Thursday, January 12, 2006

"Officials seek options after fiber-optic loss"

The Advocate posts a catch-up article on the current state of the BellSouth lawsuit. The article has a good clean explanation of the basics and is well worth the read. The issue du jour is whether or not Lafayette will appeal the third circuit's ruling overturning an earlier finding that LUS and the city were pursuing a legal course in their plan to issue bonds to fund the project.

The two factors are time and money. (Sounds like daily life, no?) It's all complicated by a slowly rising bond market.

On the Lafayette side you have conflicting desires to keep the costs low and to get the thing built as quickly as possible. On the BellSouth side you have the perfect mirror: they want to jack up the price customers of LUS pay and delay the thing as long as possible.

BellSouth has few conflicts (if you can ignore the ones that have to do with the community and customers' interests as easily as they do) Any lawsuit will delay the project and if they work hard at suing about things that will raise the cost of the project they might get lucky and lessen their exposure to competition. They are further cheered by the fact that the bond market is slowly rising making LUS project slightly more expensive each day.

Lafayette, on the other hand, has real conflicts. Its promise to the people involves building both cheaply and quickly...and the two are not always clearly aligned. Fighting the lawsuit further offers a good probability of giving the city the best rates when the bonds are sold, important because interest is easily the single largest line item on the bill. On the other hand giving in holds the promise of going to bond sale more quickly--before costs rise too much more. The decision fork for the city has three tines: 1) give in and get the best rate you can under unfavorable bonding conditions quickly. 2) Appeal and hope for a decision that is in your favor and hope the bond market doesn't wipe out any gain over #1 that accrue because of delay and 3) Appeal and accept the possibility that the appeal will be upheld and you will both have to sell under unfavorable conditions and into a higher bond market.

It's unappealing. And if BellSouth were honoring its commitments made in legislative compromises it wouldn't be happening. The PSC, tasked with deciding what the law means, agreed with LUS to the point of joining its suit. The author of the bill, a BellSouth partisan thinks these issues were dealt with in conference. The first trial court didn't think that fulfilling a pledge to pay had anything to do with going into default. BellSouth drew a good hand; it happens. But the game should never have been in play. And wouldn't have been with an honorable company. The solution is repeal of the (un)Fair Competition Act: complete and utter. The state and an out of state corporation should not be standing in our way and BellSouth has demonstrated that it cannot be trusted honor a good-faith attempt at compromise.

For my part, I think the city ought to pursue appeal. It can be expedited and should be. The money is a tossup...trying to predict markets is a fools game. What's solid about this is that caving in at this point will make it appear to the unreflective as if you were trying to get away with something in the first place--and giving in to bullies is simply never a good tactic. They know in the future that all they have to do is spook you. We should simply admit that we are in a fight with an unscrupulous opponent and go after them. --In the legislature, in the courts, and in the court of public opinion.

15 comments:

Anonymous said...

Questions: If LCG passes a new ordinance, will that mean a bell can make us go through a new vote by the citizens? There was an ordinance is place before the vote, which did not have the same pledge, and seemed to be in compliance with the (un)fair competition law, then LCG passed a new ordinance after the vote, which was the one the court ruled illegal. Do you know why they passed a new ordance? Can we just go back to the first one? I have heard that if LUS fiber division has to first go into default before LUS can pay the bondholders, what happens to the fiber division? What do you think?

Anonymous said...

i think the communications division would go defunct and those resources would revert back to the present day situation, which would mean the city would still have the advantage of addition fiber in the ground and could leverage that to still pursue their wholesale business towards the more lucrative contracts in town- maybe generate enough revenue to handle the police and firefighters backpay

John said...

I think people ought to develop a little courage and use their own names.

There was no changed ordinance...there won't need to be a new vote if they decide to change some of the ordinance the council passed.

If they end up dumping the current plan they'll just go through more legal hoops and get the money from the same places...the only difference will be that the bonds will cost more to secure because they'll have to dance around a faux "default." They can likely arrange their financing so that this will never happen (and had already gone a long way toward that in the plan) but were hopeing to save the people of the city on interest costs. BellSouth knows this well...their actions won't stop the project. It can ONLY make it more expensive. THAT is BellSouth's goal in this lawsuit.

It's entire purpose in this "fair competition" law is to raise the costs to consumers of LUS' products. People need to wake up to what is actually happening here.

GumboFilé said...

John,

I recall that many of the American founding fathers, who proved to have much courage, published the Federalist and Anti-Federalist Papers using pseudonyms. That being said, I think that most of the anonymity that occurs here is due to either laziness or paranoia.

David in Grand Coteau

John said...

Hi David,

You'r right about the founding fathers. But I confess that I am old school about the Fedralist and anti-federalist papers. I don't think the maneouvering and behind the scenes politicing they mark the begining of in our politics was the founders finest moment. It is precisely because the were attempts to manipulate "factions" by men who basically thought themselves above faction and party that I distrust the revisionist history that makes the carry the "founders" meaning of the constitution.

Jay and Hamilton and the other (mostly other second tier revolutionaries) used reasoning and points they didn't fully share to try and drive the herd. That motive--and being too prideful to publicly endorse ideas they found useful rather than true--was why they didn't use their real names (As pride was the reason they did use their real name as revolutionaries).

The idea that the Federalist or the anti-federalists or some combination of the two represents the real thoughts of the founcers would have been anathema to the likes of Washington and Jefferson whose vision of a democratic state disdained all self-interested factions...and particularly the commercial interests often curried by the federalist papers.

Sorry, got a bit of a grump from another context. The history guy peeks out. At any rate, you can see I doubt the example of pseudonymity (or, worse, anonymity) in the anti/federalist papers as a basis for good political conversation.

I'm actually more interested, David, in what you think of these endless lawsuits after a vote. ?

GumboFilé said...

I appreciate your analysis of the anonymity of the Federalist/Anti-Federalist writers. I'm more of a fan than a student of that era so I can neither endorse nor dispute it, but I suspect you're probably dead-on.

Without endorsing the tactic (I doubt you'll concede that there's a difference, and I'll concede that perhaps there isn't) my hope is that BellSouth hinders LUS long enough to allow a free market cash cow (such as Google, who happens to have much of the necessary resources) to bring broadband to the masses, thus making LUS FTTH more obviously unnecessary, allowing LCG to avoid putting LUS assets at risk.

GumboFilé said...

I should've read that better before I posted it. I certainly don't expect Google (or anyone else) to bring universal broadband to us in the immediate future, but I won't be surprised if we soon hear of a plan by someone (like Google) to do so within a remarkably short period of time. The world is getting very small very rapidly.

David in Grand Coteau

John said...

Hi Mister Hays,

Didn't mean to drop the conversational ball...been some family things to deal with.

You're right that endorsing the outcome while witholding endorsement of the method seems to me like a distinction with little pragmatic difference. I'd have hoped that the people having made their decision you and others could actually decide to move in the other direction: to condem the outside obstructionist that are trying to prevent the people of Lafayette from doing what they've decided proper without actually endorsing the project. (That would make sense to me. Doing the opposite still strikes me as suspiscious and reveals a distrust of democracy and a reliance on the profit motive as a substitute that I think logically dubious.)

At any rate I think that holding out hope for some sort of anti-capitalist capitalist like Google to step up an do the right thing in defiance of the values of the corporate culture is hoping for way too much. While I do admire Google they've said quite plainly that they don't have the capacity or desire to build us all networks. They are interesting in securing their own backbone (net neutrality being under attack that's been shown to be a wise condcern) and in demonstrating an alternative to the low-bandwidth incumbents that are starving the high-bandwidth projects that are google's future.

What we might hope for from Google is two things: 1) that they will sell Lafayette outsystem bandwidth on their independent fiber backbone at much better rates than the incumbents.--They've every reason to support high-bandwidth muni projects and have been explicit,like Intel, about where their sympathies in this battle lay. and 2) that Google will push development of high-bandwidth applications along the lines of google maps and will run special trials of their most advanced services in the only multi-racial, mulit-income, multi-ethnic setting available in the country. That'd make good sense all around.

GumboFilé said...

John,

You've got me pegged. I do distrust democracy. It leads to things like pandering for votes by promising favors at the expense of others, which leads to three- trillion dollar budgets, which leads to a lobbying industry, which leads to a sort of anti-democracy.

Democracy has become a religion with voting as it's sacrament and our military as it's evangelists.

I believe in the democracy of the market where the consumer votes with his wallet. I believe in private property and voluntary contracts. I believe in an honest profit, gained by giving the consumer what he wants, not by using the power of the state to coerce the taxpayer into paying for something he doesn't want, but I'm on the wrong blog for this discussion.

David the anarcho-capitalist

John said...

Hi David,

My, this conversation is a wandering one..but it is a real conversation.

I am, as you might imagine, dismayed to have my suspicions about your anti-democratic leanings confirmed. I recognize, quiet painfully, the shortcomings of democratic republics. But as Churchill averred: "democracy is the worst form of government except all those other forms that have been tried from time to time." For my money that's not trite but profound.

Another worth-remembering formulation pretty much captures why I think so: "Man's capacity for justice makes democracy possible, but man's inclination to injustice makes democracy necessary." (Reinhold Niebuhr)

And (I'm full of it today) a last piece to this explanation: "Power tends to corrupt; absolute power corrupts absolutely" (Lord Acton)

The pieced-together story: Democracy has its problems but its ultimate virtue, which overwhelms all its disabilities, is that waters-down the corrupted and corrupting power of the few. History has made it more than plain that strong men and kings, and regional warlords and titans of industry have too much power to be effectively checked. The only sufficient resource for justice is the people as a whole--to the extent that each of has a little power and no man has enough to stand against the majority of his fellows we are on a democratic and just road.

Unfortunately for anarcho-capitalists capital accumulation is very similar to the sword as a source of control and power in society. Make either of these factors the organizing principle of society and there is no logical limit to the further consolidation of power by the very few. (Timothy, in fact, condemns money as the root of all evil, does he not?)

Making the rights and responsibilities of citizenship the organizing principle (and, yes, using the vote as a central tool for checking the freedom of the powerful) is by far to be preferred (IMHO) to legitimating wealth as the central organizing value of society. Conflating the market with democracy is a serious conceptual mistake. (Again, IMHO.)

As morbidly interesting as this all is, I am aware that I've allowed myself to be distracted a bit from the main line of the conversation...it is apparently your faith in "the market" that allows you hope that the vote of the people should be frustrated by desires of corporations. I admit it is a consistent position of sorts. Don't trust the people, trust capital and all that. I do wonder if even from the point of view I currently understand to be yours your position of hostility toward Lafayette's democratic desires can be sustained. I see no reason that LUS can't actually reduce prices and provide better service than the incumbents. The economics are pretty straightforward. The incumbents rightly fear this. If LUS succeeds at price and service the people will vote, yet again, this time with their pocketbooks.

I expect LUS will succeed and become a dominant player here. Will this mean that you will then support LUS since individuals will have freely chosen to buy from LUS.

Or is there some secret opt out that lets you continue to favor the corporations?

GumboFilé said...

This democracy thing seems to be working real well up in Washington, DC, wouldn't you say?

John said...

David,

Can't really argue with you there. This is NOT democracy's finest hour.

I can only say in democracy's defense that what is happening is not democracy but its other. A mere president is taking on the role of the sovreign. This is the ultimate defiance of the idea of democracy. We fought a revolution to free ourselves from one who thought himself an absolute ruler--meaning above the laws.

The greatest shame is not that we've elected such, mistakes can be made. The greatest shame is that we tolerate his continuing in office.

What is needed, in my judgment, is not less trust in democracy, but more commitment to it.

John said...

Oh yeah, I'm still interested in whether, since you don't value democracy but do value commercial choices, you'll finally support Lafayette's decision if enough individuals buy in to make the project work?

Or is there yet another, deeper objection which even the market cannot cure?

GumboFilé said...

John,

I'm really enjoying this. Since I'm getting substantially off-topic we could switch the discussion to email but then I'd only have you as my audience. As long as you continue to reply by blog I'll continue to take advantage of your hospitality. If I wear out my welcome please either refrain from replying or do so by email. It might not really make a difference. I might be the only reader who scrolls down this far.

I've been chewing on this awhile. I can take awhile to gather my thoughts. In addition I've been busier lately than I'd been for some time.

From his perspective Churchill may have been right. For a man who weilds power, democracy may be beneficial. It can lend legitimacy to the most shameful of actions. From my perspective, and the perspective of many in eastern Europe, he was wrong.

To Neibuhr I would counter that man's inclination to injustice makes democracy terrifying.

As for Acton, I don't think that he even believed in democracy. A more complete quote,

“Power tends to corrupt and absolute power corrupts absolutely. Great men are almost always bad men, even when they exercise influence and not authority; still more when you superadd the tendency of the certainty of corruption by authority.”

He also said,

“It is bad to be oppressed by a minority, but it is worse to be oppressed by a majority.”

“The danger is not that a particular class is unfit to govern. Every class is unfit to govern.”

“It is easier to find people fit to govern themselves than people fit to govern others.”

and,

“The will of the people cannot make just that which is unjust.”

Rather than watering down corrupting power I would say that it concentrates corrupting power and offers no incentive for virtue, rather it rewards vice and attracts scoundrels. I don't think that it's a coincidence that the most democratic century was also the bloodiest. I say give me a regional warlord or king. It's easier to depose an unjust warlord or king than it is to depose a bureaucratarchy.

As for capital accumulation as a sword, without the real sword of political power it is no sword at all. Capital is accumulated by voluntarily offering something to others and allowing them to voluntarily accept, counter, or reject the offer. The problem occurs when you mix such formerly free exchanges with politics by such government actions as cartelizing resources or even whole industries. We can get by without democratic politics but history has shown that without trade we would starve. When smart, hard-working men do a good job of offering to the consumer those things that the consumer is willing to freely purchase, those men get rich. In a free society people get rich by serving others. Those who would get rich by lording over others do so through politics.

It was Paul who wrote, in a letter to Timothy, that "the love of money is a root of all kinds of evil." (I Tim 6:10, KJV) He was writing about personal godliness and contentment.

More of the same passage,

6:9: But those who are determined to be rich fall into a temptation and a snare and many foolish and harmful lusts, such as drown men in ruin and destruction.

6:10: For the love of money is a root of all kinds of evil. Some have been led astray from the faith in their greed, and have pierced themselves through with many sorrows.

He was clearly referring to the effects on an individual of his own sin, not it's effects on others.

I think rights to life, liberty, and property should be the organizing principles of society but I don't see how democracy can accomplish this. I can't see that it ever has. It seems just the opposite.

I don't distrust people, I just trust them more when they put their money where their mouths are. I have things that you don't, and vice-versa. We have each voted with our wallets and both of us has won. We both got what we wanted. However, give every envious or greedy person a secret (and cost-free) ballot, and we will vote ourselves all sorts of things we are unwilling to finance ourselves, such as LUS fiber. It's easier for a business to lose money and adapt to comsumer preferences than it is for the government to lose votes or adapt to voter preferences.

If and when LUS ever offers retail telecom, those who wish should not be hindered from doing business with them. For me it's not about keeping consumers from availing themselves of choices. It's about restraining civil government to it's proper role. If they become the only choice I would do business with them but I would never support them in the sense of calling this right and good. I would prefer a less intrusive solution. I would favor removing any and all regulations that are currently preventing free competition by free market (non-government) providers. If this is not currently politically possible I would prefer to deal with the incumbents rather than adding more government involvement.

As for what's going on in Washington, I wish Bush was the only problem. I was actually refering to the lobbying scandal, which is nothing but the latest threshold of the way business has been done there for decades, if not generations.

I've used too much space but I close with some more quotes, these by Ludwig Von Mises,

"There is really no essential difference between the unlimited power of the democratic state and the unlimited power of the autocrat."

"Majorities are no less exposed to error and frustration than kings and dictators. That a fact is deemed true by the majority does not prove its truth."

and,

"He who is unfit to serve his fellow citizens wants to rule them."

John said...

Hi David,

Quite unbelieveably to me I greet this post with a smile and mild affection. I suspect it is honest as well as well-informed (if, in my judgment entirely misguided and directly opposed to core American traditions). [Don't forget that I'm smiling.]

Your suggestion is a good one; do let's take this offline. I doubt many are interested and we are into realms of philosopy, theology, and history that are arcane even for those actually interested in those areas. I try to keep (and too often fail) stuff not at least peripherally related to fiber and Lafayette in the background here.

John AT Lafayetteprofiber.com -- A suggestion: while I'd happily continue via correspondence these sorts of things might be more pleasureably pursued over spirits or coffee...


I do feel you are owed a respectful response to some fair points you made before I take the conversation offline.

Broadly, I think you distrust people in general--citizens-- (some in what I perceive as your tradition might say "in mass") more than you do individuals who hold power. My read of history demonstrates (to me) that on the average it's better to trust the people than autocratic "leaders" who rule by virtue of some principle other than the rights of the men who elect them. I grant your point that evil is done by both.

On Acton in particular you're right. A complex guy with committments that seemed contradictory to his peers and now to history. I freely admit to not understanding his positions.

You're right too about the Abramoff scandal being ugly. For my part, given my committement to Democracy, the lobbyist scandals are "normal horrors." The assertion of unbridled power by the executive is more disturbing because it threatens the democratic corrective mechanisms.

Thanks for the talk...