Thursday, August 12, 2004

Follow the Money?

Well, I tried to follow the money. I went to the LUS budget review presentation for 2004-5 at the city-parish council meeting yesterday evening. As I had suspected, there was no budget item for the fiber initiative since there is no proposal to budget. Still, it was worthwhile—and interesting—to see the principals in action and to watch the dynamics of their interaction.

The Advocate and the Advertiser both have stories worth reviewing online. The Advocate's Blanchard emphasizes the fiber angle and is thus probably more interesting to readers of this blog. Taylor's in the Advertiser is worth reading on this score as well but she gives more prominence to other issues—and, indeed, the meeting spent more time focused on issues other than fiber.

I should really say that I came out of it impressed with the competence of all involved. Now a number of the councilmen weren't there and maybe they are the ones that fit the all-too-popular stereotype of local politicians but I have to say these guys seemed smart, competent and earnest. Possibly I'm naive. But, hey...

I'll not try and do a play by play or even be exhaustive in dealing with the high points of the event. Our interests here are the "Fiber for the Future" issue and for that there were three "C's" worth highlighting: Context, Competence, and Class (or lack thereof).

Context:
The context of any fiber proposal, for both LUS, and the council, has to be as important in its approval or defeat as any actual business plan for a fiber optic network itself. Not to put to fine a point on it but the council and LPUA have to be concerned with the overall health of LUS and the services it already provides as well as any proposed new telecom utility.

In that context even fiber partisans should recognize how dominant electrical generation is and will likely always be in LUS’ budget. The current bond issue for purchasing two new gas-fired plants is substantially larger than the 100 million discussed to start up a fiber network and ongoing fuel costs are fully half of LUS’ total budget. Power is and will remain the most important utility LUS provides in terms of both human needs and simple cash.

I was interested to find that sewerage supported by other LUS services to the tune of about 20% of its total cost. While no proposal for change was in this year’s budget the brief back and forth on this point made it clear that all recognize that eventually this will likely change. Apparently new wastewater regulations and an aging infrastructure have lead to escalating real costs of providing treatment. Local government has effectively chosen to consider these extraordinary costs one-time expenses and has not passed all of that cost on to its citizens. So part of your electric bill supports sewerage.

The effect of this is probably to give a small break to the poorer residents of the city since the poor and the wealthy are almost certainly closer in their water usage than in their electrical usage. That is an intensely political if very quiet decision but one that seems absolutely right to me. What interested me is that it is clearly a longstanding practice to support the universal, inexpensive provision of one service out of the profits of another.

For fiber partisans what is interesting about this is that, by new BellSouth-sponsored state law, any LUS telecom venture will not be allowed to benefit the less well-off in the same way. And that is too bad. It is the kind of decision that we ought to be able to make about our own community without outside interference.

Annexation questions occupied quite a bit of time with discussion of an upcoming contract with SLEMCO that would allow LUS to “buy out” its customers when an area is annexed. Council members appeared to carry a good bit of frustration around that Lafayette had lost ground during the last “eight years” to more “aggressive” surrounding municipalities. In part this was due to lacking an agreement that would allow LUS to offer full city services to the areas annexed and the councilmen clearly wanted that situation to end.

Their frustrated passion led me to wonder if there might not be a fiber angle to annexation issues. Surely the provision of “full city services” that accompany annexation would be much more attractive, especially to outlying, upscale subdivisions, if being annexed provided access to cheap, truly fast internet, cable, and phone services as well as the traditional utilities. Realizing that potential advantage would involve an intricate dance with the adjacent parish municipalities who, by all the evidence I can see, have been promised a place in line for the fiber offered by LUS. Broussard’s mayor recently defended LUS (oddly, no online link for letters for that day only exist at the Advertiser) and additionally the city-parish's LINC study has suggested tighter integration between adjacent water and natural gas utilities would lead to greater efficiency for all. There are potentially some very touchy, very local political issues just under the surface.

Competence:

One of the more unfair issues that anti-fiber folks have raised is competence. There has been an awful lot of insinuation that somehow LUS is incompetent. Way too much of this has been based on nothing more than the generalized feeling that government just can’t be competent. That is silly. The actual facts are pretty clear. LUS, bond issuing agencies highest rating and has traditionally had the lowest rates around for its services. It replaces its plant as is needed. (Broussard’s water quality problem, for instance, is a result of not undertaking the infrastructure upgrade that has been necessary for at least a generation.) According to data from the Public Service Commission LUS provided at the meeting it has the most reliable electrical service in the state. By all the evidence it makes responsible, locally driven decisions with a noticeable eye for the long term.

There were some new numbers revealed on LUS’ already established wholesale broadband business, a recent target of insinuations that LUS has been hiding loses and has not been making its business plan’s goals. But according to LUS last night, its wholesale business is healthy and ahead of its projections. It projects an income of one million in 2004-5 based on revenues of 820,000 this year and 600,000 last. At that rate they expect to breakeven in year 4, ahead of schedule.

Class (or lack thereof):

There was evidence that the city council is tiring of Cox and BellSouth’s tactics. Some discussion early in the session about restrictions on LUS advertising and what sort of educational advertising was deemed legal were puzzling references initially. As the session went on it became apparent that council folk were angry about the recent Cox full-page ad that ran in the local print media recently. Council members are taking umbrage at the sorts of deceptive tactics BellSouth and Cox are using and are urging LUS to reply. But there are restrictions on LUS advertising that seemingly makes that difficult. Both stories cited at the top of this entry carry amusingly exasperated quotes from councilman Mouton on Cox’s tactics. But the papers did not report that chairman Stevenson injected his opinion that he was actually seeing very few emails or other complaints generated by automated mailers sponsored by Cox—and that he was seeing several times that number of “unsolicited” endorsements. If these guys ultimate goal is to sway the council I would have say that as far as I can tell their current tactics are working against that goal. A little class would be my first recommendation.

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