Wednesday, August 30, 2006

Cox at the Council

I went down to the Lafayette City-Parish Council yesterday evening in order to watch Cox's Kleinpeter defend her company before the council. The council, or at least most of them, wanted to express their objections to the new lineup, the still-ongoing problems with the channel changeover, and long customer service waits. The story was covered in both the Advocate and the Advertiser, though only the Advertiser's article made it online. (Update 12:30--The Advocate article has now been uploaded.)

The Weather Channel:
For Lafayette residents the most meaningful moment occured in a defensive move before the council began its questioning: Kleinpeter announced that Cox was considering putting the Weather channel on the basic tier for 3 days prior to a hurricane using one of AOC's channels. Apparently this has been discussed previously with council members but the channel suggested was Cox's channel 22, the all ads all the time channel. Kleinpeter offered something vauge about "laws" preventing them from using channel 22 and no one challenged it. ...Honestly, there are no laws but there is Cox's desire to make money. --And putting a 24 hour shopping channel on the basic tier is apparently in line with what Klienpeter characterized, as she justified the inclusion of CSPAN, as Cox's policy to devote the basic tier to "important" public, civic, and local programing.

The council has clearly heard a lot from their constituents about the Weather Channel and that subject was the most intensely felt issue of the night for the councilmen. Stevenson made a formal request that the Weather Channel be on for the whole of the hurricane season. Cox isn't going to do that. What the community wants is to make is to return that channel to the basic tier and no on on the council even asked for that.

French Programming:
The movement of the sole French-language bit of programming off the basic tier was the second big programming issue of the night. This has been less of an issue than I would have thought given the high percentage of French speakers in Lafayette and Acadiana. But while French speakers might not write letters to the editor they do complain to their councilmen. Some rumblings of complaint were raised about why we get the "choice" of an entire digital package in Spanish but only one channel in French far up the channel guide. The only excuse offered here was that now Baton Rouge would get TV5 and that it would bring "parity" to Cox's channel lineup.

Parity=Be like Baton Rouge
"Parity"--the idea that offering the same channels in the same places to all their customers from Baton Rouge to New Iberia--was Cox's most consistent theme last night. It was the chief excuse for all the unpopular changes and decisions made by Cox. Unfortunately no councilman challenged it. It is obviously technically feasible to maintain the status quo...and in fact Cox complained all night about the difficulty of the changeover. Cox's chief reason to desire "parity" is not that it is somehow fair, as using the term 'parity' implies, but that it is more convenient for Cox since it wants to 1) have big regional support centers and not have to keep track of different channel lineup and 2) not have to have any messy complicating clauses in its contracts with suppliers.

As far as Acadiana is concerned "Parity" is code for "be like Baton Rouge." All the changes Acadiana objects to are to bring us in line with Baton Rouge. The price changes bring us in line with Baton Rouge. Pulling the Weather channel brings us in line with Baton Rouge. Moving the French channel up into the 200's will allow basic cable to be just like Baton Rouge.

The trouble is we don't want to be just like Baton Rouge. The council should give that a little voice.

There was a fleeting moment last night when the one councilmen raised the question of why Cox couldn't standardize on Lafayette and give Baton Rouge the weather channel but even that councilman did not follow the suggestion up. It should be a serious question. The weather channel was on basic in New Orelans and Lafayette--why not acknowledge the special issues that being coastal cities bring and make this a policy in all markets south of I-10? But that question was not even raised.

LUS
An undertow in the discussion all night was the upcoming entry of LUS into the market. Councilmen made only the most indirect of references but it has to be obvious to Cox that the council will have the influence to reach a very favorable "model" agreement with LUS when it comes before the council for its franchise contract. In the future that agreement will be a pattern that can be held over Cox's head. Currently the council has no real leverage between contract negotiation seasons. But with LUS in the business with a real local product (Expect things like the weather channel and French programming on basic!) both the market and the council will have more influence. Moving away from local programming and to a regional programming model at this moment is a mistake, I have to believe, and one that could only be made by a monopoly.

So it was a relief when a local resident stood up and made the point explicitly and dramatically. He felt ill-served by Cox and was angry at both the changes and the way that Cox had bungled the changeover. He said he'd been against LUS originally but would now switch over if LUS offered comparable programming.

Cox is burning bridges that LUS' presence in the market will make it very difficult to rebuild. Interesting times are coming.

Tuesday, August 29, 2006

WiFi BS Resurfaces

This morning's Advertiser carries another letter by Chuck Pickett dissing the the fiber optic plan. Ole Chuck has a series of letters to the editor on this going all the way back to '04. He's always opposed to the community's plan but used a different set of reasons each time.

There is a common pattern: the fella takes a "naive" misunderstanding and uses it to attack the Fiber plan. My guess is that he is smarter than he lets on. In January of '05, for instance, he inferred that the city would be better served to "do a bond issue" for cop cars, etc. Of course what's silly about that is that the Fiber bond issue would generate revenue to pay off the communty's debt. Just issuing random bonds would not. Then in September of '04 he wanted us to believe that we were just too poor to afford a fiber network that would provide competition and lower costs while paying for itself. Who's too poor for that?

This time he wants us to believe that his vacation demonstrated that the hiking trails in Colorado are filled with WiFi and that WiFi somehow makes Fiber obsolete. Nah, nobody is that naive, are they?

I took a vacation too (4 days!) in North Carolina and had free WiFi whenever I wanted it also. --In my hotel room and in coffee shops. I bet that little detail is what he's "naively" neglecting to mention this time. He paid for WiFi in his room bill and with that cuppa coffee. I'm pretty sure folks visiting in Lafayette experience exactly the same pleasant convience if they stay at places like La Quinta and take their caffine at CC's or Mello Joy. The only muni wifi setup in all of Colorado are a few hotsposts in the parks and the community centers/library of the tiny "village" of Glenwood Springs according to CNet -- and so Pickett didn't experience anything like the ubiquitous "free" connectivity he is suggesting for Lafayette during his vacation and his vacation did not likely inspire his letter. Misleading? I'd say so.

His bit about Fiber being made obsolete by WiFi is suspiciously naive as well. Nobody that is in the least knowledgeable really believes that; not even the most ardent proponents of WiFi or WiMax. Wireless technologies and wired ones are complimentary and the wisest plans combine a fiber backbone and FTTH/B connectivity for rock-solid and nearly boundless bandwidth to the places where people use most of their bandwidth and a much lower speed wireless for mobility. But having anything like even DSL speeds reliably available on wireless provided to all (as Pickett's "free" wifi presumes) will require a dense fiber backbone. The opposition between the two is simply false--and the truth is that a workable high-speed wireless requires a huge previous investment in a dense fiber network.

Lafayette could have a dream network with high-bandwidth fiber to the home and office and higher speed ubiquitous wireless than is available anywhere in the country. That could all be very cheap. We could, if we wanted, make the WiFi a no-extra-cost service to subscribers of LUS broadband services. But it wouldn't be really free since people would pay for it in their broadband bills.

TANSTAFL

And my guess is that this guy understands all that.

Saturday, August 26, 2006

Cox will "address" Council

PR flack Sharon Kleinpeter will have the unenviable task Tuesday night of airly explaining to the Lafayette City-Parish Council Cox's decision to drop the weather channel on basic cable shortly after Hurricane Ernesto moves past Cuba on a path toward the Gulf Coast. And Cox does have an explanation for the community's vocal distress:
"It's just change. People don't like change,"
Get real. People think Cox doesn't have their best interests at heart and don't trust their explanations of much of anything anymore. When you look at the raw arrogance of this rationale it's not hard to see why. The real reason, of course, is to move the popular channels onto a more expensive tier and to extract a little extra cash from the community.

Cox is going down to the Council to explain themselves Tuesday night. If you think that Cox has plenty to explain you might want to go down to the council meeting yourself. --Pick up a "green card" as you go in, fill it out, and hand it in and you'll get your chance to say what you think of Cox.

"BellSouth Blinks on DSL Fee"

It looks like Bellsouth has decided that charging an obviously made-up fee to maintain its income after the FCC dropped its fees on DSL got them into too much hot water:

On Friday, The Wall Street Journal reported that Federal Communications Commission Chairman Kevin Martin was "very upset" by the companies' decision to stick it to consumers. Regulators have yet to sign off on BellSouth's pending merger with AT&T

The agency was preparing a list of questions for Verizon and BellSouth, according to media reports.

On Friday, BellSouth backed down. The company said it would roll back the fee and credit any payments charged in the last week

The FCC fee in question, one that helped support rural phone lines, was paid by all the telephone companies into a common pool and was then rebated to the companies in proportion to the covered services (rural, schools, libraries, etc.) each company had provided. So, mostly, it just shifted money between the right hand pocket and the left hand one.

It was the telephone companies that were set to lose income; not the Feds.

BellSouth's decision to invent a new fee to subsidize themselves with didn't sit well with the FCC which is at least supposed to watch out for consumers and the word was out that the FCC thought this might amount to deceptive billing. Of course it would have--but where was the FCC when BellSouth (and other phone companies) were implying that the fee was a simple tax--like a sales tax--imposed on consumers instead of a self-collected subsidy?

Thursday, August 24, 2006

BellSouth Shafts Consumers (Cross-subsidization!)

It will come as no surprise to readers of this blog that I think BellSouth should be embarassed
at the way it treats its customers--and the communities in which those customers live. CNET covers the story and the core of the tale is cleanly put in the first paragraphs:

Last year, the Federal Communications Commission changed how it classifies DSL (digital subscriber line) services, thus eliminating a fee that had been charged to all DSL subscribers to help pay into the Universal Service Fund. USF is a federal program that helps subsidize rural telephone service and provide Internet access to schools and libraries.
Verizon DSL customers subscribing to its 768Kbps (kilobits per second) service paid about $1.25 into USF every month, and customers of its 3Mbps (megabits per second) service paid about $2.83 per month, the company said. BellSouth customers were charged $2.97 per month for USF, according to the BellSouth Web site.

But now that the fee has been eliminated, as of Aug. 14, neither Verizon nor BellSouth plan to pass the savings on to consumers. Instead, Verizon has added a new "supplier surcharge" starting Aug. 26 that's $1.20 per month for the slower service and $2.70 for the faster service. BellSouth said it will keep its $2.97 fee, which it continues to call a "regulatory cost recovery fee."

And:
"BellSouth is clearly misrepresenting what the fee will pay for. I mean how can this be a 'regulatory cost recovery' when DSL is no longer regulated?"
Some behavior is just plain flat beyond shameless.

Understand that these bogus "fees" are added on after the advertised price--and they are not and never were fees charged to customers and collected by the phone companies--though the phone companies would like you to think so. Mainly they are regulatory fees that go into a big pot and are redistributed to companies themselves based on how much subsidized service (rural areas, schools, etc.) they provide.

So BellSouth is getting much of the money the collect back...possibly, given the higher rate of poverty in, and the rural nature of much of, its footprint...more than it puts in.

If they had simply stopped charging the fee they would have actually lost the income that will no longer come from that common pot...and that is why they renamed the fee instead of returning it. Gourmandise.

The "unfees" always should of been simply part of the price of doing business; tacking them on top of the bill we pay is a way of hiding the true price to consumers--and when it implies that the money doesn't go to the phone companies, a way of outright lying.

"Shameless"--as the reader who alerted me to the story called it--is putting it mildly.


Lagniappe:
This story has a couple of specifically Louisiana angle that readers might be interested in. It demonstrates just how tied together and important seemingly obscure background definitions can be for a wide range of issues that matter to us all.

The embarrassing unraveling of this particular "unfee" is due to a larger change that reclassified DSL as a "telecommunications product" rather than a phone product. That, change in definition "accomplished" several things for which consumer/users can't be expected to care.

Where's EATel and Sprint?
The reclassification of DSL as "telecommunications" was basically a deregulatory move. It's most immediate effect was to free DSL from line-sharing requirements that were the basis of businesses like EATEL or Sprint (who once had a sizeable business in Lafayette providing phone and DSL service). No longer. BellSouth has effectively driven them out of the market and those good prices and service reps with local accents are a thing of the past. "Deregulation" has lead to a consolidation of the market and a loss of competition.

BellSouth's vetoed video bill
That same deregulatory effect of reclassification of DSL was what was at the base of the opposition to and the eventual veto of BellSouth's state-wide video franchise bill. Before a late amendment attempted to clarify the issue BellSouth had insisted on a clause in the bill exempted "telecommunications services" from being part of the basis that the phone company would use in calculating franchise fees paid to cities and parishes for the use of their rights-of-way. All the while AT&T, which is in the midst of buy BellSouth, was insisting in multiple locales and in Congress that its IPTV service was a DSL-based service (it is) and as such a telecommunications service NOT subject to local regulation or federal regulation. Had the law gone through as BellSouth/AT&T originally desired AT&T would have had no visible legal reason to pay the fees that BellSouth had told localities would be paid. (As bill stood when vetoed that phrase remained in the exemptions section with the addition of another phrase that obligates the company to pay for IPTV services. It was contradictory compromise. And we in Lafayette know how contradictory compromises are used in court by telecos against local governments and the will of the people they represent. Blanco did good with her veto.)

Cross-subsidization
Lafayette residents will be painfully aware of "cross-subsidization." Contradictory definitions of that in BellSouth's (un)Fair Competition Act is the legal tool that BellSouth, Cox, and its allies have used to keep Lafayette's fiber project tied up in court. Those types have piously argued (when they trouble themselves to excuse their actions at all) that there is something wrong with cross-subsidization and that people who buy one service should never be faced with even the most distant possibility that their costs in one are will rise to support a project which might not directly benefit them (regardless of how the community voted). This has a certain surface plausibility--if you ignore that the same companies that put forward this argument against their competitors "on the behalf of consumers" regularly use the profits from its more profitable areas to (cross) subsidize its customers in less profitable areas. --If you are a user of the highly profitable Cingular division your bills already effectively subsidize the declining landline operation.

Cross-subsidization comes up as a topic here because Verizon is being a bit more forthcoming about its reasoning for renaming the fees it charges customers. That segment is worth quoting in full:

Verizon said it is charging its new supplier surcharge to offset the cost of offering its standalone, or "naked," DSL service, which allows customers to subscribe to DSL without subscribing to Verizon's local phone service.

The company said that because it's losing revenue from those voice subscriptions, it must make up the difference in other ways. But instead of simply recovering those costs in the price of the actual service, Verizon has chosen to spread the cost of naked DSL across its entire DSL customer base.

Customers subscribing to standalone DSL pay $5 more per month for their broadband service than customers who buy DSL bundled with a voice service.

"We didn't think the standalone DSL service would be competitively priced if we put all of the cost on the service," said Bobbi Henson, a Verizon spokeswoman. "So we spread the cost across the entire base of our DSL customers. Doing this as another fee was coming off the bill seemed like good timing, since it will have little impact on what customers are actually paying per month."

Verizon is coming very close to acknowledging that it is simply raising its prices and doesn't want its customers to notice. (As opposed to BellSouth, whose gobbledy-gook explanation is completely irrational.) Even more revealing is that the company feels its DSL service wouldn't look competitive against cable if it had to advertise its higher real price. Verizon is admitting what both companies are doing: raising prices on DSL in order to subsidize its competition with cable companies and it is using the resulting pricing policy to "encourage" customers to buy services they otherwise would pass on.

The disturbing hypocrisy of using the spector of "cross-subsidization" to tar its prospective competitors is but the final upsetting element in this story.

Tuesday, August 22, 2006

Will of city's majority thwarted once again

In a letter to the editor today David Motes complains:
It is with dismay and deep frustration that while away on a business trip in Connecticut, I learned that yet again the will of the majority of the people of Lafayette has been thwarted by the special interests of a very few.
He goes on to express his anger with the incumbents and their allies.

He's right.

Monday, August 21, 2006

Cox Lineup Changes Stir Up Discontent

Cox's lineup changes have elicited a lot of resentment locally. The trouble, of course, is that the changes seem more than a little self-serving and that Cox seems incapable of responding in any way that doesn't underline their arrogance.

I've recently convered the TiVo debacle and complaints about dropping the weather channel off the basic tier in the middle of hurricane season emerged early. But in the last week we've seen a flurry of responses that make it clear that all is not well with Cox's public relations.

The Cox lineup change made the top of the cover of the Independent ("Rate Storm") this week, demonstrating that the editors think it will move papers. The Ind was given good material to work with too...the article reveals the misleading Cox's PR response to criticism has been. The article points out that Cox has pulled popular channels off basic cable and moved them to a tier that would cost a user 194% --almost twice--what they were paying to get those channels before. Cox's motivation is obvious. Cox PR spokesperson Sharon Kleinpeter (who gets the unpleasant jobs) claimed that secret agreements with its suppliers forced them to move The Weather Channel off basic. But the story points out that the Weather Channel flatly denies any such contractual obligations apply. And the channel remains on basic in storm-wracked New Orleans.

It's not the Weather Channel's fault any more than the TiVo mess was users fault. It was a "business" decision made by Cox and blaming someone else, as Cox is wont to do, may get Ms Kleinpeter out of an uncomfortable interview but it does the company no good in the long run. Cox needs to understand that Lafayette at least will no longer just accept such nonsense as "fact" with out checking it out. Cox long since has blown its credibility. Competition is coming and in a competitive environment being believeable in you claims about current and upcoming services is crucial. You can't win over customers who dont' believe a word you say.

As the story makes clear Cox understands the growing hostility it is engendering--it has abandoned its former practice of gathering public input before making changes; probably correctly sensing that the level of hostility that has developed over the last two years means that sponsoring a public forum that allowed criticism of its policies would be a nightmare. The company also shorted the city-parish government on notification time and is revealed as not meeting its contractual obligations to Acadiana Open Channel. Ms Kleinpeter claims not to have seen letters sent to Cox a week before her interview...un hunh. The story closes with a sadly accurate observation:
“At the end of the day, I don’t think Cox [will] give a hoot about any contract,” says AOC Executive Director Ed Bowie. “They’re nearly invincible, and they know it.”
Even with the smokescreen that Cox's PR person puts out local letters to the editor reveals that citizens see through the misdirection Cox puts out. In the Advertiser the letter "Competition needed in the cable industry" expresses outrage at the loss of the Weather Channel and advocates:
I think it's time for some competition. The area city councils and mayors need to start checking into getting a new cable company and break up the Cox monopoly that has gotten out of hand.
As second letter, "Rumbling in land is about Cox cable," is even more direct about the discontent Cox's behavior over the last few years has caused. The author advocates dropping Cox cable entirely and switching to satellite.
Don't forget that Cox (and BellSouth to this day) are fighting the LUS fiber-to-the-home project, preventing us from getting cheaper rates on TV, telephone and Internet service. We can't hurt Cox much by dropping them. They are too big to notice, but we can help ourselves. We have a choice. I have exercised mine. I've saved a few dollars and gotten more for my money. All it takes is a phone call.
It's not pretty. And Cox brought it on themselves.

The incumbents have been amazingly inept in dealing with Lafayette. Cox at one point showed signs of getting smart by bringing a personable woman to front the division and hiring the governor's Lafayette-based daughter to represnt it but the PR insight that showed appears to have had little effect on actual policy decisions. There the new Cox remains the same as the old Cox--and PR without substance is a hard sell.

Should the public ever find out who has funded the delaying lawsuits the proverbial stuff will really hit the fan. The incumbents are playing dangerous games with public opinion--games that were much safer when they could rest assured that their monoply status meant that "they're nearly invincible." Times are a' changing and Lafayette's citizens are showing little signs of forgetting recent offenses.

Sunday, August 20, 2006

Dreaming: The 100 to 1 Advantage

or
Intranet, Not Internet
or

How AOC and LUS Can Save The Internet

Ok, so maybe that last is a little over the top. But maybe not much over the top. Between them LUS and AOC could invent a model that would fix whats wrong with TV, make IPTV as currently conceived a bad joke, break the net neutrality debate wide open, and make locally produced content central to local video viewing. Sound too good to be true? A little like that other local wonder, Hadacol? Let me explain...

I've been ruminating over a recent post by Cringely that points to something I've mentioned before: that the costs of local bandwidth are very, very, small compared to the costs of interconnections. Your local intranet connection--in an office or at school has been running at 100 megs for at least a decade. Gig connections on an intranet are now common. But those sorts of speeds stop dead at the point where you have to buy internet access. For most of us around the US that means that those sorts of speeds just aren't real--almost of what we want to do is limited by, first, the availability of "big broadband" (you simply can't buy that sort of connectivity) or by cost (even where available it is prohibitively expensive for a single user to purchase.)

The choke point is in the last mile between your speedy intranet and the provider backbone that connects to the capacious internet backbone. An amazing number of our problems would go away if we could solve that last mile problem. Everything from Net Neutrality to international competitiveness to expensive and pokey internet connects are built around the last mile choke point and its monopoly/duopoly control.

The Suggestion

What Cringely suggests is that we avoid the choke point altogether. As a PBS employee he is concerned for PBS affiliate stations who are as worried about the death of the broadcast model as any other network station. Right now local stations are crucial in the redistribution of network content. The advent of cable has made a lot of non-local content available and reduced local stations' share of the market. They fear that the coming deluge of DT (downloadable TV) will make that worse, especially if their parent network makes the best content available from a centralized location on the net in a way that cuts them out of the revenue stream. That's not an unreasonable fear...Internet TV really might mark the end of local broadcast channels. Says Cringely:

But it doesn't have to be that way, because the supposed strengths of centralization aren't really strengths at all when viewed in terms of the much more imposing issue of bandwidth costs, where all the advantages are local.

I explained this to a group of PBS station managers meeting last month in Orlando, Florida. Where these folks tended to fear IPTV portended the disintermediation of local television, I argued the exact opposite. My reasoning came down to the price differential between Internet bandwidth and intranet bandwidth, the latter being that bandwidth entirely within the ISPs local point of presence or data center. There is a lot more of this intranet bandwidth, for one thing. Depending on how their network is segmented, a local provider of cable Internet or DSL service may have gigabits of aggregate customer bandwidth attached to a much smaller Internet pipe. A 100-to-one ratio of internal to external bandwith is typical, meaning the effective cost of internal bandwidth is 100 times lower.

What I advised the station general managers to do was to serve their traditional audiences as much as possible over internal, rather than external, connections. This means colocating a server down at the telephone and cable TV companies, which isn't hard to do since most communities have just two broadband providers, and the PBS station manager probably knows both of them from Rotary meetings or from the local United Way board.

Cringely tells PBS affiliates to locate a nice healthy server inside each ISP intranet (like Cox's or BellSouth's) using their Rotary ties with local telecom execs and then to push out the content they own as downloadable video. Content pushed inside the local Intranet would get the larger pictures faster intranet speeds would buy it and those outside the intranet would still get the postage stamp versions we've grown used to. Downstream the dream is to cut revenue sharing deals for good national content and evenutally build up a network of non-profit video servers based on the new PBS infrastructure. At that point the new non-profit infrastructure would be positioned to schlep bits for any commercial provider at its non-profit rate. The combination of better quality and cheaper carriage would make the new network a natural winner.

A pretty picture.

But one that overlooks a lot of reasons why it won't work as advertised.

Cringley's Mistaken About Curent Local Networks:

First and foremost the self-interested nature of the incumbents will ensure that they won't just give or even sell Public Broadcasting the rope with which to hang them. The death of the broadcast model would turn the current cable video providers into sellers of commodity bandwidth. They hate the idea to their very core and the current net neutrality fight is largely based on the telephone companies wanting to avoid becoming commodity bandwidth providers. Giving away the farm to local PBS friends would be a policy decision of the first water and the guys PBS managers schmooze with at the local chamber of commerce aren't the ones making those decisions.

On top of that, unless I very badly misunderstand how local networks are set up the idea that it will be easy to let every user make use of excess "intranet" bandwidth is very mistaken. For the Bells the extra bandwidth simply is not there. If they had it they wouldn't need to be messing around with IPTV and trying to squeeze enough bandwidth for a few switched TV channels out of their next upgrades to the system. (They can't push any video now.) The cable companies do have more bandwidth streaming past your door than they give you--much, much more, enough to since they are streaming many full-screen channels of video past your connection at every moment. But they have no facility to differentiate between IP address inside and outside the system--and the speed cap they set on your internet access is controlled in your cable modem. My sense is that they'd have to seriously re-engineer their systems to give you the unbridled access to the local network that would make Cringely's plan work. And as I've pointed out already, they've got no reason to go to considerable expense just to enable the destruction of their business model.

So, while Cringely's dream is very suggestive, and points to the real potentiality of an intranet, it doesn't seem at all likely to be realized unless some outside force pushes it on the incumbents as a matter of competitive survival.

But Cringley's Basic Insight is Correct:

Here's where AOC and LUS come in. (You anticipated that, didn't you?)

The main reason that Cox and the cable companies won't participate is self-interest. This plan would be great for customers who'd get internet service fast enough and cheap enough to replace the old broadcast model of the internet. But it is not the way to maximize their profits, shareholder return, and executive pay packages. Even if it would maximize the value returned to customers for their monthly investments.

What you need for Cringely's vision to work is a network owner who isn't in it to maximize profits for distant shareholders or increase executive bonuses. A network owned by its customers. A LUS. LUS has already committed to engineering their system so that in-system bandwidth will be fully available between its local subscribers. (Langiappe consequences of 100 megs: Telework, Grid, Futuristic Consumerism) The initial thinking was that the commitment would yield a 100 megs of internal speed on local subscriber interconnections. By the time the system is built that will, more likely, be a gig. That is much more than enough to offer full-screen HD in multiple streams to each household in the city. LUS would have bandwidth to burn in the last mile and little reason not to give its customer-owners exactly what the desired on the internal highway.

LUS would make a rational ally for AOC in moving to a local, server-based version of its current programming.

Natural Allies:

There'd be a lot of advantages for both AOC and LUS. All of AOC's shows would effectively be playing in "prime time." There'd be no necessity to try and decide who goes on when for most of their shows. There'd be an easy way to gauge demand for their shows.

The local producers would love it that their shows would not vanish as soon as the red camera light goes off. With smaller downloads available outsystem local creative types could build an audience outside Lafayette that would help develop an ecosystem for future growth of their shows. (Austin city limits is a model that could work well in Acadiana; a genuine Cajun or Creole food show could also be successful nationally after building an online audience. Current TV models suffer from not having a genuine "farm" system--all shows originate nationally and local sensibilities--and creativity--have little influence witht the "coastal" executives.)

For the customer this type of system would have all the advantages of a huge, online DVR/personal archive of AOC video. It would be a free, permanent online library of locally produced content. (If you wanted to go back and see that contentious (cough, cough) council meeting that everyone still talks about you could.)

LUS would love it because they'd have a huge and clearly understandable differentiator of product. They'd be able to have content on their system in a form that would be impossible for any other network provider to match. There's no reason the online version of AOC shows couldn't be provided in an HDTV alternative. HDTV steaming video over the internet side of local connections would be easy for LUS's fast internal connections to handle. But BellSouth/AT&T's and Cox's networks simply could not handle that sort of load without an upgrade of a sort they are not even beginning to contemplate. Installing an upgrade of a sort which would allow one stream of 25 megs HDTV--much less reengineering the system to provide that much bandwidth between any set of local users regardless of the tier they've bought-- is not on the map of either BellSouth or Cox. On the other hand, LUS is planning to build just such a system; one that would support at least 3-4 independent HDTV streams to each household. By supporting AOC in this way LUS would be making it clear that its system could support services that the other networks could not--and would be expressing its mandate to encourage local alternatives.

Okay, and PBS too:

With the AOC server up and running on the local LUS network Louisiana Public Broadcasting (LPB) would have a local network provider whose interests are in align with their mandate to serve the people of the state. Cringley's vision could be realized in Lafayette--even if they'd have to talk to Ed Bowie over at AOC instead of the cable reps at the local Rotary. As a social studies teacher in remission I can tell you that LPB owns a fantastic library of video. It's mostly inaccessible to the public that paid for it. But there's no reason, save cost, that it can't be online. In Lafayette that cost could be reduced to the price of space on AOC's server farm. A collegial agreement could surely be reached since all the participating parties would benefit from the exposure. (Video served outside the LUS region could go out in the severely reduced postage stamp format we use now and be paid for in at-cost bandwidth or a trade for making the content available if the right deal were cut with AOC and LUS.) Maybe LPB could begin recruiting membership from all over the country--like KBON (stream) and KRVS (stream) do now. LPB already has some downloadable video; for instance it offers the news magazine "Louisiana: the state we're in" online. Why not get muscular about it? The grant to digitize all their old shows should be easy to get.

And there's absolutely no reason to be selective about this...LPB (and AOC, for that matter) could offer their content to be placed on BellSouth and Cox local servers just as Cringley originally suggested. Just don't expect those entities to be willing, or able, to take up the offer.

And that's only the beginning--there are lots of archival video and voice recordings whose collection protocols mandated that they be made publicly available languishing in obscure corners of university libraries. Both ULL and LSU have astonishing oral history archives, for instance. Every heard of them? Thought not. While the Library of Congress has done fantastic job of making those sorts of things available local content gets the short shrift. An initiative like the one described here could change all that. I know some folks at ULL are interested...

Back to the outrageous thesis—LUS and AOC save the Internet:

Right now we experience the bottleneck that is at the root of this discussion most painfully when we try to download those short postage-size video clips from the web that were pioneered by news sites but have morphed into a major cultural phenomena by the rise of sites like YouTube. The incumbent providers claim that they need new revenue sources to bring you up to speed (a bogus claim) and want to extort a surcharge on top of what companies like Google, Vonage, and YouTube already pay in order to guarantee them adequate service over that last mile into your home.

That last mile is the only place where the current incumbents have enough monopoly control to impose such an unpopular and unfair regime. Take away that control by offering the sort of robust local competition that would be offered by an LUS fiber to the home project which would have no problem with commoditizing its bandwidth if it served its owner/customers and the net neutrality issue would vanish. Without their current duopoly control over the last mile the incumbent providers would have no leverage to impose the "packet prioritization" that is at the heart of the Net Neutrality debate.

What's more there'd be no need. With sufficient bandwidth there is no need to worry about packet prioritization and, in fact, the additional overhead would just drag down the network to no useful end. (This is the conclusion that the Internet2 folks reached after trying to improve an advanced broadband network by packet prioritization. They decided it was easier, cheaper, and faster to achieve the goal of new internet services by simply increasing the bandwidth.)

It's not just the hot net neutrality issue that is built around the current choke point between intranets and the internet. So is the continued survival of the old "broadcast network" model of TV. You know the one that forces you to watch fixed length shows, interspersed with truly stupid ads, at fixed times. (Die TV! Die, Die, Die!)

So maybe LUS and AOC could provide the "demonstration proof" that big local bandwidth, locally owned, and operated in the interests of local owners could save the internet and, as a bonus, kill off the network/cable model of video production and consumption. Not only would our local community love it but it would serve as an example to other communities across the country.

It's not really all that far-fetched. It just requires a bit of vision and some modest courage and cooperation.

Why not?


(Dreaming dept.)

Saturday, August 19, 2006

Cox has Local Problems

The Advertiser this morning carries a story with the fawning title "Cox: It's working to correct problems." In a nutshell, customers are complaining about problems with sound, pixelation (blocky patches on digital channels), and most seriously for those effected broken recording functions on TiVo's Digital Video Recorder (DVR). --Problems which did not effect Cox's own competing DVR box. Doug Menefee, of LUFFTTH blog fame, complains:

Douglas Menefee, a TiVo and Cox subscriber, said his TiVo began recording the wrong channels and said it was because TiVo had not received the updated channel guide from Cox through Tribune Media, which is in charge of the data on Cox's channel guide.

"Television is just supposed to work. This week, it has been working against me," Menefee said.

For those who don't see what the fuss is about: a DVR's most basic function is to provide automated recordings of its owner's favorite shows. As a bonus you can motor past the commercials. TiVo--the technology leader in the area and the most popular brand--is beloved by its devotees for its ability to record a favorite series without virtually no attention from users and has made the phrase "time-shifting" a pop culture phrase. Being able to watch TV on your own schedule instead of the network's turns out to be a killer feature. I'm a TiVo user who bought it on the recommendation of a friend and would never willingly go back. As a result of this mess-up I actually had to watch one of my favorite shows when it aired and had to watch the commercials (which turn out to be even more annoying than I recall) and missed several of my regular recordings. Cox has really aggravated such viewers.

What makes it worse is that Ms Kleinpeter passes it off with typical incumbent arrogance:

Kleinpeter said Tribune Media did receive the information and dismissed the claim.

A representative from Tribune Media declined to comment and representatives from TiVo were unavailable.

Kleinpeter said it was the customers' responsibility to update their TiVo settings in conjunction with the change and not doing so would result in a problem with their recordings.

"We have been blasting the information to our customers for 30 days," she said. "So, if someone didn't know about it, they didn't want to know about it, I guess."

This is wrong...and arrogant...and every TiVo user will know it. I'v had some subscriptions for five years now on my aging TiVo and only miss a show when the listing is wrong or when my TiVo's connection to cable box has been broken. This is the worst listing problem I've seen--and it IS NOT the user's fault. There is nothing, nothing whatsoever, an owner can do except to wait for the update to be made online and for their TiVo box to download it. I forced my box manually to make unscheduled update calls every 12 hours or so during the 4-day outage without seeing an update to the correct lineup . That apparently came through yesterday morning sometime and my afternoon attempt pulled down the correct lineup. TiVo happily and correctly updated all my subscriptions to shows and my Friday SciFi indulgence set recorded correctly last night. I'll watch 'em sometime this weekend when I get some relaxation time.

Kleinpeter's attempt to blame the victim is typical of Cox's modus operandi when they are wrong--they put out some sort of inaccuracy, preferably one that blames someone else and hope that the confusion they've caused is enough to cover its culpability. (With all due sympathy for Kleinpeter--perhaps she was made testy by the fact that the two women Cox has used to build up their "friendly face" in Acadiana after the fiber debacle weren't asked to pull this npleasent duty. Karmen Blanco and Jacqui Vines were nowhere to be seen when this latest mess hit the fan.)

What makes this explanation all the more incredible is that Cox had and as of this morning still had the incorrect listing on its own web site. My wife checked it over the outage looking for her favorite channels and I confirmed it this morning. Since TiVo is finding the correct listings now I expect it to update soon. Cox's Listings--powered by Tribune's zap2it.com. (As of yesterday zap2it's own web-based listings were also incorrect; the problem was not in propagation to TiVo's servers.)

Until Cox notified Tribune and the change worked its way through the system there was nothing that could be done by any user. The fault lies with Cox.

I've been through lineup changes before in two states, and have never seen this problem. If its handled correctly the listings change is slotted in to coincide with the cable company's channel shift and the user does not see an issue. It's hard not to think that it has something to do with Cox now having a competing copycat DVR of its own....I wonder how many TiVo users who called in to complain were offered boxes that "work fine with our system?"

Friday, August 18, 2006

It's the Same All Over

It's the same story all over the map; corporate opposition to local telecom initiatives has become a regular feature of such ventures.

In the day's news are upset communities from across the country. Naperville, IL is furious with AT&T (our new phone company overlords) for refusing to follow the law (shock!); Muskegon, MI can't fathom why Verizon won't allow poll attachments for its new fiber system (No!); Clarksville, TN anticipates opposition to its plan to roll out fiber (Duh).

Naperville is angry about AT&T's claim that it doesn't have to follow the law governing cable companies if it wants to offer cable services since it isn't a cable company..... Confusing? You bet. AT&T likes confusing laws. Fron the local Daily Herald:
An angry city council rejected the telecommunication giant’s request Tuesday to offer the service without full build-out in the city after learning the company had reneged on several negotiating points previously agreed upon.

“I’m very sorry I wasted my time meeting with AT&T,” Councilman James Boyajian said. “I have not dealt with many companies that showed less integrity than AT&T on this thing and if this is the way they are going to do business, other municipalities better watch out.”
The build-out requirements were the nub of the dispute over BellSouth/AT&T's recent attempt to secure a state-wide video franchise. The phone company really, really doesn't want to have to serve everyone in exchange for using the community rights of way.

In Muskeogen the phone giant Verizon isn't allowing a local school district/local government consortium to attach to poles they own regardless of a state law requiring them to do so

Local officials are fuming about Verizon's actions, calling them "delay tactics" and "sabotage." The total cost of avoiding Verizon poles is estimated at more than $300,000, said officials with the Muskegon Area Intermediate School District, which spearheaded the fiber project.

"This is a classic case of a project that has been developed for the common good going up against corporate self-interest," said MAISD Superintendent Susan Meston...

"It makes me angry because somewhere along the line, I have to guess their stand has to be fiscally motivated," McCastle said. "In the name of their dollar bottom line, they want to do what they can to mess with people in Muskegon County.

State law requires pole-owning companies to allow educational institutions to attach to their poles and other owners are complying. Verizon, you'll be shocked to discover, is fighting the law on hard-to-understand technical grounds in the courts. The local group has decided it would be cheaper and faster to simply lay in their own poles.

Sound familiar?

In Clarksville a referendum to approve revenue bonds for a fiber-optic system similar to Lafayette's is going to be put before the people in November.

Spradlin said voters can expect to see campaigning by CDE and opponents to the plan — such as Tennessee Cable Telecommunications Association, Charter Communications and BellSouth — as the referendum approaches.

"There have been some relatively bloody fights in some other communities," Spradlin said...

"After seeing what these other communities have gone through, we realized real quick we were going to need some help in these areas," Spradlin said.

Representatives of Charter, BellSouth and the TCTA spoke at City Council and town hall meetings last winter as CDE sought to become an authority, in addition to lobbying the City Council members individually.

Clarksville needs a citizen's group. Watch out guys...

I'm no longer surprised at such stories. But the what I've started to notice in the last 6 months or so is that the language on the part of the communities has changed. Back when Joey Durel and Terry Huval were calling the incumbents "greedy out of state monopolies" and "gourmandise" such langauage was shocking--and inspiring. But now it is clear that the wind has shifted and such langauge is no longer taboo. This is how attitudes change. The incumbents are burning up their credit with the public. They'd be wiser not to stand in the way of local communities.

It's the same all over. Lafayette is hardly alone.

Thursday, August 17, 2006

Appeal reviewed

--Got some catching up to do from our little vacation to the Outer Banks. (Where what they call hot, we call air conditioning!)

Lafayette is going to appeal the 3rd Circuit's ruling. From the Advertiser article:
Lafayette officials will ask the Louisiana Supreme Court to hear arguments on the proposed Lafayette Utilities System fiber-to-the-home project.

City-Parish Attorney Pat Ottinger said the city will file a writ application to the state Supreme Court asking that it take up the case.

"At this point, we think our position is still correct," said LUS Director Terry Huval.
--Good. It is time to fight.

In the past the city has not chosen to appeal any ruling that has not gone its way--effectively deciding on the path of trying to appease the unappeasable. (The majority of cases have confirmed Lafayette's position--something that is easy to forget at moments like this.) At the time the officials made a defensible case. Uppermost in the minds of LUS and the city was trying to get around delays as quickly as possible. But, as proved the case with the (un)Fair Competition law itself, expedience proved costly in the long run. This is a lesson the city and LUS have had to learn and relearn over the different phrases of this conflict. The simple truth is that you can't cut fair deals with unprincipled people. (Evidence: Even Senator Ellington, the (un)Fair Act's "author" said that BellSouth's suit was betraying the deal, Example: playing games with Durel and the city council before earlier bond votes.)

The difficulty here, in my judgment, is that the Lafayette officials are honorable men. They believe that when you make a deal that, naturally, you abide by that deal--especially the parts that are not to your advantage. BellSouth and Cox executives apparently see nothing beyond their own advantage. Handshake deals are for suckers. They think it "smart" to take what advantage is offered and pursue their own interests without any reference to earlier "deals." We can rail against this interpretation of "business" ethics but it is best to simply know who you are dealing with and to quit trying to work with people of this ilk.

At any rate the effect of the latest ruling is try makes sure that the city-parish will benefit as little as possible -- its an extension of the "make sure it costs more" tactic that has gone hand in hand with the incumbents "endless delay" tactic. Bridging loans made to other elements of LUS get repaid, with interest to LUS and amount to a way to transfer income to the rest of the organization. That slight of hand is part of forcing up the price consumers of LUS pay; and it was understood to be part of the "deal" by the legislature, LUS, and the city-parish--that's outrageous enough. But what wasn't supposed to be part of the deal is what the 3rd Circuit is now trying to force on the community: that the extra costs in interest to consumers can't come back to the owners of the utility (those same consumers) as income to the rest of LUS which could, conceivably, be used to lower utility rates in the other divisions or to lower taxes. Instead, in this scenario, the interest income is forced out of Lafayette and out of the public and into private hands. This was not the deal. Under duress LUS and the city were forced to accept artificially higher prices for its telecom services. It was not supposed to have to be forced to hand any part of those higher prices over to private, profit making entities...it was supposed to be able to retain those for the people of the city. That's what's being threatened now.

It is worth noting, again, that neither BellSouth nor Cox is forbidden by law from using income from ANY of its various holdings. Only Lafayette is restricted in this way. --If you believe this is supposed to benefit our community through some strange logic I merely refer you to the plain fact that Lafayette has proven itself quite capable of protecting itself (to Cox and BS's distress); we don't need; and don't want; and surely aren't grateful for the "help" the state imposed upon us at BellSouth's request.

Friday, August 11, 2006

Opie Meets The Godfather

As the LUS fiber project continues its journey through the courts, it is worth noting that it did not have to be this way.

That this project finds itself in legal jeopardy today is a direct result of the failure of the Durel administration to recognize the nature of its primary opponent on this issue, BellSouth. BellSouth has been intent on killing this project and any other project like it from the start. That's why their initial legislative response was a bill to prohibit local governments from getting into the telecommunications business.

The Durel administration and its advisors failed to recognize the way BellSouth and other Regional Bell Operating Companies (RBOCs) have used the legal system to thwart competition and to strangle competitors. And it is that failure that led it into two strategic mistakes that may yet prove fatal to this project.

The first failure was to agree to the terms of the Fair Competition Act of 2004.

It may be the nature of legislative compromise for parties to try to get at least some of what they want in what amounts to the horse trading that is the legislative process. Clearly, the team of advisors working on the Lafayette side of the Fair Competition negotiations did not pay close enough attention on what they were allowing BellSouth to insert into the bill, apparently focusing on the elements in the bill they felt Lafayette needed in order to proceed. Remember that the Lafayette fiber project had already advanced beyond some of the stages covered by the bill that ultimately became law.

I believed then (and have said so on a number of occasions since) that Lafayette was content to leave barriers erected behind its project in the belief that the law would allow our city to proceed on its project. It was short-sighted and it was, in fact, a colossal misreading of the situation.

But, the real mistake was agreeing to the legislation at all. People on the Durel team and in LUS have told the story how they had been assured by Governor Blanco that she would veto any bill that they could not live with. They naively agreed to this law and, in the process, set the trap that has now ensnared this project.

Why do I say that the Durel administration was naive?

Because the history of the phone industry is one defined by the ability of the incumbent carriers (in this case BellSouth) to use the legal system to resolve and eliminate competitive threats. By agreeing to a law regarding municipal telecommunications systems, the Durel administration was putting the ultimate fate of the project where BellSouth wanted it and where it operates best: the courts. That's right! It's better in court than it is winning its way in the Legislature and at the PSC.

The ultimate mistake that the Durel administration made was in assuming that it could negotiate in good faith with BellSouth on the provisions of this act. The administration gave BellSouth the benefit of the doubt which they clearly did not deserve.

During the fiber campaign, the administration appeared to have learned from that mistake (helped along, no doubt, by a round of court cases involving lawyers from BellSouth). BellSouth's various, transparently phony attempts to demonstrate that they had great plans for network infrastructure in Lafayette or were possibly willing to strike a deal with Lafayette were recognized as being the desperate acts of a desperate company that they were.

With the fiber victory behind us and more litigation ahead of the project, the Durel administration apparently forgot what it had learned and made its second glaring error in judgment this year going into the Regular Session of the Louisiana Legislature.

As you may recall, Lafayette had a series of bills introduced that would have repealed in part or in whole the Fair Competition Act. All but one of those bills was withdrawn in exchange for a pledge from BellSouth not to engage in any further litigation against the LUS project. Knowing full well that the agreement would not end the litigation, the Durel administration agreed to this bone-headed deal that cleared way for state approval of the AT&T buyout of BellSouth and removed Lafayette (and its influential legislative delegation) from the battlefield in the fight over the statewide video franchise bill BellSouth sought.

Let's see: you give your opponent everything they want in exchange for approximately nothing! Heck of a deal!

As you know, that legislation (HB 699) won approval from both houses of the Legislature but was vetoed by Governor Blanco.

What's that old saying? "Fool me once, shame on you. Fool me twice, shame on me."

The LUS fiber project finds itself in legal jeopardy today because the Durel administration has at key moments of this multi-year, multi-chapter drama played naive Opie to BellSouth's cynical Godfather. At this point, not surprisingly, the score reads: "Advantage Godfather."

It didn't have to be this way.

Coverage of the third circuit loss

I've been contacted by folks wondering where I am. ...

North Carolina, on the outer banks. :-) And loving the break from the ordinary. Worked into the wee hours on a website and flew out of BR early, early in the morn. I'm going to crash and try and grab some sleep before my friends come in.

But here's the links folks have grown to expect. Late, I know. But still:

The Advocate: LUS loses fiber-optic suit appeal
The Advertiser: Fiber effort hits roadblock

I've still not read the decision fully but Blanchard has proven trustworthy:
“The ‘provision of covered services,’ contemplated by the Fair Competition Act does not include the ‘payment of bond obligations,’ ” according to the 3rd Circuit’s ruling.
Well...That's not what LUS--nor apparently even the "author" of the legislation--thought thought they were agreeing to. It's also what every other company in the world does as a regular part of doing business. Bridge loans, internal loans, hell, BellSouth will use its profits from Cingular ratepayers to prop up it's dying wireline business. The decision is fundamentally unjust.

More when I've had the time to look over materials.

But...hey I'm for fighting. LUS and the city has never appealed and adverse decision. I've argued with that before. I'll being doing so again. The fact that the incumbents want to change the game in the middle should be no surprise. That why the (un)Fair Act was pushed by BellSouth and Cox from the beginning--they wanted to change the rules to benefit themselves. Initially by essentially making the LUS project impossible and then, when compromise was forced on them, to try and cripple the enterprise.

But this interpretation from the 3rd Circuit is not what Lafayette's folks understood to be the compromise deal that was agreed upon. If part of the law is obfuscated by legalese that the court chooses to focus on other parts are clear...the law was supposed to let LUS do what other companies are able to do commercially. That's what the legislators "gave back" to LUS...and that is what the Third Circuit is taking away.

I don't think LUS and the city have much of a choice: the people voted for the plan that was out there. Lafayette is committed by that vote to trying to make it work. The third circuit is a lost cause. Appeal to the Lousiana Supreme Court. If it loses there bring it that clear and final decision to the legislature; make them look at what was done with their "fair deal" and demand repeal.

Fight.

There's never any way but forward.

Thursday, August 10, 2006

Unhappy News From the 3rd Circuit

Just thought that you should all know....the 3rd circuit has ruled against LUS and Lafayette.

I have yet to read the 19 page decision and so don't understand the basis for the decision (available at: http://www.la3circuit.org/opinions/2006/08/081006/06-0904opi.pdf) but the bottom line is that LUS lost.

Terry Huval tells me that that they're not going to say anything specific about the ruling until they digest it, that it could mean a rehearing by (I presume) the full 3rd Circuit or could go direct to the State Supreme Court. An appeal was in the in the works by one or another of the parties anyway....so there will be no more delay than was already in the works.

He also says that if the ruling stands it will become clearer that Louisiana’s “Local Government Fair Competition Act” is a nothing more than a barrier to entry for local governments wanting to provide telecommunications services, despite an overwhelming public vote in favor of such an initiative.

In that he is absolutely right.

This makes me mad. And that probably doesn't help anyone. :-)

I will say this upfront: If this interpretation of the law is upheld it reduces the whole law to nonsense and should quiet anyone who claims that this law was supposed to be about "fairness." It would put restrictions on one company---and only one company--that NONE of the its competitors would have to endure. It would mean that little LUS, whose whole territory is the city of Lafayette, couldn't even borrow from itself. This while its enormous competitors can rake in monopoly profits from every state in the southeast and in Cox's situation far beyond and use it as they please. Their profits from, for instance Cingular wireless, or any other division can be used as the please. Can you imagine the uproar if anyone tried to suggest that Cox or BellSouth couldn't use their profits to start a new division? Justice and equity has nothing to do with this. There is nothing fair about the law. If our legislators are to craven to repeal it, they ought, at least, be willing to add the four characters I always add:

The Local Government (un)Fair Competition Act.

Recall please, that even the bill's author said that BellSouth is challenging aspects of the law he thought were agreed to in discussions. This law and its absurdist internal contradictions is being used to frustrate the express desires of the people. This sort of hypertechnical decision. based on legalistic definitions that make no sense in common usage or the context of the law destroys people's faith in the legal system.

It's not only Cox, BellSouth, Naquin, and a batch of lawyers from across the basin who should be ashamed: it's the third circuit as well.

"High-tech projects begin to pay off"

"High-tech projects begin to pay off" is the title of an article in the business section of today's Advertiser. NuComm cited technology and the spirit of energy that technology complex indicated for its decision to choose Lafayette over the other approximately 200 locales it investigated. It mentioned no other differentiator. That deal will bring a 1000 jobs and inject about 115 million in total benefits into the city each year. Citing Fiber To The Home, the LITE center, and LONI, the paper talks to university, LUS, and business people about the economic development benefits to our community.
When RĂ©al Bergevin, the founder of Canada-based NuComm, said the company had chosen Lafayette for its new call center, he singled out three projects that made the city stand out: LUS' fiber-to-the-home plan, the LITE center and LONI.

While some may not be entirely sure of what they do, this high-tech trinity has become a cornerstone of the city's economic strategy...

Huval said the city-owned utility always is at the table talking to prospective business because electricity cost is a main concern for companies. But the talk usually turns to the fiber plan.

"Every time we've met with a prospect to describe that to them, their eyes light up,"...

Mike Spears, CEO of Firefly Digital, said local companies benefit, too. His Web design and software development company is positioning itself to offer services to companies who use the LITE center.

"The benefits cascade across the entire market," he said.

During the fight for the fiber network economic development was one of the benefits promoted by the fiberistas. This single big event realizes that hope even before the network is built. It might seem logical on the surface to assign 1/3 of the benefit of this deal to the FTTH network. That's conservative since there's no reason to think a company like NuComm will find LITE's graphical supercomputer useful or that it will do the sort of research that will gain it access to LONI's superfast but basically academic network. So the main immediate benefit to the company (besides the food, music, culture, and local attitude) is that it will have access to the local area network of at least 100 megs. Mike's written usefully about that benefit, as I pointed out yesterday, and the bottom line is that NuComm will get a huge pipe to their center at relatively low cost by working with LUS (you can bet that a deal has already been cut there) and their employees will have a 100 megs of internal-to-the-system-bandwidth with which to connect back to their office network. Understand that most local networks operate at 100 megs internally so that means that homeworkers will have the same access to databases and VOIP functions that their colleagues at Northgate mall will have. As NuComm gets their workforce trained and start to expand they would be crazy not to buy computers and a nice connection for homeworkers. That would allow them to avoid the substantial additional costs of opening and running new physical centers. (Setting up this one is due to cost 3.5 million. The real financial benefit of Lafayette's advanced technology is FTTH. And that's the reason NuComm brought its jobs here.

So assigning only 1/3 of the benefit of NuComm's investment to the FTTH project is conservative in the extreme. Even at that discounted rate 1/2 of 115 million that is 57.5 million in benefits to the local economy each year. Setting up the system is to cost 125 million. If you do the math you'll see that that 125 million will be returned to the region in just a bit over 2 years 1 month as a consequence of Lafayette approving the fiber initiative. That's not a bad ROI on Lafayette's investment for Acadiana.

That's not the last of it; already an article has appeared that speculates that NuComm's entry will further dry up an already tight labor market and put upward pressure on wages at the low end of the market.

All that can only be good for local citizens, Lafayette, Acadiana, and Louisiana. And we all need the good news.

Addenda: North Lafayette, in particular should be happy...and if it wants to know who in their community did the most to bring this benefit to the heart of the north side let me be the first to congratulate Gobb Williams whose tireless work to pass the initiative has borne fruit for his community--just as he said it would.

Wednesday, August 09, 2006

For the Record....

Just for the record...

During the recent battle in the Louisiana legislature over BellSouth's state-wide cable franchising bill there were folks who made the claim that the municipalities were being disingenuous--even dishonest--when they said that language in the bill that would have excluded "information services" from the calculations used to determine franchise fees could result in no franchise fees being paid at all. Lafayette Pro Fiber insisted the danger was real; both on these pages (example) and through meetings with legislators and local officials.

Eventually, under heavy pressure from the municipalities and facing the threat of a vocal outcry on the floor of the senate--which was realized-- (the committees responsible for oversight were predictably supine) the bill was heavily amended to secure, so far as is possible, a definition of the fees basis that included IPTV. All the while BellSouth's representatives and their lawyers played dumb about the implications of the use of the term "information service" and the way the FCC uses the term to exclude all local oversight for data services.

The threat was real.

And it's now revealed that our federal legislators are aware of the issue. (They probably have knowledgeable staff.) From a recent article in the National Journal:

The FCC debate over Internet-enabled services began in 2004, as a way to deregulate services that allow phone calls over a computer.

But the proceeding has become the primary vehicle for AT&T to argue that its video service is not a cable service.

Verizon Communications and other telecom companies do not agree with AT&T's efforts, and neither does House Energy and Commerce Chairman Joe Barton, R-Texas.

"Our friends at AT&T have sent this silly letter saying they're not a cable service, which they shouldn't have done," Barton said during an April subcommittee vote on the telecom bill. He called AT&T's argument "stupido."

Added Barton, "We explicitly say they're a cable service."

AT&T/BS tried to pull a fast one on the state--one that they are still trying to pull on the Federal level. The Federal legislators are on to them. But AT&T still plans to try and convince the FCC that their cable TV service is actually something else--and that they shouldn't have to pay any attention to those pesky municipalities that actually own the property they want to use.

Madame Blanco did us good in vetoing that bill. And the Federals may have learned a thing from the fight here.

Tuesday, August 08, 2006

NuConn and Lafayette Technology

Hey, its nice when you turn out to be a prophet....or at least when Mike does.

Today's announcement (Advertiser, Advocate, Advertiser again, and yet again) of a major new employment should kick $115 million yearly into the Lafayette area economy in the form of a major new call center. The NuComm deal will mean a 1,000 jobs, with benefits, centered in Lafayette's Northside. The deal-makers touted their own influence, a package of incentives, and the local Lafayette technology initiatives for the coup. Announced by the Lafayette Economic Development Authority (LEDA) the announcement emphasized Fiber To The Home, LEDA's LITE center, and local participation in Lamda Rail. But LITE and Lambda Rail are mostly positive indications of our atttitude. The fiber to the home project will bring real economic benefits to companies that are trying to decide where to locate their call center business.

Mike predicted it--and made it clear what the economic benefits to companies would be:
Imagine the possibilities in a fibered-up Lafayette!

If you've noticed recently, some television ads extol the virtues of company websites that let you click to connect directly to an operator. It's internet protocol-based phone systems that allow this intermodal interaction to take place.

Lafayette could become a magnet for these types of jobs when the LUS fiber network lights up. The high-speed network could easily handle voice and Internet traffic of the busiest call centers, distributed or concentrated. Not only that, the network could enable another mode of communications (video!) over the Internet portion of the network that would further enable our community to distinguish itself as a hotspot for leading edge business applications.

Think about it! A city with the potential to become the home to thousands of call center operators working from the comfort of their homes.
How's that for prescience?

This announcement is big win for state and especially local officials and development personnel and they deserve all the congratulations we can extend. But beyond that it is a big win for the people of Lafayette who endorsed the fiber initiative partly in hopes of spurring economic development. A part of the community's hope was that voting for the fiber project would help make the area more attractive and help us keep our kids in the area. This announcement is a down payment on a future their collective ability to dream of a better future for their community enabled. Kudos to Lafayette.

A few juicy fiber and tech oriented quotes for the readers of this blog:
He said NuComm plans to take full advantage of the high-tech projects the city has embarked upon including fiber-to-the-home and the Louisiana Immersive Technology Center on that list.

"I can see most of our employees in (the) next five years being able to work from home, which is attractive to a lot of people." (Advertiser)

Bergevin said he is also excited about the technological developments in Lafayette — including the city’s municipal telecommunications project, the Louisiana Immersive Technologies Enterprise and the state’s connection to the National Lambda Rail, which enables a large bandwidth connection to the rest of the world. (Advocate)
A bit of Lafayette chauvinism:

State Secretary of Economic Development Michael Olivier said parts of the state undamaged by the hurricanes, such as Lafayette, will have to “carry the economic football” for the whole of Louisiana for awhile.

LEDA CEO and President Greg Gothreaux said that Lafayette’s unemployment reached an all-time low in April, at 2.7 percent.
Over the past five years, Lafayette accounted for 40 percent of the net new jobs created in the state, Gothreaux said. (Advocate)

And a bit of good sense:

LEDA Board Chairman Walter Guillory said he is excited by the announcement, but said he is picturing a future visit to the call center once it has started operations, providing jobs that improve people’s quality of life.

“I think that’s going to be the true blessing,” Guillory said. (Advocate)

Monday, August 07, 2006

Network Neutrality: AT&T, Verizon have failed this test before

Much like a decade ago, telecommunications reform legislation will await the new Congress that will be elected in the fall elections.

I've been involved in telecommunications issues for just about the entire decade since the passage of the Telecommunications Act of 1996. That act is a near-classic example of the law of unintended consequences, as well, as the ability of powerful corporations to bend the law to their will over time when they are committed to a strategy.

The Telecommunications Act of 1996 had as its intent the unleashing of competitive forces in the telecommunications industry. When it became law, the Internet was not widely used although it had crossed its tipping point and was well on its way to widespread adoption and use. Reed Hundt, who was FCC Chairman during the period when the bill was in its formative stages and finally became law, wrote a book about that era that is at once enlightening and familiar.

The fact that telecommunications reform is on the table again is at least partially the result of the phone and cable companies so successfully turning that attempt to promote competition into a law that instead secured their place as dual controllers of network access, that is, duopolists. As a result, network innovation has been stifled, prices for network access and services remain artificially high, and America has fallen from the global lead in broadband access to somewhere in the teens back in the pack.

With Republicans in control of both houses of Congress, it should come as no surprise that the bills that promise 'reform' actually constitute a spanking new round of corporate giveaways, this time to the phone giants AT&T and Verizon. One sticking point that appears to have prevented these bad pieces of legislation from becoming law has been the issue of network neutrality.

The fire storm was set off by AT&T Chairman Ed Whitacre when he said his company was going to charge companies who used AT&T's network a premium if they wanted their content to get preferential treatment. Whitacre's proposal would put control of consumer's Internet experience under the control of the network operator from which they bought their network services.

This issue had actually be bubbling in the background for a number of years as companies toyed with the idea of creating branded Internet appliances that only happened to work with their networks. I recall that at a community networking conference in Austin in 2000 that Gary Chapman of UT-Austin said that was one of his concerns about the course the Internet was taking as the broadband era emerged. Not surprisingly, SBC was the main phone company in Austin, Ed Whitacre was the CEO and the company was advertising a kitchen-top device as a dream appliance that would find utility on its new broadband network. SBC became AT&T in 2005 when it bought the former Ma Bell.

And while there have been all kinds of arguments laid our for and against the need for network neutrality legislation, one point that seems to have been missed is that the phone companies have had this test before and failed it miserably.

The test that they failed but that they claim they will pass this time is whether they can fairly run networks that are open to other providers that they intend to compete against. That is, can AT&T, Verizon and other network owners act as both wholesale network access sellers and network retail service providers. Their histories say that they cannot.

The philosophy that undergirds opposition to network neutrality legislation is that network owners (AT&T, Verizon and others) can abide by and meet the terms and conditions of the business arrangements they would make with content providers against which they would compete in the market place. That is, AT&T would enter into a contractual relationship with, say, Google to provide priority treatment for network packets carrying Google traffic.

As long as those packets contain, say, search results, the contract should be uncontroversial. Ah, but what if Google steps more boldly into video? What if Google created a movie and/or program download service that became hugely popular to the point that it was reducing viewing of cable offerings that were being carried over AT&T's Project Lightspeed fiber network? Would AT&T agree to those contractual terms at the expense of cannibalizing the revenues from its own IPTV service?

We have direct evidence that it would not abide by the terms of the contract and that evidence comes from the record of the Regional Bell Operating Companies (RBOCs) actions to drive the Competitive Local Exchange Companies (CLECs) off their networks and out of business.

The Telecommunications Act of 1996 set up a mechanism which was intended to create a means for service providers to compensate each other for allowing their respective customers to access those on other networks. It was called Reciprocal Compensation. The RBOCs (including the companies that will soon comprise AT&T: SBC, BellSouth, Pacific Telesys and Ameritech) agreed to this language, expecting full well that since they had all the customers, the CLECs would pay them money to connect their small based of customers to the RBOC customers.

The CLECs, who were sold access to RBOC networks on a wholesale basis, happened to become home to a lot of dial-up Internet Service Providers just as Internet usage was exploding. As a result, Reciprocal Compensation dollars were reversed; that is, the RBOCs owed the CLECs money because so many of their customers were making calls to local ISP numbers in order to gain access to the Internet.

Confronted with this reversal of revenues and the potential loss of still more, RBOCs began withholding Reciprocal Compensation payments from CLECs, thereby depriving the CLECs of critical revenue and then citing the CLEC's resulting inability to pay for network access as the basis to shut them out of the network.

This was a case where the RBOCs were network wholesale access providers. The CLECs were competing with the retail service provider side of the RBOCs. When the competition began to erode the networks on the retail side, the RBOCs moved to undermine access on the wholesale side.

With their network ownership secured through predatory practices sanctioned by Republican control of the Congress and the FCC, AT&T and Verizon would now have consumers and content providers believe that they will now reform their behavior and honor business deals with content providers even when the results of those deals endanger the business models that they've bet their respective fortunes on.

They couldn't do it less than a decade ago when the stakes were lower and their network investments were smaller.

These companies, their predecessors and their allies have poured millions of dollars into lobbying and political action committees (PACs) to convince regulators, the Congress and the public that all they are interested in is the ability to operate like the free-marketeers they claim to be.

The history of these companies tells another story. That story is that they cannot respond in an ethical way to the contradictory forces that work upon them when they assume the role of network owner and service content provider. Their history is that when the revenues from their retail operations are threatened (in the new era it will be video services), they turn to eliminate the threat (in the new era it will be in the form of Internet-based video providers like Google, or Apple, or YouTube, or DemocracyTV, etc.

The surest way to do that is to do what they did to the CLECs: remove those threats by denying them access to their networks.

So, network neutrality is not a philosophical discussion about some free enterprise fantasy land conjured up by the phone companies; it is a real world response to the anti-competitive instincts of companies that believe they can get their way if only they throw enough money at enough members of Congress. When Republicans control Congress this plan has succeeded more than it has failed, at the expense of American consumers and small businesses.

To bring the national down to the local level, Charles Boustany and the entire Louisiana delegation voted against network neutrality legislation in the current Congressional term.

Sunday, August 06, 2006

The Weather Channel is Basic

A letter to the editor in today's Advertiser complains about Cox's recent "basic cable" channel lineup change that drops the Weather channel. The change would force folks who want to keep the weather channel to purchase a more expensive package.

The author remarks:
What a disservice! For all our citizens who depend so much on knowing the weather for the next day and night and cannot afford the cost increase of over $30. This change is an insult.

Yes, sir: It is time the city-parish "fiber plan" takes on a new crusade - surely to be one of compassion and sensitivity.

To that I'd add that pulling the weather channel during hurrincane season in Louisiana shows the sort of sensitivity to local needs that we've come to expectd from Cox.

I spent a chunk of my life as a carpenter and getting a good idea of the day's weather from the weather channel quickly and easily early in the morning was a part of the daily ritual. I'm sure many people use the weather channel to plan their day. It and the channel guide are the losses that will probably effect the most people. The weather channel costs Cox some money but the channel guide effectively costs nothing to provide. Both of these should be on the basic cable tier that is designed to get people access to the local coverage they need without buying into all the expensive channels. Taking it off is a way of forcing people off the basic, inexpensive cable that the big companies resent being forced to offer.

I trust LUS will do better--and I trust that they'll be smart enough to make offering such utterly basic services in the basic tier a marketing point.