The Third Circuit Court of Appeals has dealt another setback to the $125-million municipal broadband plan in Lafayette, La., ruling that the proposed bond issue violates a state law prohibiting the use of monopoly revenues to back competitive operations.
The decision mirrors a similar ruling in a lower court last year that forced Lafayette Utilities System (LUS) to overhaul its finance plan. Its current plan was upheld by a state district court. The appellate court issued its decision last Friday.
The decision marks the third time the LUS muni plan has lost in court. LUS now has the choice to appeal the decision to the Louisiana Supreme Court or re-do its finance plan yet again. It has been 13 months since voters approved a referendum to allow LUS to issue bonds to build a fiber optic system that would provide retail phone, cable TV and high-speed Internet services in competition with BellSouth and Cox Communications.
The bond issue, however, must comply with state law that prohibits utilities from pledging revenues from monopoly operations–electricity and water–to back loans used to fund entry into competitive businesses.
Proponents of the plan insist that BellSouth and Cox are using the courts to subvert the "will of the people," yet they continue to overlook the fact that LUS has now twice attempted to push through a bond ordinance that violates a state law it helped draft.