February 24, 2005 2:34 PM PST

Lafayette hits snag in fiber build

The city of Lafayette, La., has hit a snag in its plans to build a fiber-optic network to offer citizens cheaper telephone, television and high-speed Internet service.

On Wednesday, a state district judge ruled that the Lafayette Utilities System (LUS) must follow a different portion of state law to issue $125 million in bonds to pay for its planned fiber-optic telecommunications business. The ruling opens the door for a special election to decide whether the LUS can borrow the money necessary to fund the project.

The utility system, which built a fiber network to service its utilities business, has been offering wholesale bandwidth services to at least 11 Internet service providers, and providing retail broadband services to city agencies, since 2002. Now the LUS wants to expand this network, and provide residents and businesses with cable, phone and high-speed Internet services over fiber connections into homes and businesses.

BellSouth and Cox Communications, the local telephone and cable companies serving Lafayette, have strongly opposed the utility system's plan. Last month, the service providers filed a lawsuit against the LUS, alleging that it was using a portion of state bond law that contained no provision for citizens to call for a public election.

Wednesday's ruling hasn't killed the LUS' plan entirely, but it does mean that the utility system will be forced to go back to the drawing board before it can ask the state's bond commission whether it can borrow money for the project. One of the new procedural requirements is that the LUS will have to have a public hearing where a petition may be presented, which could force the city to hold an election on this issue.

BellSouth applauded the judge's decision.

"As government moves forward to compete with private industry, it is important that voters, as well as taxpayers and investors, have the assurance the right state laws will be followed," John Williams, BellSouth's regional manager, said in a statement.

While city officials say they're confident that the community would support funding the project if the vote were held today, they worry that BellSouth and Cox would outspend them in a long advertising campaign that could sway public opinion.

"It's all part of the same playbook the phone and cable companies have used in other parts of the country," said Terry Huval, the utility system's director. "First, they try to use political connections to influence

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