News -> INDReporter FRI, JUN 11 9:53AM by Nathan Stubbs

LUS alleges 'unfair, deceptive' conduct by Cox, NCTC

By being kept out of a national co-op of cable operators, LUS Fiber could potentially lose out on "millions of dollars" in annual savings and revenue, according to a complaint filed by the public utility's telecommunications business. LUS Fiber filed the complaint Thursday with the Federal Communications Commission, alleging that the Kansas-based National Cable Television Cooperative, whose largest member is LUS Fiber competitor Cox Communications, has violated Section 628 of the 1996 Federal Communications Act by unfairly discriminating against LUS in denying its membership application.

The NCTC acts as the buying agent for more than 1,000 cable operators in negotiating deals with programming channels. As an independent operator and non-NCTC member, LUS has been forced to negotiate individually with each programmer in putting together its cable lineup. Not having the buying power of a national co-op puts it at a significant competitive disadvantage. "These discounts and benefits [of NCTC membership] total millions of dollars annually," LUS argues in its complaint. "Given the substantial market power of the Defendants, their refusal to deal with LUS is per se unlawful. LUS seeks expedited review, declaratory and injunctive relief, damages, penalties and forfeitures, costs, including attorney fees, and such other relief as the Commission may deem appropriate."

The complaint lists the NCTC and members of its 15-member board of directors, including Cox, as defendants. The complaint further singles out Cox as likely being the driving force behind denying LUS' membership, alleging:

For many years, NCTC treated all small cable systems, including public systems such as LUS, in a fair and non-discriminatory manner – as Congress intended in enacting Section 628. In recent years, however, NCTC has become increasingly dominated by a handful of sizable cable companies that have long records of hostility toward public communications systems. This trend rapidly gained momentum in 2009, when Cox Communications and Charter Communications joined NCTC, more than doubling NCTC’s subscriber base, and took seats on NCTC’s Board of Directors. Their entry may well have driven, or at least cemented, NCTC’s refusal to deal with LUS.

LUS has been trying to join NCTC since 2008, when the organization enacted a moratorium on new members. Since then, the organization has lifted the moratorium or made exceptions for Cox, Charter and, more recently, two other small municipal cable operators in Chattanooga, Tenn., and Wilson, NC, but not LUS. In its complaint LUS says that NCTC's admittance of Chattanooga and Wilson is the latest proof that NCTC's initial argument for withholding membership from LUS – privacy concerns arising from LUS being a public entity – is no longer valid. The complaint states:

Since the matters at issue between NCTC and LUS were virtually identical to those at issue between Chattanooga and Wilson, NCTC’s discrimination against LUS cannot be explained on legal or factual grounds. In fact, the only significant distinction between LUS and Chattanooga/Wilson is that LUS’s major rival, Cox Communications, is NCTC’s largest member as well as a prominent member of NCTC’s Board of Directors, whereas Chattanooga’s and Wilson’s major competitors, Comcast and Time Warner, respectively, are not members of NCTC.

In an e-mailed statement to The Independent, Cox Communications spokeswoman Patricia Parks Thompson states: "Cox has nothing to do with NCTC's membership decisions, which are entirely in the control of NCTC management. Cox has always embraced competition in Lafayette, and we will be vigorously defending ourselves against this meritless lawsuit."

LUS' FCC complaint, prepared by Lafayette city attorney Pat Ottinger and LUS Fiber attorney Jim Baller, acknowledges that the Communications Act does not expressly mention "the specific kinds of unfair and deceptive practices at issue here." However, LUS argues: 

NCTC is not a private country club that is free to admit or reject whomever it pleases, nor is it still the small and powerless entity that it was before Congress enacted Section 628. Rather, acting under the protection that Congress afforded it in Section 628 for the express purpose of fostering vigorous competition in the cable industry, NCTC has grown into one of the most powerful players in the cable industry, with the power to cause great harm to the intended beneficiaries of Section 628, including LUS. It would flout Congress’s intent to allow the Defendants to pervert Section 628 by acting anti-competitively themselves, for the benefit of NCTC’s largest members." Section 628 states: "It shall be unlawful for a cable operator, a satellite cable programming vendor in which a cable operator has an attributable interest, or a satellite broadcast programming vendor to engage in unfair methods of competition."

In estimating the damage incurred to LUS in the complaint, LUS Fiber consultant Doug Dawson provides the following figures:

LUS is paying, and will pay, at least 10% to 15% more for access to video programming than it would pay if it were a member of NCTC. Applying these percentages to LUS's actual programming costs, and utilizing a conservative rate of projected subscriber growth, I estimate that LUS will suffer damages ranging between $227,000 and $341,000 for the fiscal year ending October 31, 2010 and between $663,000 and $995,000 for the fiscal year ending October 31, 2011. If LUS does not achieve its projected growth rates because of the cost pressures created by its exclusion from NCTC, its damages will be much higher, because they will also include lost revenues from sales of broadband and telephone services to subscribers that purchase bundled services.


Comments (13)add
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written by NORTHSIDIAN SHOTGUN , June 11, 2010 - 04:57 pm
LUS, NUMERO UNO---" NEVAH CROSS COMMERCE AND GOVERNMENT, this is a well=known fact in the business scene,,,GOVERNMENT is the biggest """ LOSER known to man.....closely following government, " there's LUS. HAH ! I guess Lus would get their jollies, being in the same boat with the " Honest-To-God-Cable-Co's, rather than being in a pirogue going up the Mississippi without a paddle........

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written by I Noticed , June 11, 2010 - 05:05 pm
I noticed before we voted on this fiber thing, LUS made no mention of this national co-op. Are they just finding out about this unfair advantage? And if so, who was asleep at the wheel? Why do people get in a game if they don't know the rules before starting? ONLY IN LAFAYETTE!!!!!!!!!!!!!!!!!!!!!
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written by NativeSon , June 11, 2010 - 05:12 pm
Maybe Terry Huval and Joey should have thought this thru a little better? Seems to me that what is referred to as damages in a lawsuit soon becomes financial losses if the case is lost.

So next year the LUS Fiber system could suffer losses in excess of nearly a MILLION DOLLARS! Very competitive.
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written by Geraldbertholl , June 11, 2010 - 06:53 pm
Terry and Joey wanted competition in cable only, not power and now they cry. Nothing new, they rarely know what they are doing.
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written by Cajun Man , June 11, 2010 - 08:16 pm
I agree it looks like LUS was asleep at the wheel...maybe LUS should request a refund from their consultant Doug Dawson for not giving LUS the full picture.

Nevertheless, I wish LUS success. One way we can assure LUS is successful is by switching to LUS fiber. I switched, the very day that LUS fiber was available in my neighborhood.
I was fed up with Cox (and AT&T/Dish Network) with their “bait and switch” tactics and lousy service. LUS service is first class. Most often I even get higher internet speeds than my subscription. Cox nor AT&T never even came close to matching what they charged. I am also asving about $50 a month with LUS!

LUS fiber is fiber class. Cox and AT&T would try to attack LUS, just to keep LUS down.

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written by Holeinthedonut8 , June 11, 2010 - 08:35 pm
I heard about the co-op several times during the "presale" period and I know for sure LUS intended and was lead to believe they were going to join the co-op. After really asking to be allowed to join, the co-op suddenly "stopped" taking new members except for some others beside LUS. Not as dumb as some of you paint them, just dealing with a business that isn't necessary honest themselves.

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written by Solutions? , June 11, 2010 - 08:55 pm
It's funny how these back seat drivers like to sit back and call the shots whenever there is a minor stumble for LUS. They cant be happy with a great system. They would probably complain about the flavor of their birthday cake.

What a bunch 'o douche bags!

P.S., Terry Huval will get this sorted out. He is an outstanding business man.
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written by Real American , June 11, 2010 - 11:33 pm
Do people believe in free enterprise still? Last time I checked our founding fathers fought, many given up their lives, so we could be free and not totally ruled by government.
As this country continues to grow we fall further into the socialistic platform. Our country was founded on freedom and to prove so the United States Federal Reserve has this statement published on their website regarding free enterprise....

"Free enterprise is the freedom of individuals and businesses to operate and compete with a minimum of government interference or regulation. It enables individuals and businesses to create, produce, transform, develop, innovate and compete in the marketplace. As they are able and willing, enterprising people produce goods and services for profit, offer their labor for wages and own the resources needed to produce and sell goods and services. In this system, no one forces people to be creative, productive or enterprising. Instead, they pursue what they believe to be best for them. By producing the goods and services that society values most highly, a free enterprise system results in the greatest efficiency, or lowest costs, of any economic system. It is the system most compatible with individual freedom and political democracy."

I guess this statement needs to be changed as certain so called Americans no longer believe in this statement.

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written by Northsidian Shotgun , June 12, 2010 - 02:59 am
SOLUTIONS AND DONUT HOLE, Maybe thats your problem, all along you thought the waterbag broke too soon, when the truth be known it was, " A PERFORATED DOUCHE BAG ! Now stop ya-yaning like uncle joey and uncle terry.........
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written by I Love my LUS Fiber! , June 12, 2010 - 12:23 pm
Thanks for Terry and the folks at LUS for continuing to fight for better rates for our citizens.

Cox had the chance to install fiber and they said we were too small to invest in. They took a gamble and they lost. Cox Failed. End of story.

People will complain about anything. Here we have people who will complain about having a choice. They would rather deny us the CHOICE of LUS or COX and prefer we could ONLY buy from Cox. Really? That's what you want? You LIKE Cox having a monopoly in Lafayette? What a stupid point of view.
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written by ragin_cajun , June 12, 2010 - 10:52 pm
NCTC is not the only game in town. There are other "content aggregators" out there that provide packages of cable channels for service providers to re-sell to their subscribers. Americom/SES was doing it about 2 years ago. I think that if the cost is anywhere near as low as NCTC, LUS should go with them or some other "aggregator". "you can't fight city hall".


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written by EXISTENTIALIST HOMME , June 13, 2010 - 06:28 pm
" TO GO ALONG OR NOT TO GO ALONG THAT IS THE QUESTION !
"Free Enterprise that is the answer.....One cannot merge Public and Private business, if this were allowed capitalism would not exist.
Government would not stay in business, without the constant,
in-pouring of tax-payers money to run the biggest-less-for-your-money, gig in the world, """ THE US GOVERNMENT "!
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written by Its pure Karma...you get what you asked for , July 02, 2010 - 01:39 am
When LUS and the city of Lafayette promised fiber to the home and then...fiber to the business they forecasted economic gains for Lafayette. We now have traffic cameras generating income for Australia and millions of dollars going to out of state fiber contractors. LUS is advertising, “Support your community” what a bunch crap! I would love somebody to demand the records of how much money is leaving Lafayette to outside companies and how the bid process worked.

Lawyers?
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