Broadband Team/UIUC Public Engagement

Lafayette, LA

Introduction

Lafayette is one example we have of a success story. In Lafayette, LA, broadband was successfully made into a “fourth Utility” by the city’s public utilities system. The largest resistance this project faced was the challenge of private phone/cable/Internet companies, who viewed the Utility as competition.

Actors & Initiation

Lafayette is somewhat unusual among U.S. cities for having a strong public utilities system in place. For over 100 years, Lafayette’s electricity, water, and waste water utilities have been provided, maintained, and sold to customers by the City. The body that manages the utilities is called the Lafayette Utilities System, commonly known as LUS.

By 2002, LUS had already constructed its own internal fiber system for the use of its Utilities offices. LUS had already been offering bandwidth on this network wholesale to service provider companies, who then sold and managed service to customers. However, in 2004, LUS proposed to expand the fiber network and offer service themselves, directly to homes and businesses (FTTH). Phone service, Television programming, and Internet would be offered over Fiber. Fiber would become the “Fourth Utility” offered to the city by LUS.

LUS Fiber’s “mission statement,” in which they define “communication” as the true fourth utility, can be found here on their website: http://lusfiber.com/aboutus/ Elsewhere, also, the encouragement of business development is cited as a major reason for building the fiber network.

Incidentally, Mayor McGinn of Seattle allegedly cited Lafayette as an example to follow during his campaign.

Funding

The building out of the network would be publicly funded with municipal bonds. However…

Challenge

The existing commercial service providers that were already servicing customers in Lafayette with phone, cable, and Internet were of course opposed to the idea of Fiber as a utility, because of the strong competition it would offer. Companies including BellSouth and Cox Communications made moves to push for legislation at the state level that would restrict the government’s ability to provide telecom services. The legislation passed as the “Local Government Fair Competition Act.” Invoking this Act, the companies brought legal suit against the city of Lafayette. After LUS lost in district court and on appeal, it decided to hold a referendum.

A campaign on the issue ensued. Lafayette was worried about the telecom companies’ resources and their capacity to sway citizens. However, grassroots efforts put up a strong campaign in favor of city-utility Fiber. The citizens approved the Fiber plan by a 2-to-1 margin.

Another suit was brought by the cable association and BellSouth, regarding technicalities of state bond law and how it was being used. Lafayette was able to revise in order to comply with the court ruling against them. Two private citizens also brought suit against Lafayette for “overcharging” for the services. The court ruled in Lafayette’s favor.

$110.4 million in bonds was issued to Lafayette for the completion of the project.

Success

The fiber network is currently in the process of being built. The fiber cables are being placed both above and below ground, depending on the landscape. Each destination point will have an Optical Network Terminal (ONT) in order to be able to use Fiber.

Lafayette began offering services to some areas in early 2009 and expects the project to be completed, with coverage for every residence and business, by 2011.

Analysis

The power that challengers can wield can be frightening. Telecom companies have a lot invested in the success of their operations, particularly in areas where they have already been entrenched. That they lobbied to create a new law to protect their interests, brought legal proceedings, and campaigned to keep the public in favor of their services and image demonstrates what a force to be reckoned with the private commercial sector can be. Even a couple of residents, though ultimately unsuccessful, attempted to challenge the project through legal means.

This type of challenge is happening not just in Lafayette, but all over the U.S. as various community broadband projects have been proposed. As described by a 2005 article about Lafayette’s meeting with this challenge:

“These projects have ignited a firestorm of opposition from the Baby Bell phone companies and cable operators, who view the existence of these networks as threats to their businesses. As a result, they have spent millions of dollars lobbying state legislators and fighting court battles to make sure that these networks aren’t built.
In 2003, a referendum was put before voters in the Illinois cities of Batavia, St. Charles and Geneva. The community known as the Tri-Cities planned to build its own fiber network. When funding for the project came down to a referendum, SBC Communications, the local phone company, and Comcast, the local cable provider, spent millions of dollars to influence voters. In the end, the referendum failed, and the project has been put on hold.”

However, while legal challenges can be convoluted and difficult to deal with, the good news is that they shouldn’t be a problem — in this form, pertaining to these issues — for the prospective broadband initiative in East St. Louis. First, if the funding comes from a stimulus grant, then obviously that money has been set aside already and there shouldn’t be any legal challenges regarding that source of funding. Second, East St. Louis is, at present, not much of a booming hotspot for the telecom industry. It is difficult to see the local businesses being especially threatened by the competition a community broadband plan would bring.

Still, legal opposition is a force to always keep in mind, as it could possibly present itself during official proceedings of any kind. When undertaking such a large project, it is probably wise to be wary of alienating key players who could seek legal recourse as a way to protect their interests.