Friday, June 11, 2010

LUS Files Suit, Sorta...(updated)

LUS, for a change, has initiated a lawsuit. Or at least an FCC proceeding. Close enough.

In a press release issued today LUS outlined its case for the public. That release underlined the basic irony of the situation that LUS finds itself in: fighting for admittance to a coop whose reason for existence is to help small guys, like LUS, somewhat level the playing field with big guys, like Cox. It's outrageous that Cox is in a position to try and block LUS. From the press release:
The concept behind the establishment of the NCTC was to allow small cable providers to aggregate their collective buying power for national programming, therefore providing an opportunity for more competition in the cable TV marketplace.
In a move that is reminiscent of the angry days of the fiber fight here in Lafayette Joey Durel blasts Cox's willingness to block fair competition:
It is a sad day for the free market economy when a corporation hundreds of times the size of a small, community-owned enterprise will use every means necessary to snuff out competition so that they can go back to charging outrageous prices for services.
That's from the press release, and really that's pretty much all you need to know. But the complaint to the FCC is only marginally less caustic in its lawyerly way. A reader who'd like to savor the full flavor of this story is encouraged to read it through. But if you're not in that group, I'll be happy to replay some of the highlights...

I was intrigued to see that the complaint to the FCC had a politically timely overtone...the introduction begins by emphasizing that LUS depends upon video revenues to "provide ultra-high-speed broadband services." Devising a high-speed broadband plan is the project of the moment for the FCC and Lafayette's LUS received much favorable attention in Washington during the plans proceedings, serving as the national poster-child for local initiative for having provided ultra high-speed broadband at a shockingly low price.

The complaint outlines the history of the conflict; and a very suggestive history it is. Congress. The NCTC, the complaint alleges boasts of its inserting a clause into the 1992 Telecommunications Act that assured that the coop would be treated like a cable company by content providers by convincing legislators that this was the only way to insure fair competition between the little systems it represented and the mammoth national cable companies. But, a two-year "moratorium" on new members the NCTC opened up their Cox and Charter; two of the nations largest multi-system operators. Since that time they've apparently quit admitting new members that would compete with their present (expanded) membership.
[The NCTC and its dominant members] are now undermining Congress’s pro-competitive intent by using denial of membership in NCTC as an anticompetitive device to insulate NCTC’s existing members from competition by new entrants.
A footnote offers evidence that Cox and Charter aren't the only members who have fought against local municipal competition...MediaCom, SuddenLink, Bridgewater Telephone have also engaged in their own versions of the anti-competitive behavior Cox has practiced in Lafayette.

Lafayette wasn't the only municipal provider caught in this trap. Chattanooga, Tennessee and Wilson, North Carolina were similarly denied membership--right up to the moment that they demonstrated they'd bring a complaint in conjunction with LUS to FCC. Then, suddenly, they were notified that the NCTC had reconsidered. LUS and its lawyers draw the obvious conclusion and urge the FCC to do the same:
NCTC’s discrimination against LUS cannot be explained on legal or factual grounds. In fact, the only significant distinction between LUS and Chattanooga/Wilson is that LUS’s major rival, Cox Communications, is NCTC’s largest member as well as a prominent member of NCTC’s Board of Directors, whereas Chattanooga’s and Wilson’s major competitors, Comcast and Time Warner, respectively, are not members of NCTC.

...NCTC’s continued flat rejection of LUS’s membership application, despite LUS’s offer to join under the same terms and conditions as Chattanooga and Wilson, underscores the arbitrary, discriminatory, and anticompetitive nature of the Defendants’ practices. Indeed, to keep LUS out, the Defendants are even willing to go so far as to harm the membership of NCTC as a whole, as the addition of another qualified member would increase the bargaining power of the whole group.
There's more in the complaint, including a series of emails between Lafayette's lawyers and the NCTC's explaining—or rather refusing to explain—why Lafayette was being treated differently, the text of the first joint draft of the cities' complaint, and the text of the NCTC's attempt to pre-empt the three cities legal action.

It's a surprisingly readable and interesting document. And it will be very interesting to watch this go forward. Lafayette has asked for a quick and frankly pretty brutal judgment against the NCTC and the individuals and companies represented on the NCTC board. I look forward to seeing how these companies enjoy having their feet held to legal fire.

Update: Back during the fiber fight when Cox and AT&T were doing everything in their power to eliminate LUS as a possible competitor each ugly episode made national news. The push polls, lawsuits, and incumbent-promoted petitions were widely reported. No small part of Lafayette's victory was the result of unremitting bad PR in the national press. Those days have returned and the current fight over NCTC membership has garnered extensive coverage.

The Advertiser: LUS files FCC complaint
The Advocate: LUS Fiber complains to FCC; Cable TV order asked
The Independent: LUS alleges 'unfair, deceptive' conduct by Cox, NCTC

Broadband Reports: LUS Files Complaint With FCC Over Cox Blackballing
Broadband Breakfast: Small Town’s Telecom Drama Continues: Municipal Utility Sues Cable Group For Discriminatory Access To Programming
Telecompetitor: NCTC Membership Fight Stirs Up Controversy, FCC Asked to Intervene
FierceCable: LUS blames Cox because it can't get into National Cable TV Co-Op

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