According to one of its biggest boosters, community-owned fiber networks open a door that "has remained shut due to the sleight-of-hand antics of many private telecom companies who talk the game of broadband but only offer embarrassing low levels of capability."

But communities considering such a buildout need to know what they're in for: lawsuits.

Lafayette, Louisiana has one of the largest and most successful fiber deployments in the country. Right now, residents can pick up a 50Mbps symmetrical connection for only $57.95 a month. In most cases, the prices are at least 20 percent less than phone and cable companies, and every subscriber gets 100Mbps access within the city's network. Street-level deployment should be complete by July 2010, nine months ahead of schedule.

Getting to this point wasn't easy, and Lafayette Director of Utilities Terry Huval used his entire statement last month before the Senate Committee on Small Business and Entrepreneurship to blast the telecoms and cable companies for making his life a living hell since 2004. His history of Lafayette's buildout is obviously one-sided, but it presents a detailed and useful look at what it's like from a city perspective when contemplating a local fiber network build.

A reluctant fiber builder



The city didn't want to get into the ISP game. It first went to the local telephone company (BellSouth, now AT&T) and the local cable operator (Cox Communications) and asked if either company would be willing to deploy a fiber-to-the-home network within Lafayette. Both refused to do so, "stating that Lafayette was too small of a market to make such a large investment."

The city decided to build a next-generation network itself. Shortly after the city started a market survey to see if the community was actually interested in the service, "BellSouth orchestrated legislation which, while self-styled as a 'fairness' bill, would have effectively prohibited any local government in Louisiana from offering telecommunications services."

The result was the state's Local Government Fair Competition Act (LGFCA), and it made Huval furious. "Lafayette certainly agrees that the playing field is not level," Huval told the senators, "but all of the advantages go to the private providers."

The city is forced to conduct all of its business, including decisions about deployment and rates, in the open; competitors are not, and in fact have long resisted providing things like deployment plans to local municipalities across the country. City-owned networks operate under strict limits regarding advertising; private networks do not. The list goes on.

As the city moved forward, opposition mounted. Even after the new law was passed, the incumbents went after Lafayette. The first lawsuit, from BellSouth, demanded a local referendum. Lafayette complied, secured the endorsement of the local Republicans, the local Democrats, and the local Chamber of Commerce, then won over the local paper. The referendum passed with 62 percent of the vote.

Once this was done, the city tried to raise money by issuing tax-exempt municipal bonds. The incumbents sued over the bonds. Lafayette first won, then lost on appeal and had to rework its offering.

It was then sued by two local citizens. The case went all the way to the Louisiana Supreme Court, where the Chief Justice "asked the plaintiffs' attorney if they were being paid by the telephone company."

The Supreme Court eventually sided with the city 7-0 on the revised bond issue.

At the same time, Lafayette was dealing with the Louisiana Public Service Commission, which was crafting some of the rules that would affect the service. In Huval's view, "BellSouth and Cox used this additional opportunity to try to make the mandates of the LGFCA even more onerous for Lafayette."

In the end, the process took three years and cost the city $4 million. It also got nasty, with push-polls asking residents, "Since the city only allows you to water your lawn only three days per week, how do you feel about the city offering you cable TV service [you could only watch] three days per week?"

On the other hand, the battle wasn't a total loss.

"Interestingly enough, Cox Communications, which had been increasing its rates several times a year prior to Lafayette's initial announcement to explore its offering of telecommunications services, decided to freeze its rates in Lafayette between 2004 and 2007. At the same time, Cox continued to increase its rates in other parts of the state.

"Estimates indicate that Lafayette citizens and businesses saved nearly $4 million due to these deferred cable rate increases, so in a roundabout way Lafayette's citizens saved in reduced cable TV rates the amount the city spent defending itself in this extensive litigation process."

In the end, Lafayette got permission to move forward, it raised $110 million, and it began building in 2008. It currently offers TV, phone, and Internet service to Lafayette residents and businesses, and its local electric utility (also city-owned since 1896) plans to deploy smart electric meters that use the fiber network as backhaul.

A dismal pattern



While Huval's testimony is certainly partisan, it does broadly echo the stories we've seen in other communities that have attempted something similar. For instance, we have followed for some time a similar saga in Monticello, Minnesota, which tried to deploy its own fiber network after saying that the local telco refused to do so. The project was immediately tied up in court (the city eventually won), and the local telco used that time to launch its own fiber deployment in town.

Cities hoping to go down this route need to be aware of the challenges they will face, including the laws of their own states.

And even after cities have built their own networks, the incumbents can lean on state lawmakers to make life more difficult for the cities—a process currently underway in North Carolina. The incumbents always argue that the issue is about a "level playing field," and it's true that public ownership poses some tricky questions.

But broadband is the future, and it's increasingly hard for residents to sit back and suffer because companies without much competition don't see fit to give them what they need. As a local North Carolina paper put it this week, "[the town of] Wilson says it has the fastest residential Internet speed in the state—100 megabits per second. Time Warner's residential customers there make do with 15 megabits per second... If Time Warner had been offering 100 megabit-per-second Internet speeds in the first place, Wilson might not have felt a need to go into the business."

Despite all the hassles encountered in Lafayette, Huval believes the work was necessary.

"Lafayette, Louisiana is an oasis of major broadband connectivity through its successful fiber deployment," he concluded. "It is unfortunate that the national policies of the past have failed to even approach a world-class broadband system... Clearly, major policy changes need to be made in this country that will allow and encourage all possible participants in the construction and operation of major broadband infrastructure, preferably a fiber to the premise system."