Wednesday, May 29, 2013

Antie's Ethical Antics: Corruption revisited

Un-freaking-believable. The swagger of Ed Antie defies imagination; from the lead paragraphs in the Advocate story:
The insider who some say was most responsible for canceling an $80.6 million federal grant to build high-speed Internet capabilities in rural Louisiana has asked the Ethics Board for clearance to rejoin the Board of Regents. 
“Ed Antie is the guy that killed high-speed Internet for 400,000 poor people in Louisiana. The Board of Regents wanted it. He did more to damage that than any one person in Louisiana,” said Foster Campbell, of Bossier Parish and one of five elected members on the state Public Service Commission.
First, as the article makes crystal clear there is no possibility that the Jindal administration will touch Antie with a 10 foot pole anymore—no matter how much money he and his pals amass for their side in the political arena. So this is all about Antie insisting he should feel pride when others clearly understand that shame would be the appropriate emotion.

Some Background
Lafayette Pro Fiber covered this back in '11 when the story originally broke;  that report tells more of the sordid tale.

To recall the outline: The Louisiana Board of Regents had applied for, and won, a grant to supply the state's poorest parishes in the delta region of northeast Louisiana with a backbone fiber-optic network. That area is radically underserved, and what connectivity does exist is in the hands of a few men who, lacking the resources, or perhaps simply the will, to expand the fragmented networks usefully are milking lines laid down during the dot com boom for monopoly-level profits but not reinvesting in substantial expansion in the impoverished region.

It is critical to understand two things that this new network would have done. First, it made portions of the insider leases that formed LONI, the state's academic network connecting the state's universities through the area, redundant. But—even worse— the new capacity would have been open to lease and extension by anyone since it was paid for by public money that mandated open networks. That meant actual competition could emerge throughout a region for the services monopolized by a few players who used their ownership of the decaying physical network to remain virtually sole providers in their small areas. Under the new setup any entrepreneur who thought he or she could do a better job than the old boy networks could connect to the shiny new network and compete at rates somewhat nearer the national norm.

At the behest of Antie and his friends in the telecomm business the Jindal administration intervened in the project and simply changed the deal unilaterally. Their new idea (surprise) entailed cutting out all that nonsense about a new, single, pervasive, open network in favor of  a version that took the money but spent it leasing the old fragments and creating a network that would explicitly not be open. A closed network obviously violated the letter of the law. In addition, the grant rewrite violated the spirit: the stimulus grant was intended to build new capacity and create immediate construction jobs. The astonished Feds had no choice but to cancel the grant.

Mission accomplished: "400,000 poor people in Louisiana" would not get access to a modern high-speed network. But the old boy network would continue undisturbed.

Antie's Role
Antie's sin was being blindingly obvious. The man from Carencro turned into an embarrassment. He was among the six Board of Regents' members who, it was revealed, had paid into the Jindal campaign immediately after receiving their appointment. The usual order for this specie of corruption is for the applicant for a public position to have paid into the campaign before getting the job and, preferably, before their candidate has won the position. Post-paid is, well, unseemly. It looks disturbingly like you paid for a seat.

The way the Regents work is that you get appointed and start the job but you then have to be approved by the Senate. That's usually a rubber stamp deal. Senators don't argue with the Governor over his appointees. At least not in Louisiana. At least not usually. But this time was different. Antie had spent his early days as an appointee politicking the board and the administration by phone and (most traceably) by email demanding that the state do something about the no good, terrible, very bad federal grant to bring broadband to impoverished Louisiana. It wasn't the idea that taking money from those communities was ok if it would hurt in any way someone's private profits—as the subsequent history of the grant proved. It was being so damnably blatant about pandering to his self-interest that led Antie to the woodshed.

Antie's Board of Regent's Photo
The senators came prepared to Antie's hearing. They knew about the internal emails and they knew about his ownership interest in leases to the state's LONI network. They grilled him. An observer of the Louisiana scene at that time would have to have understood that Jindal et al. had already cut Antie loose. The senators had surely secured at least tacit agreement from Jindal to cut this man down to size. But then he lied to the senators. That sealed his fate. Louisiana Voice reproduced his testimony (follow the link and search "Things got ugly early.") What you'll find is testimony that was certainly intentionally misleading and one which the senators obviously took as simply a lie.  First he denied that he had any contracts with the Regents. Then, when asked, he admitted that he did have an ownership interest in Sun America (understating that interest) and claimed he didn't know anything about their contract with the state, claiming the holding company he owned that owned part of it was "dormant." The heart of the exchange:
“First you said you had no contractual relationship with the state and now we find that your company has a $531,000 contract with the Board of Regents,” Murray said. “You said you didn’t know, but you said you approached Gray Sexton for advice on your apparent conflict.
“In terms of ethics, you may be breaking the law,” Murray said.
Sen. Lynda Jackson (D-Shreveport) observed that Antie claimed that Central Telephone was dormant. “Yet, when you check corporate records with the Secretary of State’s web page, it shows that Central Telephone is in good standing, which means it has filed annual reports,” she said. “Its last report was November of 2010 and it shows that you are the registered agent.”
It is simply incredible that Antie still doesn't appear to understand that what he did was wrong. Even in Louisiana open self-dealing is considered bad form. It's actually technically illegal! And there are still those among us who think it is actually wrong—shamefully wrong.

Monday, May 27, 2013

"You Don't Have to Wait for Google to Build it"

Just ran across this nifty month-old article that ran in the Huffington Post; in it Durel makes a strong argument that you don't have to wait for Google for a community to reap similar (or better) benefits. I suspect this article prefigures a presentation Durel is scheduled to give at the FTTH conference in Dallas on the 29th of this month. Since his panel immediately follows Google Fiber head honcho Milo Medlin's keynote address it may be a pretty pointed message for a crowd coming off being wowed by Google's ability to "give" towns a modern network. Durel represents the DIY option.

And when you do it yourself your community controls it.

Wednesday, May 22, 2013

Media Roundup: Fiber "Celebration" Coverage

Media coverage of yesterday's events understandably focused on what was actually news rather than the storyline that LUS Fiber was pushing. The headline for LUS Fiber was new evidence of the success of the venture as evidenced by the audit that hit the news last week. The media pulled the LUS Fiber data out of that audit and ran with the story when it came out.

What was new this week was the announcement that the number of customers had gone over 14,000, that LUS Fiber was announcing a gigabit intranet for businesses, that Acadiana Mall was going to get WiFi, and that further WiFi in public places was being vaguely considered. The stories read accordingly:

@ The Advertiser: Claire Taylor at the Advertiser toplined the subscriber numbers—as one might expect a veteran reporter who'd covered fiber issues for nearly a decade. She's also posted a worth-the-watch video of that portion of the press conference.

@ The Advocate: Richard Burgess, a veteran report at the Advocate also focused on subscriber numbers and had the most pointed Huval pull quote: "“The tough years are behind us.”

@ The Independent: The Independent rounds out the initial reactions to the event with a short summary.

Tuesday, May 21, 2013

Celebration...and Post-Celebration Intranet and Wireless

LUS Fiber supporters had a good day today. The city's telecomm utility marked another signpost victory and, more crucially, began looking beyond the viability of the new utility and toward the benefits it can begin to provide as a successful operation.

Celebration & subscriber numbers:
Veterans of the Fiber Fight
Veterans of the Fiber Fight
The day started off with a gathering of employees, long-time supporters, politicians, and reporters in the atrium at city hall. Folks who'd worked hard during the fiber referendum in '05 held a mini reunion after  a period of circulation, talk, and anticipation. The chair of both the council and the LPUA (LUS' governing authority) gave brief talks but Huval, as directory, held center stage as he laid out the case for  considering LUS Fiber successful, promised new services, and urged the crowd to encourage residents who intended to sign up to go ahead and do so.

And, finally, he revealed subscription numbers, saying that LUS had 14,000 subscribers out of a possible total of about 43,250—based on water customers. That's right at a third of the available households and businesses.

At both the press conference and the subsequent presentation to the City-Parish Council Huval emphasized the encouraging numbers that emerged from the recent audit of City-Parish finances.
income rises, expenses level off, cash flow is positive
Three factors interact: 1) That significant market share—33% spreads the cost among enough people that the services can be offered at a cost-competitive price. In two years the customer base expanded 293% 2) Costs are leveling off; the large startup costs are settling back into maintenance mode. Costs only rose 6.5% last year. 3) Revenue increased by 41% reflecting increased numbers of subscribers served at a much smaller per household incremental cost. The result: cash is flowing into the new business at an increasing rate. This was always the predicted pattern but everyone surely breathed easier when the expected numbers showed up.

Looking Forward; the Benefits of a Successful Utility:
With LUS Fiber willing to declare itself over the threshold of success the focus immediately, and correctly, turns to what "What next?"  What can a vigorous LUS Fiber do for the community. That's a spot where I think the utility could use a little community input. What they offered was worthwhile and interesting:
Why wait on Google Internet?
We didn't.

  • Allons TV—The mobile platform upon which HBO Go recently launched and which already contains a raft of other channels (from ESPN to ABC to SyFy) are already making their material available to smartphones and tablets.
  • The Lafayette Intranet—LUS Fiber has long touted a nearly unique feature: the 100 Mbps internal network that makes the link between all subscribers the same speed, regardless of how much or how little they are paying for their data service. To this LUS is adding a 1 Gbps service between businesses. Why not everyone? Well that's a product of the fact the electronics on the sides of residences top out at 100 Mbps practically speaking. Commercial grade electronics doubtlessly are a step there is no extra cost for new electronics to offer this to their business customers but providing it to all the already established homes would be a major expense. But...there is no reason not to make it clear that this IS the issue, if indeed it is, and to promise that LUS will continue to provide "best possible" intranet to all its customers on the intranet. We should all have a Gig. 
  • Wireless Lafayette—LUS has long had numerous hotspots—for the use of LCG and LUS only. But today they announced the provision of their first commercial wireless installation. It will be at  Acadiana Mall and the WiFi signals will be free to all users. That's interesting news in one direction: it implies that LUS is developing a wireless division for large commercial venues. This is actually a fairly good-sized undertaking with its own raft of specialists and maintenance personnel. That is surprising and may turn out to be a significant part of making a larger wireless play in some degree self-supporting. Public WiFi in public places is also on the agenda and is intended for public buildings and the parks. That'd be a good start but not anything very unusual or notable. My guess here is that there is that there is a deep reluctance to devote the manpower and maintenance expense necessary to keep up an area-wide WiFi network until the utility itself is absolutely secure; it costs money. Frankly, that's an outlay that may require public pressure as it would compete with the final benefit that Huval said a successful fiber utility would bring:
  • Cash on the Barrel Head—If customers continue to sign up LUS Fiber can get considerably beyond just paying for itself and saving Lafayette's citizens a pile of cash. It can, Huval noted, also save us on taxes. The mechanism is the oft-discussed (and oft-misunderstood) In Lieu of Taxes (ILOT). Huval projects some 5 million dollars a year in ILOT monies should all the citizens of the city who say they intend to get around to buying LUS Fiber services would just go ahead and do so. That's not at all pie in the sky and would only increase as further customers sign on. The incremental additional cost of new customers, once the basics are paid for is very small; new adds very quickly become very profitable gravy. All that money could go into the city's general fund! Now it may be that there should be some discussion about whether we want it to go there or whether we'd like to get other benefits from our telecomm utility: what about a wireless cloud over the city? or maybe a real attempt to close the digital divide; a task the Council once endorsed? If we want to have that discussion about the surplus LUS Fiber will one day generate I fear we'll need to insist. 
Huval closed with a convincing plea that we should all try and get those the surveys show simply haven't gotten around to subscribing to LUS Fiber to go ahead and do so. The advantages, whether it is saving on our taxes or getting valuable new service, are to great to ignore. He's right. Talk it up. It is to all our benefit. 

Celebration? LUS Fiber Teases -Updated

LUS Fiber is holding what it is billing as a "celebration" at 3:30 in the atrium at city hall today. They're being coy about just what it is they are celebrating but I do like the idea.

Surely they will brag on the recent audit—it seems unqualifiedly a good report that alone might justify a celebration. But there is also talk about new products, a hint about a gigabit product on the facebook announcement page, and hints that I take to be about wireless networking. And we know, cause it's been promised: we'll get a peek at official subscriber numbers. 

We'll see. And if you've been involved in this fiber thing for awhile you just might want to attend. (I'm going!) Who knows, maybe we'll be surprised.

Update 11:30 5/21/13: A media "reminder" sent out this morning adds the point that Huval will be making a presentation to the council during the president's report. That occurs very early on the agenda so it should start not long after the meeting begins at 5:30. You can watch it on AOC 2 (LUS 3, Cox 15). Alternately, catch streaming live or view the recording at LCG's ustream account.

Tuesday, May 14, 2013

LCG Audit reveals LUS Fiber progress; subscriber numbers to be released

Screen shot from Advertiser Video
The headline news from the LCG audit is that the city-parish has brought its rainy-day cash cushion back up to a level that could keep the government running  for 81 days; the last audit had revealed a mere 7 day cushion.

But that's not the reason this blog is reporting the Advocate story by Richard Burgess — the secondary story is the health of LUS Fiber, the city's local telecomm utility:
The audit released on Monday also offers a close look at the finances of LUS Fiber, the city-owned fiber optic telecommunication service that launched in 2009.  
That’s enough to cover debt payments on the more than $100 million the city borrowed to build the fiber optic system and to cover nearly all operating expenses with the exception of depreciation... Factoring out depreciation, LUS Fiber made enough money to roughly break even by the end 2012, according to the audit figures.
LUS Fiber operating revenues rose from $17,010,937 in 2011 to $24,041,236 in 2012, according to the audit. 
As nice as that news is the real news for avid followers of fiber is the final paragraph:
That's continuing good news. LUS Fiber is paying all its bills—ongoing expenses, cable contracts, debt service, the whole schmear. What it can't say it is doing is storing away enough cash to replace or upgrade the equipment. Even that is a bit misleading. LUS Fiber is, in capital turns, mostly a huge investment in equipment which is scaled to serve the whole city. That hardware is almost all installed upfront before the customers begin to be served in any numbers. The equipment is brand new and it is being depreciated at a steady rate based on its expected useful life. In reality those parts won't begin to fail for a long time. So there is this huge mass of capital investment that is being depreciated on paper each year. Until growth catches up to the amount the accountants want to see being socked away as savings for the eventual day it is needed LUS loses money on the spreadsheets. But it is in no sense that any real businessman would acknowledge "losing money."
The city has never made public the number of customers served by the fiber optic system, citing laws that allow it to keep competitive information secret, but Huval said he plans to release the numbers later this month.
That's a good thing. I've long argued that keeping stuff like this secret is pointless: Cox knows quite well when a customer leaves for the competition and if it wants to spot check to confirm its estimates all it has to do is ride down the streets and look for houses with fiber optic cable running into the home. Cox knows exactly how many customers LUS has to within a small percentage of error. The only ones who don't know are the public—and hiding those numbers looks, well it looks like LUS has something to hide. It is much better in terms of public relations to simply be upfront about it.

Lagniappe: The Advertiser doesn't yet show its article on the audit but it does have a nice video up that has Huval explaining EBITA, Cash Flow Positive, and Profitable to our community. It's a tad surreal to realize that these terms are now useful terms that the citizen-owners of the new telecomm utility have good reason to understand. And you can see him promising to release subscriber numbers.

KATC had a badly mangled story up that Joey Durel immediately blasted in its comments section. Durel wrote:

Wrong. Please try again. I will make the independent auditor, Chief Financial Officer, and Director of Utilities available to your reporter to try and get an accurate accounting of the facts. As disappointing as it may be to someone there, the communications division of LUS is on the right track and continues to grow into the asset this community VOTED with confidence for it to be for Lafayette.
That sounds like the Durel of the fiber fight—an immediate feisty response. And he was right. The article, which has since been pulled, was an unsigned mishmash that confused In Lieu Of Taxes (ILOT) (which LUS Fiber does not yet pay) with an internal "loan" (where LUS Fiber is forced to pay market rates for a loan that returns to them money that they earned) and made the thinly veiled claim ("But that can't be taken at face value") that the auditor and Terry Huval were lying. It showed an embarrassing lack of understanding of the fiscal issues involved and revealed that someone at the station is drinking the anti-fiber cool-aide. KATC was wise to get its mistakes out of the public eye.

Update: The Advertiser story with full text is now available.

Update 2, 5/14/13  The Independent has a story up with the provocative title: "Lafayette’s ‘sinking ship’ is cash flow positive." That title refers to councilman Theriot's strange ideologically-fueled rant last year. Some fun bits:

On some marketing research:
"And what we’ve learned is that of the people who have not bought our services yet, about half of those probably aren’t going to buy our services because they’re against the idea of the government providing these types of services. But the other half that do intend to buy our services just haven’t gotten around to doing it. And if we end up with a big percentage of those who just haven’t gotten around to hooking up, we think the numbers that we have now will probably increase those by 60 to 90 percent in revenues, so it’s pretty significant.”
I have no doubt that there are significant parts of the population who see the city's telecomm utility as a new, risky idea. But that will be true only for as long as the fiber utility is new and risky. As it incrementally morphs into a stable fixture on local scene those concerns will drop away—and folks will buy according to what's best for them from all the established providers. Time will cure this ill.

Concerning the climb to profitability:
Says Huval, “We’ve gotten past that dark hour, but we knew it was going to be this way, if you look back at our feasibility study. We did the whole city. From the beginning, we didn’t discriminate. The poorest parts were hooked up just as fast as the wealthy. We promised that.”
Huval's remark tying the time to profitability to the political commitment to serve all demographics immediately reflects his understanding that doing so, rather than serving high-income, high take-rates first as Google is doing, kept LUS Fiber from getting over the hump faster. That points to one difference between public and private providers.

The take-away really ought to be that things are going roughly according to plan. Advocates of fiber always said that it would take awhile to get to profitability on any enterprise that required huge upfront capital investments. None of this was unanticipated and those that want to pretend that something scary is going on because a startup loses money that it always said it would lose in the first years is not being "fiscally responsible"—they are playing some other game.

Monday, May 06, 2013

"New Yorkers Envious of Lafayette and Chattanooga? Yes."

What's Being Said Dept.

Community Broadband Networks posts a nifty short piece that points to how ingrained a positive perception of community-owned fiber networks has become among the digerati. Notice that this really isn't a story about community networks; the basic story is about creating a strong digital workforce in New York City.  The person interviewed is using Lafayette as shorthand for attending to the basic infrastructure needs supporting a vibrant tech community. I like that NYC considers Lafayette to be the obvious case of a community that has done its basic homework. (Of course, we still need to get about building on what we've made possible.)

Aw hell, rather than summarize the summary, I'll simply repeat; it's pithy enough to reproduce in full; enjoy:

In a recent New York Daily New article, Scott Stringer wrote about the Big Apple's tech employment trends. He noted that more tech related positions now come to the city but those jobs still tend to elude women and people of color. He suggests looking at New York's own workforce and offering better science and technology training. How do they do that? Improve curriculum, of course, but: 
Ultimately, the new workforce is only as strong as the infrastructure that supports it. Today, fast, reliable Internet access isn’t a luxury — it is a core utility of the modern age.
Stringer notes the antiquated copper throughout the city and looks south for a model:
Lafayette, La., constructed a municipal fiber network in 2005, linking fiber to every home and business. In Chattanooga, Tenn., the city worked with the public electric company to build a fiber network that not only helped modernize the energy grid, but also linked 150,000 homes and businesses to a gigabit connection that is 20 times faster than connections in much of New York City.
London-based Foreign Direct Investment recently recognized Lafayette as one of the top 10 Small American Cities of the Future, in part due to its fiber infrastructure. Chattanooga has receivedmultiple recognitions for it innovative municipal network.