Wednesday, May 10, 2006

Repeal!! (for corporations) BS and Cox's Second "whopsiee" law

"Noble" Ellington, the man who introduced the Local Government Fair Comptetion Act for the incumbent telecom providers will be sheparding a new bill for them this year. It amounts to a "repeal" of the Act for private corporations only. Public property could be used, and the risks of public indebtedness may be freely taken on by local governments--if and only if its new property were to be used for services offered by private, profit-making enterprises. (Is this the free enterprise ethic these guys touted during Lafayette's really doesn't sound familiar.) Due to be heard in the Senate Commerce Committee, it's an ammendment to the (un)Fair Act, the second proposed by the corporations since that bill became law. Like the first ammendment this one is meant to "fix" a portion of that (un)Fair Competition Act that wasn't working out to the advantage of BellSouth and Cox. There's the old story and the new story, but it' s the same song.

You can see the ugliness by streaming video by clicking through the Senate Commerce Committee's link on the legislative front page at 9:30 this morning. It's a bit down the published agenda but might be moved up...

Old Story:
The first time BellSouth and Cox returned to the well was with the infamous Broome Bill, which tried to fine Lafayette to the tune of 900, 000 dollars a year if the city actually had the nerve to build a fiber optic network of its own. (Read all about it.) The issue then was that BellSouth and Cox had only belatedly realized that taxes they'd had imposed on LUS would not have the intended effect of driving up prices for LUS customers (which purpose is central to the law) since LUS was already paying more in "in lieu of tax"--which they could count against the new taxes BS and Cox thought they'd imposed. Oh competitive advantage. Whoopsiee. So they tried another way: they'd void Cox's contract and make LUS pay the monies that contract said they owed the city-parish for 10 years. Really. You can't make this level of arrogance up.

A firestorm of protest from Lafayette and municipalities state-wide beat back the worst portions of the bill and an embarassed Broome backed off much of the bill. BellSouth and Cox had to settle for tacking a new referendum requirement onto the bill.

New Story:
This year the issue is a little different...then it was about stopping municipalities from getting into "their" business in any way. This year they've realized that they earlier cut off their nose to spite their face. They put such heavy restrictions on municipalities that they would never be able to take advantage of Louisiana cities--and that was never the point.

Let me explain: the original bill contained no exceptions for "public-private" partnerships. In fact it contained a raft of hedges against using private companies as cover for public ownership of the infrastructure. Times change. Suddenly and unexpectedly, Earthlink, Google and others are rushing into "public-private" ownership structures of various sorts with municipalities like Philadelphia and San Francisco all across the nation. It's starting to look like their competition will help fund municipal networks. At the same time they lost in Lafayette and are faced with a purely public competitor there whose network will be vastly superior to both BellSouth and Cox's.

Public-private cooperation suddenly doesn't seem like such a bad idea. Half a pie is better than being cut out of the deal altogther. BellSouth, for sure, has a long history of using public monies to build its networks and then extracting monopoly rents. It may have forgotten that lesson for awhile. Similarly Cox and the cable companies have a lot of experience in "partnerships" with communities that essentially lead to monopolies for cable. It too may have had a little senior moment.

BellSouth and Cox have both made wistful remarks about offering to "help" New Orleans with it WiFi network. Surely they meant they wished they were the ones inside the exclusive deal New Orleans appears to be cutting with Earthlink. However, under their own law that would be illegal. But it would be just too obvious to "repeal" the portions of their law that were suddenly inconvient while they had an offer on the table.

So, having read the tea leaves a little better BS and Cox are seeking to repeal the parts of their law that would keep them from joining into entering into exclusive deals with local governments to exclude their fellow private "free marketers." Irony, apparently, knows no bounds. The new law would make such public-private partnerships exempt from the draconian restrictions of the Local Government Fair Competiton Act; making it almost impossible for local governments to go it alone without "sharing" their resources with companies that would use public property to profit off the owners of that property.

Here's my guess: this "little" change passes with very little debate. BellSouth and Cox use its passage to beat back New Orleans' attempt at limited repeal of the (un)Fair acts wireless provisions, saying there is no longer any reason that New Orleans can't take Earthlink up on their offer--or accept deals that they, together or seperately propose. Earthlink has already indicated it doesn't want to invest 10-15 million in an investment that is dependent on a struggling New Orleans adminstration winning a referendum vote while BellSouth and Cox are waging a public relations war against it. If I were Earthlink I'd back off my very generous offer which leaves ownership of the free, ad-supported network in the hands of New Orleans. Suddenly, like white knights come to the rescue one or both of the incumbents come forward and offer to take over (emphasis on take) the current network and provide the public with a "reasonably" priced network that would, by dent of the (un)Fair Competition Acts restrictions, never be powerful enought to compete with their own offering by supporting VOIP or streaming video. WiFi remains a neutered technology in Louisiana and a publicly developed network's resources are turned into a nice, if minor, revenue stream for the incumbent/s.

BellSouth and Cox must be very happy that Lafayette's bills that would have repealed the act entirely aren't on the table while they go back to repeal the portions they don't care for.

It's the same song:
Old story or new, its all the same song: The Local Government (un)Fair Competition Act is a vehicle for the incumbents to work state law to their advantage. The legislature has time and again rolled over to these corporations in the same way that has proven embarrassing to the state for generations--most recently with the House Commerce Committee's vote to send BellSouth's state-wide video franchise to floor over the strenuous objection of both the cable industry, the Louisiana Municipal Assocition and the Louisiana Police Juries Association.

The Local Government Fair Competition Act must be repealed.

(It doesn't have to be this way. We could stand up to these guys and make our own decisions about what is best for our local communities. Today's story on how quickly even huge energy corporations fold when the state stands up to them should be a lesson. ATT/BellSouth is going to build its network in Louisiana whether or not we hand them extra profit, public resources, and shut out local governments. The only question is how much we are going to let them take us for.)


CablemanNO said...

Dear Sir,
Please excuse me if I don't present this comment well, as this is my first time responding to a blog.

I work for CoxNO, and being that close to the company maybe we just trust our upper management to take care of things so we have jobs.

Anything that I say here will just be for Cox, for I cannot speak for BS. CoxNO, BR and I do beleive LAF are going through upgrades system wide now. Mainly due to the fact of The hurricne season last year but they were scheduled for next year.

The ony thing going on in government at the moment that bothers me, is this HB699. If BS wants to compete w/ anyone, they should compete with the same rules. I understand that building an all fiber network is an expensive venture but competition is competition. As BS is a larger and wealthier company I beleive that they could do it and make their money back. But who wants to take that chance, especially when its still a new technology in these parts!

I don't know much about LAF's Muni-project or the vote recently, I beleive if the people want it, and are willing to pay for it, then so be it! But, what are they left with? No one to compete on that level with them. YOU SIR are absolutley right when you said, more money spent on the product, instead of spent on lawyers would be betteR for the end consumer. However, we live in LOUISIANA, the greediest government in the USA.IMO!! These companies are fighting for profits, if they didn't they wouldn't be in business.

My comments are biased surely! But, all in all between Cox and BS, I do beleive that Cox, is the lesser of 2 evils. Cox employs all of its people locally, this is also our home. We pay the local franchise fees to local governments giving them a nice portion of their income, also giving back into these communities with different events, and so on and so forth.

I beleive that competition is a good thing, but it must be fair!!! Prices will come down, after all is said and done, that is the ultimate goal. In any of our (NO, and as far as I know any Cox System) systems there is no, exclusivity agreements. Anyone can build, but, all we want is to play fair.

I myself work very hard everyday, looking for that smile from a customer who just wants their service to work properly and get what they pay for. And, if I can give them that service, and make them happy, then I have done my job.

I don't always agree with whats going on, but then, i'm just an employee, I love my job, and I like who I do it for. I don't know about muni operations, I DONT BELEIVE THAT GOVERNMENT SHOULD BE THE SOLE PROPRIETOR of any informations systems, Video, voice, and data. I do agree with a private/public solution. Too many unanswered questions for me to go down that road though.

I do enjoy (i guess is the right word to use) reading your blogs here, very informative. One thign I do realize as im sure you do to.. the folks that arent really interested in all of this, far outnumbers the one's of us that are. Education is a must! People like to have all of their services, Vid, Voi, and Dat on one bill, pay it and get on with it! The things coming down the road are wonderful, yes, comp. will speed it up, but, in a poorer part of the country, it will still take some time.

Hope this reads well, I got off subject a bit, but i just wanted to put my 2 cents out there!

John said...


Thanks for the comments.

And, frankly, thanks for the work you do. I've talked to BellSouth linemen as well and, like you, they deserve every credit. The ones who actually do the work are usually good, local, folks who care about their community.

Like you as well, they're basically loyal to their company. That's mostly admirable too.

I was a carpenter once, and then a teacher and I know what hard work can be like. A lot of folks these days haven't ever had to work in that way and it shows.

I'd heard that system upgrades were ongoing in NO but I haven't seen evidence of much activitiy here in Lafayette.I pretty much hope you're right--I'd like more reliable service. I'm with Cox and my service was pretty good until recently. Maybe VOIP? Anyway sometime my bandwidth just drops to a drip--100 k or less.And it seems to be getting worse. Last week (I think) the whole local IP part of the system went down. For me it lasted from morning till mid-afternoon. That was a first since I've been with cox.

You say, here and there, that you don't necessarily always like what's going on--meaning I think that you don't always care for what the guys on top are doing. Me neither.

Elsewhere you say that you don't like HB699. Again, me neither. :-) Be aware that what I'm told from folks that worked the bill for the munis is that there was such dislike of the cable companies that that is the single thing that lead to the bills success so far. Those guys on top are pursuing policies that make a LOT of folks really dislike them. And generally its the local folks who get the by-blow from that.

About Lafayette: We voted last year for a local muni fiber to compete with BellSouth and Cox. They fought up to the date and fight us still. This is one of those places where th guys on top really dumped on the local community here. They lied to us and tried to mislead us and generally called us fools for want the best technology available. Frankly Cox wasn't much better and the joined forces to try and stop competition at every turn.In the legislature, through lying PR, through lawsuits.

Cox, as a company, was no better than BellSouth.

HB 699 is a good example of how the companies hang together. You may not be aware but Cox and the cable companies in La opposed the bill in the House. But they sold out the nunicipalities they had allied in Senate when they got an amendment that let them opt out of the local franchise too. Not very pretty.

The big telecom corporations are all pretty much the same from a citizen's point of view: a necessary evil. So I dsagree about govt-run utilities. The problem with the corporations is that they don't care about anything but profit for their owners. The only way we can get someone in here who really cares about our community is if we own it ourselves. That's what a muni utillity is--just like water or electricity. In this instance we'll just compete with Cox and with Bell. They should be angling to stop us or to try and hurt our business. But they are.

Long-winded I know...:-)

Thanks again, and good luck with those upgrades in NO--they need something good to happen to them over there.