Tuesday, January 17, 2006

No Appeal: It's the jack, Jack

It's official, the city will not appeal the 3rd circuit ruling.

According to a press release at the city-parish council meeting LUS and the city have decided to bull ahead without further delay. The announcement says that the city-parish will seek a new ordinance that is in line with the 3rd circuit's interpretation of the Local Government (un)Fair Competition act.

On the balance I regret that...I don't like giving in to bullies and I think it will cost real jack to go along with what this set of bullies wants. But there is certainly a part of me that is jubilant: This insures the shortest possible wait for our fiber-optict system.

The city says:
After a careful review of all options , the City will accept the recent ruling of the 3rd Circuit Court of Appeal. the City believes tht to seeck review by the Louisana Supreme Court would likely delay the project for a longer time than if the bond ordinance were simply amended...
So delay is the reason given. Behind that is real doubt about when and even whether the State Supreme Court would take up the issue. As both a reporter or and a lawyer have troubled themselves to let me know the Supreme Court is under no obligation to take this bond question on an expedited basis. Apparently the found unconstitutional a law that would have required them to do so. So LUS could wait as much as a year to find out they weren't willing to hear the case at all. Court crowding, an endemic situation, has been made much worse by Katrina. I's still like to have seen an appeal--and don't see what's to stop BellSouth from threatening to appeal the next ordinance as well. But I have to say that the lack of an expidited process does make the decision not to appeal more understandable.

I've also had it suggested to me several times...and, oddly, only by lawyers, that trusting the courts of Louisiana where big corporate money is involved is not smart. I do feel obligated to report that one of the lawyers, while openly disdainful of the third circuit, thought the Supreme Court much more reliable. That concern no doubt played into a decision not to appeal as well.

While Delay and Distrust, and especially delay was influential I strongly suspect that another factor, while less visible, was equally important in producing the apparently odd decision not to appeal: Debt.

The press release alludes to this whe it says:
Over the past two years, telecommunications incumbent BellSouth has consistently blocked the fiber project through lawsuits, legislative action, and challenges to the Public Service Commission in an attempt to delay the timing of the bond funding that could drive the cost of the project up considerably...With the continued favorable intrest rate environment coupled with decreases in the price of fiber technology, our feasibility plan remains on target." claimed Lafayette Utilities System Terry Huval. (emphases mine)
A consistent theme of the Local Government Fair Competition Act is increasing the cost to the consumer of using LUS' services. The most efficient way to do this is to increas the debt load on LUS. And that is what the current lawsuit was aimed at. LUS and the city will accept conditions that will make the loans they take out more costly. During the time the city has been delayed by BellSouth and Cox the prime interest rate has risen from an historic low by more than 3 points; tax-exempt bond rates track prime rates for fundemental economic reasons. (Banks buy money from the treasury and resell it in the forms of loans to customers; the spread seems to have been from 3.5 pts to 5 points during the last decade.) Lafayette, as a direct consequence of incumbent obstructionism has missed the best bonding opportunity in more than a decade...bond prices are still good and, in fact, lower than the business plan anticipated but BellSouth and Cox's delaying tactics have cost each and every customer of LUS telecom money--just as the incumbents intended.

Now, more than ever we need to repeal the "Local Government (un)Fair Competition Act."

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