In Lafayette, Fiber’s Not the Real Issue

Published April 1, 2005

As prospective competitors, BellSouth and Cox Communications have reason to be vociferous opponents of the $135 million municipal broadband system proposed for Lafayette, La. But the issues the proposal raises go beyond what City Attorney Pat Ottinger has referred to as “profit motives” and involve basic principles that govern our free enterprise system.

When the government wants to get into business and behaves like a 500-pound gorilla, warning lights should go off. Lafayette Utilities System (LUS) and the Lafayette city government have put forth the measure with as few facts and disclosures as possible, fought efforts to involve the electorate in the decision, withheld information on how efforts like this elsewhere have fared, and seek financing that puts the welfare of every Lafayette citizen at risk should the venture fail. This is arrogance on a par with the divine right of kings.

Instead of disclosures and information, we get rationalizations like “We don’t need to vote on this venture because we voted on the government”–a non-sequitur that defies logic. We also heard early on that the bond repayments would never affect people’s other LUS rates–an assertion that was withdrawn because the bonds wouldn’t fly without the full faith and credibility of your current LUS payments on the line, as well as the cable, Internet, and telephone revenue streams LUS hopes to provide.

In many ways it just comes down to: Do we really want a bigger people’s utility company? Is it a good idea to have the government poking around in private enterprise? Have we forgotten the Soviet Union’s centrally controlled utilities that didn’t generate sufficient profit for re-investment and growth? If we won the Cold War, why are we emulating the model of those who lost?

One thing of which I am sure: $135 million is a lot of money. It’s either going to be a decision that the people of Lafayette will celebrate for the next 25 years while the debt is retired, or it will be a yoke under which LUS and the whole system will have to suffer.

And that yoke is a bit bigger than $135 million because of the wonders of compounded interest. Based on the currently proposed first wave of $110.5 million to be floated over 23 years, Lafayette’s bond attorney Jerry Osborne of Foley & Judell estimates the total payout would be $195,248,200. That’s $85 million in profit that undoubtedly will look good on somebody’s balance sheet.

I would like to believe that the city entered into this project with the welfare of the people in mind. But the government’s furtive approach leads to other conclusions. In a matter that is supposed to have been undertaken by local government to help the populace, it would have been nice to have seen the government carry out the whole enterprise in the light of day.

Eric Benjamin ([email protected]) is general manager of The Times of Acadiana, a newspaper serving the Lafayette, La., area. This article is reprinted with permission.