July 18, 2005 Lafayette, LA -- According to Lightwave Associate Editor Matt Vincent, on Saturday, voters in Lafayette elected to give the Lafayette Utilities System (LUS) permission to proceed with a controversial FTTH project, by a margin of 62% to 38%. Critics of the project say it will put the public utility in direct competition with private telecommunications companies such as BellSouth and Cox Communications.
The election's turnout of close to 30% of 74,000 registered voters nearly doubled what was anticipated by election officials. In the election, 12,481 voted "yes" for the FTTH proposal, with 7,621 voting "no." According to a report in The Advocate of Baton Rouge, Lafayette officials initially moved to fund the project using a process that did not include a public vote. However, after a successful lawsuit by BellSouth, Cox Communications, and a citizens' group called Fiber 411, LUS implemented a new procedure to approve the bonds through voting.
"We would ask our corporate citizens, BellSouth and Cox, to realize the people of Lafayette have spoken, and it's time to get out of the way," remarks LUS director Terry Huval, as quoted in a report from The Daily Advertiser of Lafayette/Acadiana.
The FTTH project calls for a city-wide deployment of fiber infrastructure, allowing LUS to offer "triple play" broadband (Internet, telephone, and cable TV) services to its customers. LUS announced its plans to build a high-speed fiber-optic network in April 2004; since then, the plan has been a topic of intense public debate. For the project, voters authorized a plan for LUS to issue up to $125 million in revenue bonds, to be repaid over 25 years - first using revenues from the fiber system, then, if necessary, using revenues from other LUS divisions for electric, water, and sewer utilities. The Louisiana Public Service Commission (PSC) is set to convene as early as this Friday to consider the proposed cost allocation rules.
According to The Daily Advertiser's report, LUS representatives believe state law allows the system to use its existing electric, water, and sewer utilities as a second guarantor for the fiber project; BellSouth representatives disagree. The report notes that if LUS is prohibited from backing the fiber bonds with its other divisions, it may not be able to sell the fiber bonds, or may have to sell them at higher rates than planned. Also, according to the report, LUS officials also believe that the system is exempt from payment in lieu of taxes for five years, until the fiber project breaks even; BellSouth representatives again disagree. The report notes that if LUS has to make payments in lieu of taxes, this could affect the project's business plan.
After the PSC rules are decided, LUS will approach Lafayette's City-Parish Council with a bond ordinance authorizing the sale of $110 million in bonds in order to pay for the fiber project. Following council approval, LUS will be able sell the bonds, saying it could secure the majority of funding within the next four to five months. LUS says that, after selecting an engineering firm to help design the fiber system, and barring lengthy delays resulting from competitors' lawsuits, it could begin offering the FTTH service in approximately two years, with the system expanding to serve the entire city in an additional year and a half.
In response to the Lafayette voters' decision and subsequent moves of LUS, the FTTH Council North America issued the following statement:
"Lafayette, LA has been the center of attention for the last year as a symbol of rural municipalities building, owning, and operating optical fiber broadband networks. Lafayette held a general election to decide if the city should fund a municipal broadband network, based primarily on FTTH technology. Incumbent telephone operator BellSouth, and CATV franchise owner Cox Communications, both engendered vocal and visible opposition to the bond proposal. On Saturday, [in voting] to approve the measure, the voters of Lafayette...sent a message to incumbents and legislators across America: It's time for the public and private sectors to co-operate to accelerate American broadband. Since the campaign was so hard-fought, and the outcome was so one-sided, the FTTH Council hopes that Lafayette will serve as a turning point for broadband issues."Â
Also commenting on passage of the bond initiative, Max R. Kipfer, founder and president of Fiber Optic Communities of the United States (FOCUS), remarked, "We at FOCUS are pleased to see that another community will soon be receiving the benefits of fiber-optic broadband. We look forward to Lafayette becoming a member of FOCUS, and our growing number of member communities doing the same thing."
-- Matt Vincent