably true. And nationally rural/urban differences in raw access is the dominant digital divide issue. But that's not germane to LUS' current plan at all. That little mumble about extensions that was ignored last night in favor of discussion about our current, more pressing, digital divide issues might well be the clearest public signal yet that the final hopes for our system might well be larger than LUS' current footprint.
Tuesday, December 28, 2004
Bill LeBlanc stood up at the end and announced to the council that his group was going to start up a petition drive. I still have my grave doubts that it will actually happen (and am sure that it should not.) Leblanc confessed in response to a question that he wasn't sure how many signatures would actually be required. He really needs to get straight about that. That response indicates that he isn't sure what law governs. Trouble is, numbers aren't the only differences between the three competing regimes (state law, home rule charter, and "fair" Competition act). They also impose very different conditions on the petition itself. They will not be interchangeable and signatures gather for one will not be good for another.
My best advice is to be wary of anyone whose strategy is to call up fear.
I suggest instead that we keep our eye on the prize. The LUS proposal will propel Lafayette to the forefront of technologically connected communities; create jobs that can allow the rising generation to stay in Lafayette; and make those advantages available to every citizen--not just those that private companies might think 'worthy.'
My wife, Layne, and I, throughout this battle, have been motivated in no small measure by this last hope—that LUS can make available to all what had been available to the few. Advanced telecom will be the economic engine of the next generation, and if we do it ourselves Lafayette will be uniquely positioned to make sure that this new technology will help us all advance together and help heal that which divides us, rather than exacerbate old wounds.
In that spirit my wife and I are going to make a brief presentation at this evening's council meeting on the digital divide. We'll argue that it is important that the vision that the fiber-optic network be available and serve us all should be built deep into the business plan. We hope to urge the council and LUS to open this idea to widespread discussion at the neighborhood level and build in continuing support for education efforts. There is no reason that this city can't become a model for building advanced telecom into the daily lives of all our citizens. Should we succeed at that task it will be much bigger news, and a much bigger prize than the simple fiber-0ptic network the dream will depend upon.
Eye on the prize, folks. Don't let your attention drift.
The Advocate report includes the details on additional ways to block LUS considered by the group (a second petition and lawsuit)–that make it clearer that the intent it to simply block LUS and the current petition idea is simply one means to that end. The language used to describe the mysterious state law they are relying on indicates that it is not the petition provision of Act 736 but some other law that links a petition to voting numbers in a recent election. (That could be crucial. If any reader has an idea about which law this might be or even better, access to the relevant text, please drop me a line or let us all know in the comments section.) The Advocate article also makes it clear that the group is aware that the active support of Cox and BellSouth will be essential if their petition drive is to have a prayer of success.
When I first heard from LeBlanc that they wanted to start a petition drive I immediately wondered if they realized how difficult it would be to do this if they kept to the positions "We are not associated with BellSouth and Cox" and "We favor LUS building a fiber optic network—but only selling its use to wholesalers." I had told myself that those foundational principles, which I could admire if not support, would go fast. Sadly, I was wrong. They principles they were originally working from didn't make it to the first press conference. At their news conference we hear only that they are against LUS building the network; They are now simply echoing the Cox and BellSouth's line that the people of Lafayette don't need fiber-optics. The desire for a wholesale network? Invisible. Similarly, the passionate declaration of independence from the incumbents they started with gives way to their sending a signal that they recognize that they need incumbent support and that they are willing to accept it. These two new positions are clearly linked. The reality is that the incumbent monopolies are no more prepared to accept a wholesale network than they are to accept LUS' retail model. They point for these companies is, as it has been all along, to eliminate competition. So if fiber411 wants incumbent money and manpower they have to shut up about liking the wholesale model.
The silence at yesterday's press conference about the wholesale principle both Breakfield and LeBlanc profess to hold speaks volumes about just how quickly their movement has been coopted by the realities of our situation. I warned LeBlanc that a petition drive would quickly become a creature of the incumbents. I didn't realize just how rapidly that process would work.
Monday, December 27, 2004
KATC ran a short at the begining of the hour that I caught with a fast TiVo save finger but nothing is on the web yet. They promise more "after the football game." KLFY has a story online, Residents Protesting LUS Fiber Plan, and the Advertiser has a brief breaking news story up under the title: Group begins drive to put LUS telecom plan on ballot.
Take a look yourself, it's pretty thin and nothing you haven't heard before. Chiefly: "it's dangerious;" and: "Guberment competing is bad" (subtext: government is bad) Like I said, nothing new.
The crew is continuing to claim that a petition can succeed with 5% of the voters but the reporting was too sketchy to see what they could be referring to. The recent "Fair Competition" bill is pretty explicit about this and would seem to be controlling legislation. This tidbit is worth following up.
Nor does anyone explain how the petition will be worded. They claim on their website to be for LUS building a wholesale network without any retail offering. Will the petition ask for this? Or simply be against LUS doing the work?
We are in favor of Lafayette Consolidated Government moving forward with an OPEN fiber optic system that would allow for true competition, not a closed GOVERNMENT OWNED AND OPERATED system that would either stifle competition and consumer choice or expose the taxpayer to excessive risk in a very risky industry.Just how LUS could build and operate an open fiber optic system that would allow for true competition without it being owned and operated by GOVERNMENT is really confusing to this observer. I'd love a little clarification.
Update, 1:20: KATC story is now online: Group Against LUS Fiber Plan
The evening news story on that channel was much more interesting than the write-up. Huval mounted a point by point defense, saying that some of their claims were "a bunch of bunk — and they know it." He's right of course. Plenty of communities have succeeded at similar ventures and I for one have pointed it out to Mr. Leblanc.
Sunday, December 26, 2004
The significance of the story is that it confirms that cable companies continue to resist any and all efforts that would result in other companies and/or services having access to their networks.
This story brings the quiet little war over essentially making cable boxes open source that is being fought by high-priced lobbyists in the corridors of the Federal Communications Commission (FCC). This fight is over a requirement to have all cable boxes run off of a standard card. The cable companies are loathe to give up any shred of the lock that they have on their networks which, you may recall, were created under the guise of regulated monopoly conditions. Cable has since been deregulated but, like the phone companies, cable companies want to maintain the ability to lock Internet Service Providers (ISPs) and voice over Internet Protocol (VoIP) companies off their networks.
The cable company fight against the ISPs is going to be heard by the U.S. Supreme Court during this term. But, the fight goes back to at least 1999, when the City of Spokane, Washington, tried to force cable giant TCI (which was purchased by AT&T, which later sold its cable assets to ComCast). TCI fought then to block independent (that is, ISPs not owned by cable companies) from offering ISP service over its network in Spokane. The city fought to force TCI to open the network. The case went to court. The city lost.
The FCC, though, ruled in 2002 that cable was an information service and ordered the cable systems open to competing ISPs. The suit brought by the cable industry to overturn this ruling and, thus, keep a strangle hold on their networks, is the case the Supreme Court will decide next year.
So, what is the significance of this to Lafayette? Well, the fact of the matter is that Cox, BellSouth, and some local opponents of the LUS fiber plan have attempted to make a big deal about the fact that guv'mnt will have a monopoly on infrastructure and service over this new network that they are going to build.
NEWSFLASH! Cox would have a tighter monopoly if it decided to build a fiber to the home network. BellSouth would have one just as tight as that of Cox.
Why do I say a Cox or BellSouth monopoly (and make no mistake about it, only one fiber network will be built in Lafayette) would be tighter than LUS? Because of local control in the case of LUS and the lack of it in the case of the networks built by either Cox or BellSouth. That is, we the citizens of Lafayette have the ability to influence and even control the behavior of LUS through our ability to elect the Mayor-President and the Parish Council. We have no similar ability to influence either Cox or BellSouth.
In fact, the natural order of these monopolist-community relationships is that communities take what the monopolists give them and be damned thankful they're getting that! Cox and BellSouth have made a big show of their concern for the well-being for the citizens of this community in recent months as they have fought to stop the LUS plan. But, their initial response to the initiative illustrates clearly about what they think of us and how they think the world should work. Opposing this project on the merits has never been part of the plan. No, the first instinct was to try to kill the initiative using the Louisiana Legislature as an accomplice. Failing that, they fought to ensure that LUS would have to wander into the regulatory tangle that is the Louisiana Public Service Commission.
They loaded the regulatory wagon with provisions that they would not allow to be placed on their respective companies specifically the provision that telecom services can't be subsidized by other LUS revenue streams. Had that provision been in effect against either Cox or BellSouth, we'd still be stuck with technology from the 1960s.
So, 'the people' have been used as human shields for the narrow financial interests of Cox and BellSouth as they tried to kill the LUS initiative.
Neither Cox nor BellSouth has ANY interest in allowing consumers in Lafayette or anywhere else to have ANY choice in terms of service providers. Both companies and their industries have spent hundreds of millions of dollars on lawyers and lobbyists fighting efforts to force competition into their sectors since the passage of the Telecommunications Act of 1996. They are still fighting those fights. And they have not made ANY commitment to make the investment in Lafayette that LUS has made.
There is irony and cynicism at work in this process. The irony is that those Lafayette citizens who think the LUS project is too risky have pushed LUS on a course that ensures the fastest economic return on its fiber investment. That just happens to be via a closed network that affords no other providers access -- although, as long as the fat Internet pipe remains unfettered, open access will be available to all here. The cynicism is on the part of the incumbent providers who attempt to position themselves as 'little guys' cringing in fear of a government onslaught.
The reality is that in recent months Cox and BellSouth have each spent multiples of what it will cost LUS to build its fiber to the premises on other projects that they have deemed to be a higher priority than the future of this community. LUS is focused exactly on our future and, with the Parish Council's blessing, has decided to invest in us.
That is precisely how this city was built and that is why it will prosper in this century.
As a citizen of Lafayette, you and I can contact Joey Durel or a member of the Parish Council with a phone call, email, or even drop by their offices. Try that with Duane Ackerman or James Kennedy.
Wednesday, December 22, 2004
Telephone books? Gathering dust on the shelf.My wife and I do google up answers to disagreements about fact and its nice to get it settled quickly--try Wiki if you've never messed around there and like finding things out you're in for a treat. Our kids know we have pretty much constant connectivity at home and call us up from their cells for driving directions, the addresses of businesses, phone numbers of contacts that theyv'e lost and the like. Little email blizzards blow around containing the latest cute kid pics and humorous videos. I seldom use a telephone book or an atlas anymore. And we've gotten to the point where we get most of our news, even local news, over the web. My newspaper subscriptions begin to function like backups, sustained just in case something hasn't made it onto the web. (Well, I also like the comics.) I trouble shoot other folks computers and do Photoshop manipulations for friends over the web. I did the majority of work for a book I was editing with several other people over the web. We had, I think, three face to face meetings. And I designed and submitted the cover the same way. All that is very different from the way I acted as recently as 5 years ago and none of it would have been possible without the web.
Atlases? What are they?
Communal behavior also is tempered by the broadband effect.
Family members arguing a point over dinner are more apt, if they have broadband, to "look it up online rather than continue to yell at each other," said Lee Rainie, Pew's director.
Or, in the absence of verbal interaction, families can have heated discussions in Internet chat rooms — individual members each sitting in separate rooms in front of computer screens.
There's more in the story and it's worth thinking a little about how people's day to day lives might change when broadband that dwarfs what the people in this story has comes in. It's something that it looks like will happen in Louisiana first. We ought to be gearing up.
Laigniappe (Don't like their take on it? See the comments. You can fix it yourself if you want.)
The Advocate's Blanchard also has the rumor I reported last night about the possibility of a petition drive, and from the same source. LeBlanc certainly intends to help mount such a drive, that much is not a rumor. But the real question is whether that intent will be realized; that, at least in my judgment, is still to be seen. The petition task set by Lafayette's home rule charter is daunting. 15% of all voters is a large number. Practically speaking the number will need to be larger to account for spoiled signatures and good signatures by folks who just don't happen to be voters. Getting a petition signed by 20% of the voters entails a door to door campaign and without deep voter outrage you won't be getting volunteers to carry anything like the number of petitions necessary. Sixty days isn't all that long a time; you'll need a lot of people, all day every day. Volunteers on Saturday won't cut it. A serious drive will require the deep pockets of the incumbents; it will, in short order belong to them.
I'm not at all sure the proponents really see the difficulties (Mr. LeBlanc was under the impression that 5% was the number needed, for instance) and who they will have to be in alliance with. Some people may doubt LUS in this town. But very few trust BellSouth or Cox; standing with them throws doubt on the groups independence.
What threatens to go unnoticed in this is that this group is NOT against municipal fiber. They want LUS to be a wholesaler only. I continue to be amazed at how thoroughly LUS has carried the day. Even their most visible opponents only want to tweak the business plan. Even they accept that a municipal network is the only way to get fiber.
And that may be the lasting lesson of this episode.
Tuesday, December 21, 2004
There was an odd little vignette during the approval project when councilman Williams asked a series of sympathetic questions, got his answers and showed what appeared to an outside observer as general good will toward the project. Smiles on both sides. But he made an excuse and got up before the actual vote and wasn't there when the vote was taken. I heard the rumor tonight, for the second time that, Williams is being careful because he wants to run for Cravin's seat when it comes open. BellSouth does pack a wallop on the state level.... ' Course this bit of rumor could be all wrong; and honestly it seems a little far fetched. What difference could this minor absence make. But it makes a kind of sense out of an odd moment.
But by far the most significant rumor came from Bill LeBlanc who says that he and group of people including his fellow council presenter Neal Breakfield are about to launch a petition drive to put the fiber proposal on the ballot. I am not sure they realize what they are getting into. A petition of the sort the charter envisions requires 15% of the voters. That requires an army of folks walking the streets to get at least 20% of the number of registered voters. (You have to account for the inevitable spoiled signatures and signatures by folks who are registered to vote.) The task has to be completed in six months. It think it extremely unlikely to succeed. And it will be costly--so costly that I do not believe that it can be done without a big investment from the incumbents. A small crew of good-hearted men won't be able get it started in any real way. In short order any petition drive will be the creature of Cox and/or BellSouth. And then the real ugliness will begin. If you think that the initial round of incumbent ugliness was bad with its push polls, public tantrums, intimations that our elected leaders were incompetent rubes, and an utterly offensive "academic" forum were bad just wait.....
And just for the record I talked to Bill LeBlanc for a while in the parking lot. For long enough that I am sure his wife was as miffed as mine at his tardiness. ---But Mr. LeBlanc struck me as good-hearted and upright. I do think he is wrong. And that he has badly misinterpreted some of the technical material he has presented to the council--for instance on wireless technologies--but I think he's well-motivated. I just wish he hadn't thrown in with the big corporations on this one. He's the kind of fellow you'd enjoy having a good conversation with over lunch. Know what I mean?
They've got a website at www.fiber411.com. Give it a look.
This story will be in Advocate tomorrow. More when I see that..... and think a little.
But what brings the story to this blog is the fiber-optic angle.
One of the hidden dangers to Lafayette's ambitions was that regional towns would regard it as a threat. Some folks have a tendency to regard regional development as a zero sum game when it is, in almost all cases, the opposite: a boost to its neighbors. Durel and his posse have apparently done a good job of convincing the mayors of that and his leadership in developing this regional cooperative group has no doubt contributed to their trust. That and the fact that being able to offer a way out from under the lash of the telecos and especially the cable company has got to be attractive to any mayor, city council, or police jury that has had to negotiate with them. (See, for instance, the recent contretemps in Ascension parish.)
The bit in the story that occasions such reflections is this:
[Crowley Mayor] "Dela Houssaye said she appreciates the work Lafayette Utilities System is doing to establish a fiber-optic network -- and hopes that network can one day be expanded throughout Acadiana. 'Every ripple starts in the center and works its way out,' Durel said."Now I've long had fantasies about LUS' telecom utility reaching beyond the utilities current borders. Broussard's mayor Langlinias has, for one, made his desires plain along with his support for Lafayette's venture. But Crowley's desire is a little different; Crowley is not in Lafayette parish and expansion there would make the new utility a regional matter. Luckily the compromises that went into making up the "Local Government [un]Fair Competition Act" allows for this. Lafayette is legally enabled to offer it services state-wide. Somebody was thinking ahead.
I hope someone is corralling the region's state legislators. The incumbent providers have demonstrated their willingness and ability to go over the top to prevent local self-determination. (And make no mistake, that is the root issue.) Making sure the legislators know clearly what the mayors in their district want can prove crucial. Lafayette's Senator Mouton was arguably slow off the mark in allowing his first author, "Noble" Ellington, to hand the docket number for their Senate version of their rural broadband bill over to BellSouth to be replaced with a bill submitted by BellSouth after the deadline for the introduction of new bills had passed. Without the ensuing compromises, including the one that freed up the municipality to provide services beyond its border, LUS would have never had the chance to even explore providing cable, internet, and phone service over fiber to its citizens. Vigilance!
Sunday, December 19, 2004
On stories like this, where the event reported is in parallel ways by several media outlets I often recommend one to readers as doing a better job--that's the little efficiency demon in me, just trying to help folks get things done. But today I find that the teacher in me has control. I recommend that you spare a little lazy Sunday time to develop an epicurean taste in news reporting. Read them both and look at what is said, what each author considers worth informing the public of, and in what order the bones of the story are laid out and articulated.
I'll back off the usual teacher thing enough to tell you what I think upfront. I prefer the advocate writer Blanchard's more instructional model to the Advertiser reporter Taylor's strictly reportorial style. The introductory paragraphs in both are interchangeable and establish the basic reportorial facts. But thereafter the stories about the same issue, with much the same questions about the 110.5 vs. 125 million "cost," differ widely. Blanchard briefly reports issue history and informs the reader as to what the procedure will be turn an approval before the board into money LUS can spend. That includes two more landmark votes before the council and the very tasty little fact that to get it on the agenda for the next state bond commission meeting LUS will have to ask that body for a one-day deadline extension. The Blanchard story then goes on to explain the difference between the 110 and 125 figures basically in terms of interest costs on the bonds. Take a look at Taylor's story, and you'll see that the Advertiser version goes straight for the cost difference and then backtracks to explain its meaning. That style puts the importance of getting to the big, exciting facts early connected story telling. In the end I think you might agree, you come out with a better understanding of the issue if the story is treated as story.
But you be the judge. Its an interesting thing to think about on a lazy Sunday, nonetheless.
Thursday, December 16, 2004
An Illinois tech writer takes him on in response in "Carlini’s Comments" an online column. There you can see Bast's original letter and Calini's response. Bast is responding, in part, to my posts concerning the Heartland Institute and Titch's editorials-for-pay company.
My own response to Bast's letter can be summarized by saying that almost the whole of Bast's defense misses the point. The first objection to this work is that these folks are bought and paid for...and that is what leads to the distorted reasoning and cherry picking of only the most confirmatory "facts" that are symptoms of this basic issue. Bast's defense never gets to this crucial point.
Hey, as far as I am concerned that would make a great Christmas gift for Lafayette.
An earlier blog entry, "Cable controversy still not resolved," reported on Cox's attempted refusal to carry the channel if it sold its own advertising. The parish retorted that it set the terms for franchise agreements and that advertising was necessary to support local programming. The chairman of the parish's strategic planning committee said then that he is prepared to tell Cox Communication to "take their cable and leave" the parish if their do not agree to terms outlined by the council. Councilman Beiriger said he refused to allow a private company (Cox) to dictate "to us what we can and cannot do." Strong stuff. And in the usual circumstances a local government could never be so bold with their cable monopoly provider. (Suppose Cox were to fund an opposition candidate who claimed that you ran ESPN and HBO outta town? Cox could likely elect its own council in that circumstance.) What lends the parish courage is that EATEL, the local rural telephone provider, is even now rolling out its competing fiber optic-based triple play in the parish (and perhaps, eventually, beyond). The parish's telephone company can provide ESPN and HBO and so the council doesn't have to feel that offending Cox would be suicidal.
The current controversy, which revolves around Cox invoking an overlooked provision in the franchise contract that effectively eliminates the local channels ability to offer live broadcastsfor instance of parish council meetings. Cox moved its offices and claims that the old control mechanism that allowed the Ascension channel to directly control its programming isn't working. Apparently Cox wants to simply provide this service for free and has a friend on the council who wants to shut down council support of the local channel. Underneath all this, of course, is that when EATEL comes in both Cox an EATEL would likely be carrying this channel under similar franchise requirements and EATEL has stated they have no objection to APTV carrying their own advertising. If both cable franchisees carried the station a local advertiser could get the whole local cable market by purchasing with the local channel. Cox would prefer to eliminate that threat to its advertising revenue before APTV achieves that status. (This puts the cable-only channel in roughly the same position as local broadcast television that captures advertising revenues (based in part on cable viewership) independent of Cox. Federal law requires that Cox carry local broadcast programming. Cox sells local advertising on its other channels.)
All of this is interesting to students of Lafayette's evolving situation because LUS will represent here, as EATEL does in Ascension, a third player in what will be in most locales is an emerging war between two network providers, the phone and cable company. (We covered a three-cornered story in Ascension in October: Let the Price Wars Begin.) The three-cornered conflicts in Ascension may have something to teach us about our own three-cornered conflict and both our situation and Ascension's may well be worth folks elsewhere in the nation watching to see how a little disruptive local competition effects the phone and cable giant's behavior.
Wednesday, December 15, 2004
Joey Durel has been on an impressive campaign to make being available to the public as a part of his role as Mayor. I haven't seen a mayor expose himself to unmanaged public questioning as consistently as as he has and it is one of the more admirable aspects of his tenure. (If I wasn't such a fan of his courage on the fiber issue I'd be tempted to say it was the most admirable aspect.)
The newest venue is a monthly "Have a Cup of Coffee with the Mayor" program. The first was yesterday morning and was covered by the Advertiser. Inevitably, the first question was about fiber. A Carencro man and his son were clearly worried about what you might expect they'd be: the risk to the city and the (and in my opinion faux) "conflict" between public and private. If the question was unremarkable, the response was not. I'll reproduce the whole exchange (The Advertiser has decided to make its archive paid, a big step backward in public access. You'll see me reproducing more of their text if I can't rely on their archive to provide a context for curious readers who might run across this post next week or next year. 'Course that'll mean less page views for their advertisers next week and next year. Their choice.)
“If we don’t do it, we won’t get it,” Durel said. “I’ve begged the private sector to do it,” but they need a fast rate of return on their investment, while government does not.That is really amazingly clear for a politician and is revealing of the way that Durel is thinking about this problem. 1) We're not willing to wait for private industry to do this for us; if they won't do it on our schedule we'll do it ourselves. 2) Even more unabashed was the breathtakingly clear statement that LUS was created to compete with the private sector. This follows from the first assertion, that LUS exists because it is our arm to do for ourselves what private industry refuses to do. But I had not thought we'd ever hear the obvious, too not PC. I underestimated Durel. Bracing stuff.
If LUS doesn’t launch the program, won’t the private companies do so in 10 to 15 years at no risk to the city utility, Koenig asked.
“Ten to 15 years is not acceptable to me,” Durel said.
If the city had waited the 30 years it took private utilities to extend electricity to Lafayette, the university probably would not be in Lafayette, Durel said. Instead, the city created LUS and provided electricity to its own citizens.
Bob Koenig, an executive, said fiber technology is “absolutely critical” for the future, and asked Durel to address private versus public sector competition.
“LUS was created to compete with the private sector,” Durel said.
Even with the fiber project, if private companies — such as Eatel, which pulled out of Lafayette — are willing and able to pay sufficient wholesale rates to lease LUS’ fiber lines, they may do so, as long as LUS generates enough money to repay the bond debt, Durel said.
Of course I'd like to see the city fathers take one more step and simply assert that there are some things, like essential, natural monopoly infrastructure, that the people simply ought to control at as local a level as is possible. And that LUS is our arm for asserting that right of self-determination. Maybe at the next coffee?
Sunday, December 12, 2004
The Baton Rouge Advocate reported that BellSouth lobbyist Tommy Williams sent the council off the rails in its second meeting by asking for a definition of broadband and then asking how the council will identify who doesn't have it.
Well, it didn't take long, did it? Mr. Williams knows or should know that his company actually helped pay for a study (PDF file) of broadband availability in Louisiana that was released earlier this year. In fact, that study helped bolster the need for the creation of the Broadband Council.
The study used a pretty much useless definition of broadband: anything over 56 kbps line speed. As a result, it painted an overly rosy picture of broadband availability in the state. What it also found, though, was that real broadband anything above 256 kbps was not so widely available and was very expensive to the point of making, say, a T-1 line or its equivalent, beyond the reach of most businesses in non-metro Louisiana.
Governor Blanco, in the BayouBuzz piece by Steve Sabludowski linked to in the first paragraph, had this to say about the importance of broadband access to Louisiana's economic future:
"High-speed computer access can become as important to the development of our state the rural areas specifically as phones and electricity were in the past. Broadband connections are a vital piece of infrastructure in the 21st century, just as important as rail and highway connections were in previous centuries."Viewed in this light, one could make the case that the high cost of bandwidth particularly in non-metro Louisiana is an impediment to economic opportunity and growth.
Now, let's see. Who would provide that overly-expensive broadband? Uh, my guess is phone companies and cable companies. Look at the make up of that Broadband Council. The legislation that created the council created a body that is heavily influenced by special interests read that "incumbent phone and cable companies."
The list of spots reserved for incumbents reads as follows:
-- Incumbent Local Exchange Carriers (one seat). BellSouth got that one.
-- Louisiana Telecommunications Association (one seat). The Louisiana Telephone Association got that one.
-- Competitive Local Exchange Carriers (one seat). A company called New Phone got this seat. The fact that the seat exists at all is curious, since rural local exchange carriers are not required to open their networks to competitors, so there are no competitive local exchange carriers in rural areas where the bandwidth problem is acute.
-- The cable industry got two seats, one for the big companies (dba the Louisiana Cable Telecommunications Association) and one for the small companies. Carlyss Cable Company got that seat. Carlyss Cable is a subsidiary of Cameron Telephone.
-- Wireless companies got a seat (Alltel got it).
-- Interexchange Telecommunications Companies (long-distance) got a seat and the seat went to an attorney representing that group.
-- Satellite companies got a seat (Auto Comm Engineering Corp. got that seat).
-- Internet Service Providers (ISPs) got a seat and that one went to Infinity Solutions.
Then, there are the hidden incumbent votes on the Council. Those include:
-- Allen Doescher of the Division of Administration's Office of Information Technology (OIT). Doesher is a veteran state bureaucrat whose fingerprints are all over the history of technology efforts in the division. Doescher's' purview includes the Office of Telecommunications Management (OTM) which has operated as an in-government subsidiary of BellSouth for just about all of its existence.
-- PSC Commissioner Dale Sittig. Dale is a nice guy (he's from my home town of Eunice), but he's been one of several rubber stamps on the PSC for whatever it is BellSouth has wanted.
-- Representing the Louisiana Senate on the council is Senator Noble Ellington. Senator Ellington, you may recall, was author of the bill which created the council. But, he was also author of the BellSouth/Cox inspired bill (SB 511 later changed to SB 877) which sought to bar all municipalities from the network infrastructure business.
One member of the commission that caught my eye is Carlo MacDonald. He's landed one of three "Rural Private Business" positions on the council. Now, Carlo MacDonald is a wireless technology leader, but his business is based Baton Rouge via Camsoft Data System and Verge Wireless. Not exactly rural. Wonder what's up with that?
The rest of the council consists of representatives from various state agencies and departments, plus a handful of other interest groups like the Louisiana Municipal Association and the Louisiana Police Jury Association. The LMA appointed LUS's Terry Huval to its seat on the council, so that's at least one person on the board who has some special insight to the nature of the obsfucation and deception that is the incumbent way of making an argument.
The point here, then, is that we'd best not expect much out of this Broadband Council. The incumbents (with their allies) are well-positioned to gum up the works at least so long as progress is defined as doing something that actually responds to the interests of rural businesses and consumers. Actual rural interests (and people who can articulate them) are scarce.
The intentions are good and, I think, pure. But, the fact that the council is formed in such a way as to give the parties responsible for the problem of high-priced bandwidth the ability to control the council will likely doom it to failure.
It didn't have to be this way. How? Why, by putting the interests of consumers first not the interests of the companies responsible for creating the problem the council was created to address.
We'll figure this out one day.
Friday, December 10, 2004
This is an interesting suit. It accuses the city of not being honest about their intentions. According to the story, Missouri law requires a vote of the people in order for municipalities to get into the cable business. North Kansas City says it wants the network for data and voice. Time Warner Cable says the city fully intends to get into the cable business at some point in the future, but is hiding its true intentions in order to circumvent the public vote requirement.
Imagine that. A cable company demanding truth in packaging! It's a mad tea party in Missouri!
A press release by Technology Futures, sponsored by "a consortium of telephone companies comprised of Bell Canada, BellSouth Telecommunications, Qwest, SBC, Sprint, and Verizon" reports:
According to a new report by Technology Futures, Inc. (TFI), by 2006, one-half of U.S. households will subscribe to broadband access, and a shift to much higher data rates in the range of 24 Mb/s to 100 Mb/s will have begun. By 2010, U.S. broadband penetration of 75% is likely, and 10% to 20% of U.S. households will subscribe to very high-speed-broadband. In the process, most of the local exchange carriers current investment in copper cable will be made obsolete.From the website, a depiction of the transition to very high bandwidth and accompanying remarks:
TFI is brutal in its analysis of the weakness of the phone company's current network. An separate report gives us this analysis:
The upper curve shows TFI's forecast for broadband penetration in general. The bell-shaped curves show successive broadband generations broadband, each characterized by a higher nominal data rate. These curves reflect the general tendency for bandwidth demand to increase along with computing power and memory. An important transition begins in 2006 with the 24 Mb/s generation, which will require fiber optics to, or close to, the home.
Taken together we can see that the phone companies are paying good money to be told that to save half of their lines to the home they will have to move to fiber immediately; the alternative is to lose more than 3/4 of their most valuable assets—their direct line to the home—by 2020 while demand for high bandwidth that only fiber optic based networks can provide rockets far beyond the level that most of these companies (save Verizon) have been willing to contemplate.
Illustrated in this figure is the forecast transition from standard broadband (as provided by ILECs today on copper cable with DSL or T-Carrier) to very-high-speed broadband (mostly on fiber) that operates at 24 Mb/s or above. The figure assumes that ILECs capture about one-half of the very-high-speed market, meaning that ultimately total ILEC lines stabilize at about 100 million. However, to accomplish this, ILECs must evolve from predominately circuit-switched, narrowband, copper-based networks to packet-switched, broadband, optical-based networks. This will not be easy because competition will be simultaneously stranding large quantities of network investment. The long-run alternative is illustrated by the dashed line in Figure 1.2 with total ILEC access lines falling to 63 million lines by 2015 and 43 million by 2020.
This analysis is also a ringing endorsement of LUS's fiber optic strategy. LUS has implicitly made the judgment that high bandwidth is coming soon and that the only way for Lafayette to get ahead of the curve is to provide it for ourselves. A glance at the above curves will confirm that they are not alone in that judgment.
Thursday, December 09, 2004
The Bells have petitioned the FCC to let them out of this "unfair" "regulation." As I've grown weary of pointing out, entering into a contract for the use of someone else's property is not what we usually call either unfair or regulation. (Apparently any advantage you take of governmental agency is fair in the eyes of some ideologues.) The Bells have complained that it would be too complicated to get franchise agreements with all those little municipalities everywhere and that they should get some sort of special consideration because they are providing competition for the cablecos and that what they are doing is not really "video" but is, instead, some special IP (Internet Protocol) thing.
A reasonable reader might be perturbed. Too many little guys to deal with? Get over it. The cable companies manage. Providing competition with cable? Hunh? The phone company is going to endorse subsidizing those who compete with monopoly operations! Surely those Bell monopolists haven't thought that through. Or maybe they think we won't notice a little hypocrisy. About the IP thing, a casual reader might think: that is just silly. Well, probably that reader would be right, it is just silly. But that doesn't mean that the Bells aren't actively trying to get the FCC to pull the trick of removing their video offering from any requirement that enter into franchise agreements with local governments to use their land and equipment. Yes, it is nutty. But the Feds just pulled this trick at the state level by deciding that Voice Over Internet Protocol (VOIP) phone service wasn't really phone service but was, instead, an "information service" and used that rationale to keep state regulatory commissions from regulating the phone service provided by, for instance, cable companies.
However perturbed the reasonable reader might be, most mainstream coverage of the issue has been exceedingly thin, doing little more than repeating the incumbent's justification and their 'concerns' that dealing with local governments might slow their broadband rollout and make it more expensive.
Follow the Money
Ah, but a little bit of reportorial prying into that last motivation, expense, reveals a lot that is not in the press releases of the Bells. "Follow the money", the ominous advice of Deep Throat during the Watergate scandal applies here. The other stuff is mostly distraction and excuses. The real motivations of large corporations are simple, and they are not public benefit or concern for the United States' standing in the broadband race. The motivation is that first of the seven deadly sins: greed. (Before you dismiss that characterization as overblown let me ask you what you'd call it if a company enlisted the powers of one branch the Federal government to override federal, state, and local law requiring that property owners be compensated for the use of their property and equipment. I'd have to call it greed. What would you call it?)
Two stories published recently gently ease into the real story while also repeating the claims of the incumbents. They are both useful though the USAToday version is a bit more readable and the BusinessWeek article a bit more complete (for instance, correctly including BellSouth as a major player in this arena along with Verizon and SBC).
Part of the expense story is, of course, fees--money. Getting out that cost, which the cable competitors already pay, would place their cable competitors at the same disadvantage vis a vis video as the phone companies are in relation to telephony. What the telephone companies really want is bit more advantage over their competitors, they want out of any local version of universal service.
What people mean when they refer to "universal service" is that all in a service area that desire service can get the same service at the same price. Most municipalities' contracts with cable companies to lease use of their rights of way and poles require that all the owners of the property used (aka citizens) be allowed to buy the service at the same price. That seems both fair and reasonable.
That works ok for cable companies since their hybrid coax systems were designed with equitable service in mind their upgrades are relatively easy to do. Besides the cablecos' make the most money off high cost, high margin, high bandwidth premium services and they are mindful that HDTV will mean massive upgrades to their system anyway. Cable companies are generally ready to upgrade their whole systems when they have to.
But the phone companies are different. Their core business is still the phone line into the home. It is a low bandwidth use and their systems are awkward and expensive to transform into a more capable, high-bandwidth IP-based network. They want a bigger competitive advantage over cable than just a reduction in local municipal fees. The phone companies want to force high-cost customers on the cable companies and to be allowed to skim off the highest profit customers for themselves.
A break for some elementary economics is in order: When the cable company provides TV service for an entire community some neighborhoods are more profitable than others because the provide greater income for each mile of cable laid and for each connection to a home built. That logic puts a premium on dense (more customers per mile) and wealthy (more expensive services per household) neighborhoods. To make that concrete: In Lafayette think River Ranch, a densely packed neighborhood of wealthy households.
If the FCC steps in and preempts local law the phone companies will be able to set up what will be, for them, a very delightful cycle that drives their costs down and their competitor's costs up. They will, as they have already done in their current DSL (Digital subscriber Line) upgrade, provide service first to those areas that will be most profitable while their cable competitors upgrade costs have to be spread across many less-profitable neighborhoods. Cable costs are greater than they would be if they could cherry-pick too. Relative to what they would have to charge if they too had to provide universal service the phone companies will be able to reduce their charges. Lower prices lead to ever higher penetration rates and ever lower costs per customer. The predator can leisurely eat its way down into less profitable neighborhoods forcing ever higher costs on its competitor.
The image is sharklike: There is a certain deadly fascination about looking at all those teeth.
Of course, this would be a more realistic scenario if the phone companies weren't so far behind in terms of basic network bandwidth. But BellSouth, of all the phone companies is best positioned to make this little game work for it. It currently has its fiber closer to the home than any other. That has cost it a lot of money to relatively little benefit. But it is already in most wealthy neighborhoods with its DSL buildout. The returns on DSL alone haven't been enough to compensate for massive wireless investments and outright wireless debacles in Latin America and allow BellSouth to pursue the Fiber To The Home build that will take Verizon to a spot well ahead of the cable companies. But this little regulatory trick might just give BellSouth, more than any other, the breathing space it needs to catch up in wealthy areas only. From that high ground it could conceivably eat its way down the food chain.
Now this strategy just won't work in Lafayette. The new LUS fiber-based utility will be both cheaper for all consumers and have enourmously more bandwidth to push out advanced services with. There will be no space for an entering edge of the wedge at the top. And arguably the cable companies and particularly the newly privatized Cox are too far ahead for merely pulling even in video provided to wealthy neighborhoods to give BellSouth enough margin to allow it to build up more rapidly than the cable companies can respond.
But this scenario is, IMHO, the phone companies' last best hope to catch up. You can bet that the sharks will be circling at the FCC.
Wednesday, December 08, 2004
That sounds like good news—and there are good aspects of it for those select neighborhoods in the top 30 markets that get access. But the first question for Lafayette residents is whether it is something that we will even see in our town and the initial reports do not carry information on just which 30 markets BellSouth considers its top markets for this purpose.
The internet rides to the rescue! Or at least Google does. A search finds an article, BellSouth FastAccess Internet Service Deployed in 30 Target Markets, that details what BellSouth historically considered its top 30 markets—and Lafayette is included. As are New Orleans and Baton Rouge in Louisiana. The interesting part is included here:
"BellSouth began deploying DSL service in seven initial markets in September 1998, and added 23 markets in 1999 to bring service to a total of 30 Southeastern markets. BellSouth FastAccess Internet service is presently available in some areas in the following Southeastern markets:So probably Cox will see some competition from BellSouth on speed in the coming year which has to be a good thing for local customers for whom it is available. At 4-6 megs, however, BellSouth will not be in a position to advertise more speed than Cox and will have to continue to compete on price to woo customers from the cable company. Video services, a big part of the hoopla surrounding the upgrade will have to wait until considerably faster services are made available.
Baton Rouge, LA
Boca Raton, FL
Daytona Beach, FL
New Orleans, LA
Fort Lauderdale, FL
West Palm Beach, FL
But what might well be most interesting for Lafayette folks will be to see if Lafayette is actually included in the list of 30—not including her will be a strong, early indication that BellSouth has decided not to try and compete in Lafayette. My guess is that we'll see the speed.
I mention it here because the text references Lafayette, our friends in the Tri-Cities and because one of the participants is Titch, the same fellow who got his advertorial published in the Lafayette Daily Advertiser. I had let my "sin" series languish in the press of the holiday season but this convinces me that I really should readmitt a little grumpiness into my and my readers lives.
Another fun thing is that the web site that hosts the interview, Digital Democracy, has a the full range of possible media available for the viewer/reader/listener who prefers one mode to another.
Print and read page
Streaming Video Small & Large (Full show)
Listen to MP3 (Full Show)
Buy a video CD
MY, My. That's a lotta media, its good to see somebody attuned to all the possibilities. Now if only they'd use a creative commons licensing scheme it'd be just about perfect.
Tuesday, December 07, 2004
They've got a 40% take rate at an average of 2.5 services per customer--most folks are taking the full triple play.
Good for Provo and good for Mayor Billings whose support for Lafayette is well-appreciated.
Sometimes the good guys win.
Monday, December 06, 2004
Cross-subsidization of municipal telecom services (and only municipal's—the phone and cable companies are free to use money from any source in pricing their competitive offerings) is forbidden by state law in Virginia—as it is here in Lafayette.
Readers may recall Bristol. The city has been so often cited as an example of the failure of municipal fiber-optics, when it is actually one of the movement's signal success stories, that it makes for an excellent case study in just how incumbent disinformation and delaying tactics work—As Mike demonstrated in his Fact Check piece: Blowing the Whistle Over Bristol. As is mentioned in the "Blowing the Whistle" article, cross-subsidization has long been a charge leveled against Bristol based mostly on a story (one should not call it a study) by the Progress and Freedom's man Thomas Lenard who repeated similar charges during the "Academic" Broadband charade staged here by Cox and BellSouth.
A similar attempt to disrupt the functioning of the Bristol Virgina Utilities (BVU) by litigating its right to offer video services also ultimately failed—but not before it deprived the local utility of a year of income from its most lucrative service and $625,000 in legal fees. (A fact which the learned Lenard's strained analysis failed to take into account.) The same issue emerged in the cross-subsidization dispute:
Jim Bowie, attorney for the utility’s board, said it was unfortunate that it took two years and thousands of dollars to reach this point.Bristol had to get a state law forbidding publicly owned utilities from offering telecom services repealed just to begin offering its services; they've more than adequately proved their moxie. Faced with this sort of litigation local politicians and state municipal organizations should begin to plan the repeal of any and all laws that the telecoms can use as a bludgeon to force unfair expenses on local governments that only want to serve their citizens. A bill that combined repeal of the cross-subsidization law and with the repeal of a couple of million in one the state's tax breaks for the companies involved should send an adequate message; even if it didn't pass the first time. This sort of abuse of the legal system shouldn't be "cheap" for the perpetrators.
"We didn’t have any choice," he said. "We had to spend that money, and it was money that was down the drain. We’re just tickled to death that we were proved right."
Preparing a first draft of a such a piece of legislation and quietly releasing it to local state legislators and the Louisiana Municipal Association for comment might have salutary effects here. It's always worthwhile to have an arrow waiting in your quiver.