Monday, February 19, 2007

"Fiber costs city $3.5M"

Well the Advertiser has decided to write up the story that Durel announced last week: that the cost of supporting the fiber to the home project against the opposition of Cox, BellSouth, and those few citizens that supported the corporations has accounted for most of the 3.5 million spent to date.

Lafayette Pro Fiber reported on this last week, when Durel included the basic information in his state of city address. The Advertiser story on the address didn't mention this topic then; presumably they didn't want to dilute the dramatic effect of this story.

The article also covers savings due to lower Cox rates and benefits due to new jobs already gained but neglects to add up the results for the reader. Those gains would mean putting the 3.5 million in costs to the city against the 13.4 million in savings and new salaries injected into the community. That comparison, available only to readers who did the math, is pretty convincing in making Durel's basic point. Beyond that the Advertiser neglects to mention Durel's larger claim that to get the true value of the new income it should be multiplied (as is common when talking about private investments). That would have raised the contrast to a surprising "30, 40, 50 million" in yearly gains against a one-time 3.5 million in costs. Of course, thinking it through like that doesn't make for nearly as dramatic a front-page story.

Durel's claims transform the story into one in which the real issue is not about costs--that was story the Advertiser had intended with it breathless "Not a strand of fiber-optic line has been buried. Not a single customer is receiving Internet, telephone or television service" introduction. Such an introduction is intended to set up the interpretation that we got nothing for our money. That was the "exciting" story that was originally intended. Unfortunately for the paper Durel nicely moved the story to a cost-benefit analysis and took the punch out of the story. He got his defining licks in before they went to press and if you read the story carefully you can see that the author is a bit irked by how it all played out. The author lays out the timeline very carefully laid out; the reader is told exactly when each player made their move and the clear implication is that the city and LUS are engaged in defensive maneuvering. (Frankly, I don't doubt that is the case. There seems to be a pretty deep unwillingness on the part of LCG and LUS to engage in public discussion of potentially uncomfortable issues. That makes them vulnerable to suspicions like the one this article tries to raise. Given the nature of the opposition that is understandable. But not wise.)

But the media story is a sidelight, really.

What the current article usefully adds to our understanding of the city project is a list of who received the money, which is quite interesting--but not particularly surprising if you've followed the fight closely. The list can be roughly divided into engineering-planning, legal, and political costs. What is interesting is the relative size of those pies and the way the players divided them up.

Engineering-Planning: $1,646,720
The R. W. Beck consultancy has been the big, quite, behind-the-scenes player through all this. They do engineering and planning specializing in electric utilities--they were involved in developing the electrical plant that went online in 2005. Their engineering expertise is not all they sell and in this instance may not be the most of it. They also sell management and financial expertise--the nitty gritty of how to organize and run a new business. Beck does not appear to have much in the way of telecom expertise, hence the presence of CCG in the planning lineup. One might think that the 1.65 million in this category would have been spent regardless of the opposition. But that isn't really true; delays and "redos" have raised these costs. Beck, for instance, did a second feasibility study to satisfy legally imposed requirements that wouldn't have been necessary without incumbent opposition.

Legal and Political
A quick look at the list at the Advertiser reminds the reader of the various phases of the fiber fight. Baller Herbst is a national firm that gives both political and legal advice and has been "in" since the beginning. Spiegel and McDiarmid are national and deal with federal regulatory matters. (Remember when there was some talk of Lafayette opposing the BellSouth/AT&T merger--but that got dropped in return for BellSouth promising not to sue--which only got us the Eastin-Naquin suit...hmmn.) Kean Miller defended LUS when the incumbents tried the "cross-subsidization" argument at the Public Service Commission and lost. (This is the same logic that the Supreme Court is currently reviewing. It is something of a pattern for the incumbents to 'shop venues' for their nutty interpretations.) The Graham Group handled the money for the television "air war" during the fiber referendum and hired political consultants at that time. Haynie and Associates is the famous lobbyist Randy Haynie, hired to defend Lafayette from further attack in the legislature. That, and fees for the election all seem "political" to me, even when it is law firms doing the legislative and regulatory lobbying.

Legal affairs evoke a similar story of the lawsuit portion of the fiber fight with various firms involved in different of the myriad lawsuits filed by the incumbents or their minions. It's been a long row to hoe, folks.

And whose fault is it?
An implicit question is how should "blame" for all these costs be accessed. The article implies that some of the legal and political costs are assignable to Lafayette and some to the incumbents. As I read it those costs should all be assigned to the incumbents. The first move in all this was theirs: they went down to Baton Rouge in the middle of the legislative session, gutted a bill that would have done something good and inserted a lobbyist-written bill in its place. That bill eventually became the Local Government (un)Fair Competition act and NONE of the ensuing lawsuits, jockeying at the legislature, or battles in the Public Service Commission would have been necessary without it. Before that law Lafayette, and every other Louisiana city could have made its own decision about starting a telecom utility without the "help" of their big brothers in the state house.

Cox and BellSouth wanted to block competition and they went to the Louisiana Legislature to pursue that goal. Without that anti-competitive urge to involve the state in supporting their monopoly profits there would have been NO further cost to the people of Lafayette.

Every penny of the subsequent 2 million or so in costs should be laid to their feet.

6 comments:

Anonymous said...

You sure do cry a lot in your blog. Without any laws in place, Lafayette could run every private sector provider out of Lafayette. Is that what you want from this LUS fiber proposal? ONE PROVIDER!! That would not be the best solution for the people.

T-Bill

John said...

Yo T-Bill,

Somebody needs to inform you and those of your ilk that starting off with insults is not likely to work all that well. You'd do well to learn to recognize legitimate anger.

Here's what amazes me and those of my ilk: that people can read a whole long article that DOCUMENTS the cost of corporate greed to our community pass over all that without finding ANYTHING wrong with it. Instead they attack any person who points out the consequences of corporate greed.

So let me reiterate a central line of reasoning and urge you to deal with it:

1) Prior to BellSouth/Cox's law there was no tool that the incumbents could have used to block Lafayette using its own property for its own purposes. [You apparently think it is a good thing for the state to step in an tell local folks what they can and can't do with their own resources. You and BS.]

2) BS/Cox wrote their own law and got a bill gutted after the filing deadline in order to sneak their bill in. It was initially intended to make it practically impossible for a city to go into the area at all. It was intended to eliminate a whole area of competition.[You apparently think this sort of thing is "good government" since it protects out-of-state monopolies instead of local citizens. Some of us have different definitions of good government.]

3) BS/Cox's law protects them them and only them from muni competition. (They weren't protecting free enterprise, they only cared about themselves.) -- Competition from little LUS terrifies two of the largest and most powerful corporations in this country? No they are just "protecting" their near-monopolies from real competition that might eat into their local profit margin. LUS can't possibly really hurt them seriously. It can only cut into their take locally. [You apparently only like some kinds of competition.]

3) BellSouth (aka AT&T) and Cox have engaged in a series of delaying tactics and attempts to drive up the costs of locally provided services ever since they Lafayette started to think about PROVIDING A SERVICE THEY REFUSE TO PROVIDE.

Let me repeat: A SERVICE THEY REFUSE TO PROVIDE.

They don't want to do it and are willing to say plainly that the will not provide a FTTH service.

[You apparently think that it is all-american and ok-dokie to encourage corporations to sashay down to the state legislature to keep competition from emerging that uses superior technology just because it would threaten their outmoded tech.]

4) They continue to do all this after the community, first through its elected officials and then through a direct 2:1 vote of the people expresses the public will: We want our own fiber network. Who the hell do BS and Cox think they are to invent laws and pursue an all-out attack on that which the community has spoken plainly in favor of? It's easy to see that they've already cost us around 2 million just to defend that which would have been legal without their interference. [You apparently think that sort of greed-motivated damage is ok if the corporations favor it.]

--------------

I'll be frank: I'm willing to bet T-Bill thinks he's defending a "conservative" position. Maybe he's not thought it all the way through. But this sort of knee-jerk subservience to corporations--corporations who have zero concern for local communities--is not conservative. It is corporatist. Unfortunately that pretty much describes the position of too many politicians these days: Corporatists in conservatives' clothing. A real conservative would back local decision-making over the state giving itself control of local resources in order to benefit two (count 'em) Atlanta-based megacorps. A real conservative takes a direct vote of the people seriously. Lafayette voted for fiber and they ought to be able to do regardless of what competing corporations desire. Folks who call themselves conservatives and back the corporations when they come in and exploit local communities are not conservatives at all--they prove that by opting to pull down local power and control--the foundation of viable local communities--and replace it with a corporate power which values nothing beyond short-range profit.

Ok, I clearly needed to get that off my chest.

Anonymous said...

John
I have a friend that is a manager for the cingular call center and he hears AT&T is looking at consolidation of call centers. He tells me after the transition from Cingular to AT&T wireless the paln is to close 2 mega centers and Lafayette could be one of them. Do you know of any rumors like this?
I know he will find a new job because he is a dedicated emoployee that is over qualified for a call center but I do worry about his future.
FYI.....He asked me to blog you because he is concern about someone within his department learning about his contact with you and your motive.

John said...

Anonymous,

I've heard nothing that would lead me to believe that AT&T wireless would leave Lafayette.

For one thing I don't think it likely that they'll close any call centers anywhere--they'll have to service the same number of customers after the merger as before and are anticipating offering a whole new range of services (video) for which they will need more, not less, reps.

More directly: the phone company's deal with Lafayette includes 18 million (million!) in concessions and is part of a 10 year contract signed in 2001. That contract binds the corporation for 10 years to provide 750 jobs. They're not going anywhere.

(This all came out when Bill Olvier threatened to close down the center over Lafayette daring to challenge his monopoly. Mike's post on this is a classic. See:
http://lafayetteprofiber.com/Blog/2005/02/bill-oliver-proclaims-himself-only.html

I doubt your friend has anything to worry about. But I hope he finds a job he likes better. I know a woman who worked as a manager there and know she felt hugely abused by her bosses.

Anonymous said...

John
The word is, the agreement was a contract with Cingular Management as 50% bell south and 50% Southwestern Bell. With the management now being AT&T this contract is void. The rumors are starting to fly at his work and everyone is worried. The Management has been told nothing and the email that uncovered this news about 2 Cingular centers closing has been destroyed while some saying it was a misunderstanding.
Thanks for the history and keep up your work.

John said...

Anonymous,

My bet is with the "misunderstanding" aka "rumour" explanation.

Two things are worth clearing up though, and may help set folks minds at ease as much as is possible outside of working for a company that you trust.

1) AT&T is not an outside company--it is just what SBC renamed itself when it swallowed up the remnants of AT&T.

2) SBC and BS were NOT equal owners SBC owned the majority of the company. So as far as wireless goes this is just like buying out a minority owner--it does NOT change the legal obligations the company has taken on. But even if the buyer had been on the outside it wouldn't make any difference--a purchaser "buys" all the obligations of the company it purchases.

(SBC and BS had an agreement to make management decisions as if they were equal partners. But that had nothing to do with ownership.)