Video franchise bills all take; where's the give?

This was originally posted on the Lafayette Pro Fiber blog.

The statewide video franchise bills up for consideration in the Louisiana Legislature are, in fact, bad news as John and the LMA (pdf) have made clear. But, based on the 2006 experience where only Governor Blanco's veto prevented a version of this legislation from becoming law, I also believe it is clear that some form of this legislation is going to pass again this year and Governor Jindal will sign it into law.

First, let's make clear that while AT&T is the prime mover of this legislation, the cable industry is on board. That's because this legislation or a subsequent package will ultimately give cable companies the same freedom to cherry-pick and red-line neighborhoods that the phone company is seeking with these bills. They'll demand a level playing field.

It was no accident that Cox Communications announced its latest rate increase just as the Legislature was heading into its Regular Session. That enabled the various astroturf movements to begin flooding newspaper editorial pages with letters to the editor, condemning the cable companies and singing the praises of competition.

Think of this as a choreographed fight for the benefit of the viewing audience, rather than a brawl. The cable companies and AT&T are partners in this dance. Cox stepped on a lot of consumer toes in order to make them receptive to the competition paeans that the phone company allies would produce.

Cherry/Red

That ability to selectively deploy new network technology is the heart of the issue.

How do I know this? Because John and I sat in on the 2006 negotiations on that year's version of these bills when the phone company (still called BellSouth at the time) flatly refused to deal on offers that did not free them from community-wide build-out obligations.

What does this mean for communities? It means, for starters, that the State of Louisiana will become the official enforcer of the digital divide in our state; that is, enforcing that divide will become official state policy codified in the law.

Under current law, local governments have been able to require community-wide build-outs in their negotiations over franchise agreements. Under the three bills being offered in this session to create the statewide franchise, there will be no community-wide build out obligation.

That means that AT&T (but more likely, cable companies) will be able to deploy their new network technologies only in those neighborhoods that they believe will be most receptive to using it. Yes, I think cable companies will be the primary beneficiaries of this legislation because AT&T is not going to be making huge new infrastructure investments in Louisiana. They are carrying a heavy debt burden now and expecting things to slow down as the national economy moves into recession.

But, cable companies are already pretty well deployed across the state. Look for them to work to amend the legislation to allow them to selectively deploy new network technology in the communities where they are already in business under existing local franchise agreements. This will be a particularly attractive path for companies like SuddenLink that bought older networks in slower growth markets from Cox (Lake Charles and Alexandria among them) shortly after the Atlanta-based media company went private.

Consumers As Shields

AT&T and its allies are using the well-being of Louisiana consumers as the poster children for their argument to be relieved of the onerous burden of local franchise agreements. But, those are crocodile tears. In fact, most consumers will be losers as a result of this legislation.

How so?

It flows from the freedom phone and cable companies will have to bypass those neighborhoods that they deem not sufficiently attractive to them to warrant their network investments. When the insurance industry did this, it was called red-lining. When only the best neighborhoods are targeted, it is cherry picking. It is the preferred corporate way.

The fact is that there is no commonality of interest between these companies and most Louisiana citizens — or, for that matter, the best interests of the state. AT&T, Cox and others are focused on return on investments. Which is all fine and good for their stockholders. It is the American way.

But, there is a divergence of interests between the profit motives of those companies and the best interests of communities, particularly when it comes to the issue of access to modern network technologies. Access to those technologies is essential for the economic success of individuals, businesses and communities. With the video franchise legislation, the Legislature will be saying to the phone and cable companies that it is just fine with them if those companies want to exclude certain neighborhoods and communities from access to these technologies.

Combined with the burdens and limitations imposed on communities to act in their own interests on the matter of network technologies via the Municipal Fair Competition Act of 2004, the Legislature (and presumably Governor Jindal) will be handing over control of the economic fates of communities and neighborhoods to companies like AT&T, Cox, SuddenLink and others.

Where on the hierarchy of priorities — for investment, for deployment of new technologies, etc. — of those companies does the fate of those communities rank? With the limits placed by the so-called Fair Competition Act, this is a vital question because communities will have little or no recourse to the decisions that these companies make on matters about access to advanced to technologies.


Where's the 'Give'?

The statewide video franchise legislation would give the phone and cable companies everything they want. What are they giving up in exchange for this largess? So, far, nothing.

Recognizing the political reality that a few hundred dollars in campaign finance contributions from the phone company buys a lifetime of loyalty from legislators, I don't believe there's much chance to defeat this legislation. Some form of a statewide video franchise will emerge from this session and Governor Jindal will sign it.

Viewed from that perspective, what can communities take away from this battle? As matters stand, there is nothing in this legislation that benefits communities. As the record in North Carolina shows, consumers are not going to get benefits of competition that is, supposedly, at the heart of this stuff.

Legislators need to take their eyes off the corporations for just a few minutes and think about their constituents. The statewide video franchise will consign some number of citizens — primarily in middle and low income neighborhoods, to second class digital citizenship by relieve phone and cable companies of the obligation to include those neighborhoods in their new network build-outs.

This is a public policy disaster in the making that runs against the efforts of the state to upgrade the quality of the workforce here. The network tools needed for workers to fully participate in the connected workplace and the global economy will not be available to every one, only instead of a market failure, it will be the direct result of public policy.


The Fairness Doctrine

There is a way to lessen the negative impact of the statewide video franchise legislation. That would be to restore to communities the right to act in their own self interests in matters of network technology access.

That is, those interested in closing instead of widening the digital divide in Louisiana should move to amend this legislation to include a repeal of the Municipal Fair Competition Act of 2004.

The logic of this is rooted in the points made earlier: the interests of the phone and cable companies are separate and distinct from the interests of communities and, indeed, the state.

The only entities that are obligated to act in the interest of all citizens in communities are local governments.
As Lafayette has demonstrated, local governments have the technological skills and the financial means to act in their own self interests in the arena of network technology. LUS is in the process of deploying its fiber network now. By the end of the year customers will be able to sign up to get levels of network services that no other community in the state — and only a handful in the country — will be able to access.

Other local governments must have the freedom to act in the interests of their own citizens rather than be forced to stand idly by as these network builders shunt aside the interests and aspirations of large segments of their citizens.

The Municipal Fair Competition Act is a relic of a soon-to-be bygone era when phone and cable companies proclaimed that they sought to serve entire communities. Local governments should be freed to act to respond to the needs that these corporations are fighting for the right to ignore.

Repealing the 'Fair Competition Act' is a fair trade off for passage of statewide video franchise legislation. Doing so would free local governments to act on the interests of the community that the phone and cable companies do not share.

Amend the statewide video franchise bills to include a repeal of the Municipal Fair Competition Act. It's in the best interest of Louisiana.

Jindal, Tucker, bi-partisanship, and consensus

Welcome to the Jindal era of Louisiana politics where 'bi-partisanship' and consensus are redefined.

Check your dictionaries at the door. Prof Jindal will be making it up as he goes along now. Pupils (and the press) will be expected to take notes and not ask questions.

The latest lesson took place on Tuesday when Jindal announced that Rep. Jim Tucker had his backing to be the next Speaker of the Louisiana House of Representatives.

Let's go by story filed by The Advocate's Michelle Millholon:

Tucker, a 43-year-old investment banker, would be the first Republican speaker since at least Reconstruction, House clerk Butch Speer said.

In the past, Tucker spearheaded Republican opposition to Democrat Gov. Kathleen Blanco’s legislative initiatives, especially her spending plans. Tucker recently resigned as the House GOP caucus leader.

Jindal, a Republican congressman who served for three years on Capitol Hill, said he wants to prevent Washington-style partisanship from taking root in Baton Rouge.

He said Tucker built a “bipartisan coalition” of support to gather the necessary votes for the speaker spot, indicating he can work with Democrats as well as Republicans.

“He understands his previous job is different from his current job,” Jindal said.

Tucker was the tip of the Republican spear pointed, first, at Governor Blanco and, later, at Democratic House candidates across the state. Tucker, through his T-PAC contributed to a list of predominantly Republican candidates for the House — just about all of whom were also helped by the Louisiana Committee for a Republican Majority.

T PAC campaign finance reports show that all of the Republicans getting money from the PAC in its initial round of support got their checks on the same day — July 25, 2007. Could they have all have been attending the LCRM candidate workshop in Alexandria on that day? Might Tucker have passed out all of his checks to those candidates at that meeting? That would make Tucker an un-named partner in the LCRM, among the most partisan organizations in the state.

But, not to worry. Governor-elect Jindal says Tucker will play a different game now that he'll have real power. Tucker must have under gone a wild decompression session since last week's election in order to have completely shed his partisan skin in so short a time.

T-PAC did back four Democracts who got a grand total of $4,500 ($2,500 of that went to Elbert Lee Guillory in a special election in Opelousas during the spring). He's about as much of a consensus builder at Tom DeLay.

It's easy to see why Jindal would feel comfortable with Tucker. Tucker's PAC got a hefty chunk of its contributions from the same place as Jindal — nursing home operators. One particular funding nexus is a collection of care companies working out of Ridgeland, MS, that contributed heavily to Jindal and, to a lesser extent, Tucker's T Pac. Campaign finance reform will not be on the Jindal/Tucker agenda, it is safe to say.

That said, Jindal's claim that Tucker's ascension is bi-partisan and consensus introduces Louisiana to what Democrats in Lafayette have known for a while. The Republican notion of bi-partisanship is that Republicans vote in lock-step and count on a Democrat or two to cave-in, and — voila! — you have bi-partisanship. Think it's not true? Watch how few times Republicans in the House and Senate break ranks over the next four years.

No doubt Tucker will have the vote of Democrat Elbert Lee Guillory of HD 40, to whom he gave $2,500 in his special election bid in March of this year. And, no doubt there will be other Democrats who abandon the party and its constituents on key issues, such as healthcare in the coming months. These will be Democrats that Louisiana Democratic House Caucus and/or the Louisiana Democratic Party poured in their otherwise precious resources to help elect — foolishly thinking that it didn't matter what the person they supported believed, so long as there was a "D" behind their name.

Add Rep. Karen Carter of New Orleans to the list!

New Orleans blogger Your Right Hand Thief has more on Rep. Carter's move.

The Times Picayune provides some details as to Rep. Carter's early decision to back Tucker.

Republicans have put ideology front and center (regardless of the posturing by the governor-elect) and Democrats will be force to either stand on principles or hop on the bandwagon. Personally, I think the wagon is going to get worn out by erstwhile Democrats rushing to jump on it.

It was Tucker who declared after the October primary that there were more ways to win control of the House than just having a majority of Republicans elected there. With an able assist from the Democrats, Mr. Tucker has already proven himself correct.

This train hasn't even fired its engines and the ride is already looking pretty shaky. Candor was apparently the first passenger tossed from the coach.

HD 25: LCRM and Maxwell trying to hide ties?

Lamar White at CENLAMAR noted the other day that the Pierre DuPont-founded Republican PAC, GOPAC, has suddenly shown an interest in the HD 25 race. More specifically, Lamar wrote that GOPAC had taken to the airwaves to attack the Democratic standard bearer in that race, Chris Roy, Jr.

Now, how and why would GOPAC train its focus on a House race in CENLA? Could it be that they were directed to the race by a group that had proven to be a public embarrassment to the Republican who is in the run-off against Roy?

In the days leading up to the October 20 primary, the Louisiana Committee for a Republican Majority (LCRM) paid for ads attacking Roy that prompted Republican Lance Maxwell to try to disavow the ads.

CENLAMAR ran text from a press release issued by Maxwell in response to the radio ads:

This press release is in response to an unexpected attack ad against one of my opponents. On Wednesday, October 17, I heard this radio ad for the first time. I had no prior knowledge nor did I approve such an ad. (By law, no political action committee can communicate strategically with me). This ad is not supported by nor endorsed by the Lance Maxwell Campaign. I have personally called this PAC and asked that they remove this ad immediately. Any further negative campaigning by this PAC is against my specific request. This election cycle is about the future of Louisiana. I will not allow outside PAC’s to muddy the water with negative ads that are contrary to the basic foundations on which I was raised and for which I stand. Negative ads, like the one that is currently playing, are rooted in “old school” smear tactics that have kept Louisiana stagnant. Please continue to work with me as I strive to move Louisiana forward.

Yes, Maxwell was shocked — SHOCKED, I tell you! — that this supposedly rogue PAC would launch such an underhanded and vicious attack.

As the LCRM's campaign finance report filed on November 6 shows, Maxwell's disavowal was, uh, disingenuous. First, there is the matter of the $4,900 that the LCRM contributed directly to Maxwell's campaign on October 3. Then, another schedule in that report reveals that the LCRM spent $7,234.72 on direct mail attacking Roy in support of Maxwell's campaign at the same time those darn radio ads were running. Oh, and the LCRM spent $7,715 to run those attack ads that Maxwell didn't know anything about.

Can there be any doubt that 'plausible deniability' is included in the campaign policy book Maxwell and others got from the LCRM at their workshop last summer?

All told, the LCRM spent $19,849.72 on Maxwell's campaign in the last two weeks before the primary through a combination of direct contributions and allegedly 'independent' expenditures on his behalf.

But, the radio ads must have been pretty bad, because the LCRM is back trying to help Maxwell, but is trying to cover its tracks. How so? By paying GOPAC to go after Chris Roy, Jr.

The LCRM made two $5,000 contributions to GOPAC over the past two months. The first was made on October 15; the second on November 5.

GOPAC could well be doing the LCRM's bidding with LCRM money via its attacks on Roy. That kind of local-to-DC-back-to-local money running has a precedent in the work of the organization on which the LCRM was modeled; in fact, it was that kind of circulation (albeit with illegal campaign funds) that brought Tom DeLay's Texans for a Republican Majority to ruin.

Maxwell needs the LCRM to do his dirty work. He also needs to appear to maintain his distance from the organization in the wake of the primary campaign ads he felt compelled to disavow. GOPAC has shown that it is happy to oblige.

Jindal's Ethics 'Reform' Panel Undermined by Diefenthal Inclusion

CityBusiness reports that Governor-elect Bobby Jindal has completed his appointments to his ethics advisory panel.

Based on one name, it appears that Jindal's version of ethics reform will not include campaign finance reform — an essential element of any comprehensive ethics reform effort.

Edward "Ned" Deifenthal of Metairie used a number of Limited Liability Corporations (LLCs) under his control to make a series of contributions to Jindal's campaign in late 2006 that came to a grand total of $25,000. He also personally contributed $5,000 to Jindal's campaign. He also contributed $75,000 to the Louisiana Committee for a Republican Majority, as well as a number of Republican campaigns for the Louisiana Legislature.

By naming Deifenthal to the panel that is supposed to advise the Governor-elect on his much-anticipated ethics reform package, Jindal is sending a clear signal that he is not interested in reforming Louisiana's campaign finance laws.

Through the use of multiple LLCs under their control, a group of 28 individuals or companies made more than 100 contributions to Jindal's gubernatorial campaign which totaled more than $500,000. This method of using multiple LLCs to circumvent caps on campaign contributions has never been challenged before the state Board of Ethics, although it has been the subject of an advisory ruling based on a question submitted to the board in 2006.

Ethics reform that does not include campaign finance reform — particularly, the banning of corporate contributions from campaigns — leaves the door wide open for corruption. The Governor-elect is not interested in campaign finance reform and that undermines the legitimacy of his claim to be interested in ethics reform.

The $64,000 Question

I don't know what you were doing on Monday, but our friends at the Louisiana Committee for a Republican Majority (LCRM) made time in their busy schedules to write two checks totaling $64,000.

According to the latest campaign finance report filed with the State Board of Ethics, the LCRM sent a $5,000 check to GOPAC, the ideological bench-building organization of the Republican National Committee that works on candidate recruitment and activist training.

The LCRM then wrote a $59,000 check to the Louisiana Republican Party, allegedly to cover the cost of "polling/research."

I say allegedly because in recent days, Democrats across the state have reported receiving calls from Houston-based Promark Research Corporation, to which the LCRM paid $64,495.44 on August 21, 2007. Could the LCRM be trying to cover their tracks by using the Louisiana Republican Party as a pass through to pay for work that they ordered done?

Why would the LCRM want to hide their tracks? Perhaps to conceal the extent of their involvement in/control of the campaigns of Republican candidates in run-off races.