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July 17, 2006
Lafayette Muni Broadband One Year Later
Yesterday (July 16) marked the one-year anniversary of the voter approval of a referendum in Lafayette, La., to fund a $125-million municipal fiber-to-the-home system.
To date, nothing has happened with this project. It remains tied up in court following a series of lawsuits, brought first by Cox Communications and BellSouth, the incumbent cable and telephone companies, respectively, with whom the taxpayer-backed system would compete. Lafayette Utilities System (LUS), the municipal utility, lost the first court challenge on the basis that its financial plan improperly relied on revenues from its monopoly electric utility to back the broadband bands. In May, however, LUS won approval from a U.S district judge on its revised financing plan. Still, at least three other court cases tied to the project remain. In the latest development, two Lafayette residents have announced their intention to appeal a ruling to the Third Circuit Court of Appeals, charging that LUS is already overcharging electricity customers, ostensibly to build a bankroll for broadband. If the case proceeds, a decision may not come until mid-August. If LUS wins, the earliest it will be able to sell bonds is the fall. If it can sell the bonds (a challenge itself) the earliest it will break ground would be some time in 2007.
Editorials and blog commentary are placing great emphasis on the fact that a nearly two-thirds majority of voters approved the bond issue. Therefore, they say, opponents should cease their court actions and allow “the will of the people” to prevail.
The problem is, even in the U.S., majority vote does not always legitimize a law, ordnance or appropriation. For example, a majority of voters may pass a referendum allowing a local government to censor newspaper criticism of town operations, but such a law would not hold up to judicial review (we hope!).
Fortunately, we live in a society that still gives more than nominal due to the idea of free enterprise. All the bluster in Lafayette can’t push aside the basic legal question the heart of the debate on municipal broadband: Does a government have the right to leverage the unique resources it has—access to low interest loans, power of the purse, regulatory authority--to enter a competitive business?
The ability to promise “lower prices” is not a good enough reason. Theoretically, the government can use “lower prices” as a rationale to enter any business. Tthat’s where power of the purse comes in. Any shortfalls on the retail side can be made up through taxes, surcharges or intra-utility revenue transfers at the back end. With municipal broadband, this has happened time and time again.
It’s unfair competition. It hurts the companies, their employees, their customers and their shareowners. It also hurts taxpayers in the communities that mount these projects. It’s poor use of limited tax dollars.
But proponents continue to claim that the value of muni broadband is competition--that the cable and telephone companies are monopolies. This once was true but is not the case now. Direct satellite broadcast and wireless are direct competitors. And there could be more if government, instead of attempting to get into the business, got out of the way. If anything, cheaper broadband and video in Lafayette was short-circuited by Gov. Kathleen Blanco’s veto last week of a bill that would have allowed statewide video franchising.
Monopolies don’t suffer from loss of market share or a stock price that fails to reflect the company’s true value—two problems that plague BellSouth. Monopolies are favorites of institutional investors. They don’t initiate stock buybacks because of heated disagreements with them, as Cox did.
In fact, the belief of the monopoly claim to justify municipal broadband is hazardous to a utility’s fiscal health.
Bristol, Va.; Provo, Utah; Lebanon, Ohio; and Ashland, Ore; are just four municipalities who got into municipal broadband out of belief that cable and phone companies were price gouging. They soon learned that incumbent broadband pricing was not arbitrary, but reflected the cost of investment, the cost of technology and the cost of cable programming acquisition. And because the incumbents benefited from economies of scale from their national footprints, they were still able to compete effectively with the municipalities.
It’s worth noting that since the Lafayette vote, no other municipality has mounted a fiber optic project. The idea still pops up, as in Portland, Ore., where a $470 million project was suggested. Someone mentioned the situation in nearby Ashland, which, after borrowing $15.5-million, halted a muni project in 2005 for lack of customers and has been looking for a buyer ever since. Muni talk in Portland ceased.
The best thing that could happen for the people of Lafayette is that their municipal system is never built. Rising interest rates and growing commercial deployment factor against its success, not to mention timing. I haven’t even mentioned the potential upheaval a broadband play from Google, Yahoo and Microsoft might cause. Even if everything were to go LUS' way here on out, service would not launch until late 2008, more than two years from now.
Legal delays have cost the city $6 million, said LUS Director Terry Huval, in an article published by the Baton Rouge Advocate July 1 (and source of the time frame above). This includes increase in $2 million more in interest LUS will likely have to pay on debt because of recent rate increases. This pales to the millions the town will save if the project never takes off.
Posted by steve.titch at July 17, 2006 09:58 AM
Basically nothing noteworthy happening right now, but eh. Today was a complete loss. I haven't been up to much recently. I've pretty much been doing nothing worth mentioning.
Comment by: Sten62313 at January 25, 2007 09:03 AM
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I haven't been up to anything recently, but so it goes. Such is life. What can I say? Pretty much not much exciting going on to speak of. I haven't gotten much done lately, but I don't care.
Comment by: Sten47816 at January 26, 2007 08:11 AM
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I just don't have anything to say. Not that it matters. Eh. I've just been staying at home doing nothing, but I don't care. That's how it is.
Comment by: Sten88390 at January 26, 2007 09:43 PM
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I haven't been up to much these days. Today was a loss. Nothing seems important. I've just been letting everything happen without me these days.
Comment by: Sten53487 at January 26, 2007 10:28 PM
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I haven't gotten anything done recently. I've just been hanging out doing nothing. I haven't been up to anything these days, but it's not important. Today was a total loss.
Comment by: Sten33048 at January 27, 2007 04:27 AM
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I haven't gotten anything done today. I feel like a fog, but what can I say? I've just been letting everything wash over me lately, not that it matters. Shrug.
Comment by: Sten44937 at January 27, 2007 06:26 AM
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I haven't been up to much lately. I've basically been doing nothing , but it's not important. I can't be bothered with anything recently. I've just been letting everything happen without me lately.
Comment by: Sten74795 at January 27, 2007 11:46 AM
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I haven't gotten anything done recently. I've just been hanging out doing nothing. I haven't been up to anything these days, but it's not important. Today was a total loss.
Comment by: Sten60581 at January 27, 2007 04:01 PM
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I just don't have much to say these days, but so it goes. Today was a total loss. I guess it doesn't bother me.
Comment by: Sten86427 at January 27, 2007 06:33 PM
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I've just been hanging out not getting anything done. What can I say? I've basically been doing nothing worth mentioning, but pfft. Not that it matters. Pretty much nothing exciting happening to speak of. I haven't been up to much these days.
Comment by: Sten75521 at January 27, 2007 11:25 PM
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Not much on my mind right now, but it's not important. I've just been letting everything happen without me. I just don't have anything to say right now.
Comment by: Sten35116 at January 28, 2007 01:11 AM
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retty much nothing seems worth thinking about. My life's been completely dull , not that it matters. I've just been staying at home waiting for something to happen.
Comment by: Sten98184 at January 28, 2007 04:30 AM
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I haven't been up to much lately. I've basically been doing nothing , but it's not important. I can't be bothered with anything recently. I've just been letting everything happen without me lately.
Comment by: Sten55332 at January 28, 2007 09:35 AM
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I just don't have much to say these days, but so it goes. Today was a total loss. I guess it doesn't bother me.
Comment by: Sten48062 at January 28, 2007 04:51 PM
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I feel like an empty room, but eh. Nothing seems worth doing. I haven't gotten much done today.
Comment by: Sten18024 at January 28, 2007 06:17 PM
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I've just been staying at home not getting anything done. I guess it doesn't bother me. Shrug. I haven't been up to anything. I haven't gotten much done today.
Comment by: Sten89774 at January 28, 2007 07:47 PM
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I haven't been up to much lately. I've basically been doing nothing , but it's not important. I can't be bothered with anything recently. I've just been letting everything happen without me lately.
Comment by: Sten74429 at January 29, 2007 12:53 AM
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retty much nothing seems worth thinking about. My life's been completely dull , not that it matters. I've just been staying at home waiting for something to happen.
Comment by: Sten16780 at January 29, 2007 05:03 AM
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I just don't have anything to say. Not that it matters. Eh. I've just been staying at home doing nothing, but I don't care. That's how it is.
Comment by: Sten41189 at January 29, 2007 12:24 PM
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I just don't have anything to say. Not that it matters. Eh. I've just been staying at home doing nothing, but I don't care. That's how it is.
Comment by: Sten3067 at January 29, 2007 03:22 PM
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Not much on my mind right now, but it's not important. I've just been letting everything happen without me. I just don't have anything to say right now.
Comment by: Sten82318 at January 29, 2007 03:58 PM
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I haven't been up to much today. I've just been letting everything happen without me. Basically nothing seems worth bothering with. I've just been hanging out doing nothing. I just don't have anything to say right now. More or less nothing happening.
Comment by: Sten27752 at January 30, 2007 12:21 AM
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I just don't have anything to say. Not that it matters. Eh. I've just been staying at home doing nothing, but I don't care. That's how it is.
Comment by: Sten10284 at January 30, 2007 01:54 AM
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I haven't been up to anything these days. So it goes. I can't be bothered with anything these days.
Comment by: Sten53275 at January 30, 2007 07:31 AM
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I've just been staying at home waiting for something to happen. Whatever. Not much on my mind lately. I guess it doesn't bother me.
Comment by: Sten32222 at January 30, 2007 09:33 AM
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I feel like an empty room, but eh. Nothing seems worth doing. I haven't gotten much done today.
Comment by: Sten87744 at January 30, 2007 01:36 PM
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Basically nothing noteworthy happening right now, but eh. Today was a complete loss. I haven't been up to much recently. I've pretty much been doing nothing worth mentioning.
Comment by: Sten42147 at January 30, 2007 05:36 PM
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I've just been staying at home waiting for something to happen. Whatever. Not much on my mind lately. I guess it doesn't bother me.
Comment by: Sten49651 at January 30, 2007 09:54 PM
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Not much on my mind. I don't care. I've just been letting everything happen without me , but shrug. Whatever. I feel like a void.
Comment by: Sten64184 at January 31, 2007 03:43 AM
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I've just been staying at home not getting anything done. I guess it doesn't bother me. Shrug. I haven't been up to anything. I haven't gotten much done today.
Comment by: Sten1324 at January 31, 2007 09:15 AM
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I haven't been up to anything recently, but so it goes. Such is life. What can I say? Pretty much not much exciting going on to speak of. I haven't gotten much done lately, but I don't care.
Comment by: Sten49076 at January 31, 2007 09:35 AM
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I can't be bothered with anything these days, but such is life. I don't care. So it goes. More or less nothing seems worth thinking about. I've just been hanging out waiting for something to happen, but that's how it is.
Comment by: Sten90554 at January 31, 2007 07:35 PM
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I haven't been up to much lately. I've basically been doing nothing , but it's not important. I can't be bothered with anything recently. I've just been letting everything happen without me lately.
Comment by: Sten75866 at February 1, 2007 12:06 AM
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I've more or less been doing nothing worth mentioning, but eh. My life's been really bland today. I don't care. I've just been letting everything happen without me these days. That's how it is.
Comment by: Sten64362 at February 1, 2007 03:27 AM
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I just don't have anything to say. Not that it matters. Eh. I've just been staying at home doing nothing, but I don't care. That's how it is.
Comment by: Sten97680 at February 1, 2007 05:22 AM
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I've more or less been doing nothing worth mentioning, but eh. My life's been really bland today. I don't care. I've just been letting everything happen without me these days. That's how it is.
Comment by: Sten74951 at February 1, 2007 10:03 AM
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Not much on my mind lately. My life's been completely boring these days. I've just been hanging out not getting anything done. So it goes.
Comment by: Sten42107 at February 1, 2007 12:18 PM
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Basically nothing noteworthy happening right now, but eh. Today was a complete loss. I haven't been up to much recently. I've pretty much been doing nothing worth mentioning.
Comment by: Sten92520 at February 1, 2007 05:11 PM
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I've just been staying at home not getting anything done. I've basically been doing nothing worth mentioning. My life's been pretty unremarkable these days. Eh.
Comment by: Sten91134 at February 2, 2007 01:57 AM
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I haven't been up to anything today. I can't be bothered with anything recently. Nothing seems worth thinking about. I haven't gotten anything done recently, but oh well. Not much noteworthy going on worth mentioning.
Comment by: Sten58949 at February 2, 2007 07:11 AM
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I've just been staying at home not getting anything done. I've basically been doing nothing worth mentioning. My life's been pretty unremarkable these days. Eh.
Comment by: Sten30396 at February 2, 2007 11:59 AM
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My mind is like a bunch of nothing, but I guess it doesn't bother me. I haven't been up to anything recently. I've pretty much been doing nothing to speak of.
Comment by: Sten81719 at February 2, 2007 08:47 PM
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I've more or less been doing nothing worth mentioning, but eh. My life's been really bland today. I don't care. I've just been letting everything happen without me these days. That's how it is.
Comment by: Sten79770 at February 3, 2007 12:14 AM
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I haven't been up to much these days. Today was a loss. Nothing seems important. I've just been letting everything happen without me these days.
Comment by: Sten31471 at February 3, 2007 01:06 AM
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My mind is like a bunch of nothing, but I guess it doesn't bother me. I haven't been up to anything recently. I've pretty much been doing nothing to speak of.
Comment by: Sten76154 at February 3, 2007 05:34 AM
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I've just been staying at home not getting anything done. I guess it doesn't bother me. Shrug. I haven't been up to anything. I haven't gotten much done today.
Comment by: Sten16868 at February 3, 2007 07:08 AM
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I haven't been up to much today. I've just been letting everything happen without me. Basically nothing seems worth bothering with. I've just been hanging out doing nothing. I just don't have anything to say right now. More or less nothing happening.
Comment by: Sten77373 at February 3, 2007 11:08 AM
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I haven't been up to anything today. I don't care. I've just been staying at home not getting anything done. Basically not much happening right now. Maybe tomorrow. I guess it doesn't bother me.
Comment by: Sten74338 at February 3, 2007 04:54 PM
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Not much on my mind these days, but what can I say? It's not important. I just don't have much to say lately. I've just been letting everything pass me by recently, but eh.
Comment by: Sten77471 at February 3, 2007 09:29 PM
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Not much on my mind right now, but it's not important. I've just been letting everything happen without me. I just don't have anything to say right now.
Comment by: Sten64724 at February 4, 2007 06:39 AM
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Not much on my mind. I don't care. I've just been letting everything happen without me , but shrug. Whatever. I feel like a void.
Comment by: Sten56744 at February 4, 2007 08:30 PM
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I haven't been up to anything today. I can't be bothered with anything recently. Nothing seems worth thinking about. I haven't gotten anything done recently, but oh well. Not much noteworthy going on worth mentioning.
Comment by: Sten84577 at February 4, 2007 10:44 PM
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I haven't been up to much lately. I've basically been doing nothing , but it's not important. I can't be bothered with anything recently. I've just been letting everything happen without me lately.
Comment by: Sten22046 at February 4, 2007 10:44 PM
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I just don't have anything to say , but shrug. So it goes. Not much on my mind recently. I can't be bothered with anything recently.
Comment by: Sten77075 at February 5, 2007 04:42 AM
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I can't be bothered with anything these days, but such is life. I don't care. So it goes. More or less nothing seems worth thinking about. I've just been hanging out waiting for something to happen, but that's how it is.
Comment by: Sten68934 at February 5, 2007 06:35 AM
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I haven't been up to much these days. Today was a loss. Nothing seems important. I've just been letting everything happen without me these days.
Comment by: Sten9793 at February 5, 2007 09:44 AM
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I just don't have anything to say , but shrug. So it goes. Not much on my mind recently. I can't be bothered with anything recently.
Comment by: Sten25197 at February 5, 2007 03:01 PM
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Not much on my mind. I don't care. I've just been letting everything happen without me , but shrug. Whatever. I feel like a void.
Comment by: Sten4337 at February 5, 2007 10:32 PM
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My life's been basically bland today. More or less nothing seems worth thinking about. My mind is like an empty room. I've more or less been doing nothing to speak of. Not much on my mind recently.
Comment by: Sten64565 at February 6, 2007 03:18 AM
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I just don't have much to say these days, but so it goes. Today was a total loss. I guess it doesn't bother me.
Comment by: Sten46654 at February 6, 2007 07:34 AM
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My mind is like a bunch of nothing, but I guess it doesn't bother me. I haven't been up to anything recently. I've pretty much been doing nothing to speak of.
Comment by: Sten13430 at February 6, 2007 07:39 AM
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I just don't have much to say these days, but so it goes. Today was a total loss. I guess it doesn't bother me.
Comment by: Sten42222 at February 6, 2007 08:19 AM
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