BREAKING: Centerville follows Murray, is out on Milestone Two

Centerville LogoCenterville followed Murray in rejecting Milestone Two tonight, this one on a 4-1 vote. Only Perry and Orem are left to vote, but so far over half of the addresses covered by UTOPIA are opting to move forward with getting more information from Macquarie on the true cost to build, operate, and maintain the network for 30 years. Despite what you may hear, this is enough to have the Macquarie deal move forward if the Milestone Two cities accept the finalized proposal.

Most disappointing is that Centerville has 93% coverage in their city, so the vote appears to be a “we got ours” kind of statement. Tremonton and Brigham City both voted yes despite similar levels of coverage, recognizing that this is the best offer on the table and a better one is unlikely to come along.

BREAKING: Murray says no on Milestone Two by a unanimous vote

Murray logoMurray joins Payson and Lindon in declining to move forward with the proposal from Macquarie. The council voted unanimously to pass despite not really having any other workable options on the table. Of course, they’re now in a heck of a pickle: Murray has attracted numerous businesses to the city (including a new location of the Moran Eye Center) with UTOPIA, but they’re running the risk of the network going dark if they won’t cover any operational shortfalls.

Centerville is also taking a vote tonight in a special council meeting. I’ll post when I have results from there.

Making the Macquarie deal better: things every city council should consider

macquarie_logo_2638The Macquarie deal is really good. I have doubts that UTOPIA cities are going to get a better offer at all, and the odds that any other offer would even have a chance of paying any of the existing bond debt are very slim. That said, there are things that all city councils should work on to make sure this is the best deal possible. Here’s what I think they need to do.

Specify speed increases on the basic tier

Including a basic tier of service seems to be a must-have now that Google Fiber has done it. I think the included tier is a pretty good deal overall, but the contract must specify a rate at which those speeds will gradually increase. The FCC already defines broadband as 4Mbps/1Mbps service. It’s rumored that they’re going to bump that to 10Mbps/3Mbps Real Soon Now(TM). I don’t think the basic tier should necessarily match what the FCC calls broadband, but it certainly can’t sit at 3Mbps/3Mbps forever. Make sure the speed increases are built into the contract, potentially as a function of the FCC definition (i.e. 75% of FCC broadband downstream speeds for upstream and downstream).

Specify increases in the transfer cap on the basic tier

A lot of people got riled up over the 20GB cap on the basic tier, but for someone who’s doing really basic usage, that’s actually pretty good. That’s 100 hours of YouTube a month or 30 hours of SD Netflix. Most people on the basic tier probably won’t be using very much anyway. That said, the cap needs to rise with time just like the speeds. 20GB is good today. What if it’s not good enough tomorrow? Make sure the contract specified that it will increase.

Require providers to fully disclose the terms of transfer caps

While we’re speaking of transfer caps on the basic tier, I think we also need to get ISPs to be VERY clear and up-front about how they handle the cap. The spectre has been raised that a hard cap could mean that someone loses their VoIP E911 service when the cap runs out. It could mean big overages. All of these terms need to be up-front. Providers should disclose if they have no caps, a soft cap (with the terms of the penalties for repeated overages), or a hard cap (with transparent pricing on purchasing additional transfer). Anything less would not be acceptable.

Require all revenues to pay down the bond debt and utility fee

City councils should already be prioritizing revenues from the system to go towards first paying the bond debts and then reducing the utility fee. Should. Citizens need to make sure that they codify that this is how they’re going to actually do it. This removes the threat that revenues from the system will flow into the general fund and the full utility fee will be assessed to residents. That would be completely unacceptable.

Try to assess the utility fee on users only

Cities are free to figure out how to collect the utility fee from residents and businesses. Macquarie has suggested “everyone pays” as the model. That kind of stinks since the entire point of the UIA was to shift costs from taxpayers to subscribers, but it’s a hard reality of how city finances work. If cities can get the net utility fee low enough, they should seriously consider assessing it to network subscribers only. In the unlikely event that the income covers both the utility fee AND the bond payments, those who paid should be first in line for rate reductions to be made whole. Once the bonds are paid off, those who paid should also be first in line for reaping the benefits.

Conclusions

City councils are the ones ultimately in the drivers seat on these items. The first three need to be hammered out in the Milestone Two proposal. It’s entirely possible that some of them have already brought up one or more of these points. The final two, however, are entirely up to them. And it’s entirely up to you to let them know that’s what you want too.

Broadband Bytes for 2014-06-20

Orem Mayor Richard Brunst Lies About XMission to Hurt the Macquarie Proposal

Orem Mayor Richard Brunst

Orem Mayor Richard Brunst

In what can only be described as an outrageous disservice to the citizens of Orem, Mayor Richard Brunst outright lied about XMission’s intentions to participate in the basic 3Mbps level of service. When asked about it, XMission founder Pete Ashdown had this to say:

I’ve personally also heard or seen statements from SumoFiber, Veracity Networks, and WebWave that they have no problems providing the basic tier, a contractual requirement to remain a service provider on the network.

The mayor also accused XMission of redlining poor neighborhoods which also elicited an angry response:

It’s no secret that Mayor Brunst is a likely no vote against the Macquarie deal, but outright lying about a well-respected local company to try and convince others to do the same is a new low. The Mayor owes everyone at XMission a huge apology for simply making crap up.

Brigham City advances to Macquarie Milestone Two

Brigham City became the fifth UTOPIA city to move forward with the proposal from Macquarie and seek full details under Milestone Two. The council passed it on a 3-2 vote. Cities who have not yet taken a vote include Centerville, Orem, Murray, and Perry. This means that over 51.8% of homes in UTOPIA cities are now on board with getting full details of the proposal from Macquarie.

Word on the street is that Perry might actually move forward with the deal to not be left behind by their northern neighbors. Given that the city currently has no fiber, this may be the only way for it to make good on its existing bond commitments. They’ll be holding their next city council meeting on June 26th at 7PM.

Comcast to customer in UTOPIA cities: “drop dead, here’s a rate hike”

Comcast-LogoIn a somewhat shocking move, Comcast has recently released a rate table showing that it’s giving every one of its customers in UTOPIA cities (and just UTOPIA cities) a rate hike just days after the deadline to respond to the Macquarie deal. With several cities still set to vote, you have to wonder what they would have to gain by underscoring UTOPIA’s points about a competitive marketplace. You may recall they slashed rates to the bone in Provo when Google Fiber moved in.

One theory is that they may be trying to lock customers into long-term contracts in exchange for lower rates. If that’s the case, it’s the same way they’ve tried to starve out competitors in other markets Standard Oil style. This only underscores how grossly anti-competitive the telecommunications market is.

Here’s a full chart of the rate increases:

Comcast Rate Hikes

The Legislature punts on new anti-UTOPIA bills, but for how long?

In yesterday’s meeting of the Political Subdivisions Interim Committee (listen here), legislators sought to get a deeper understanding of what the Macquarie deal is and how it works. Unfortunately, most of the meeting consisted of the Utah Taxpayers Association spewing out fear, uncertainty, and doubt while the Utah League of Cities and Towns corrected the many, many mistakes they made. West Valley City Mayor Ron Bigelow also spoke and did a great job of detailing how cities are putting an extraordinary amount of effort to solve this problem on their own without state assistance.

Worth noting is that the UTA made many very thinly veiled threats to sue to stop the Macquarie deal. It felt like they were using that potential legal morass as a justification for seeking more legal restrictions. HB60 proponent Rep Curt Webb (who co-chairs the committee) also spoke against UTOPIA and seemed to have learned nothing from the massive amount of national negative press he garnered for his efforts earlier this year. Fortunately, the committee shut down an attempt to work on a bill to hamstring the Macquarie deal. They were directed to speak directly to Macquarie to get answers to some of their questions.

Overall, it seems like the committee is content to watch things play out for now and is truly interested in learning the details of the deal. Since I’m sure they’re already getting plenty of misinformation from the CenturyLink-funded Utah Taxpayers Association, it’s probably time for you as citizens to email them and let them know that you’d prefer they take the hands off approach as well. Click here to email all of the members of the committee at once and let them know how you feel.

BREAKING: Payson says “no thanks” to Macquarie Milestone Two

PaysonlogoIn a move surprising precisely nobody, Payson’s city council voted 4-1 to pass on Macquarie’s proposal to UTOPIA. You may recall that this is the same city that passed on rebonding in 2008, didn’t join the UIA in 2011, and didn’t bother to show up to board meetings with any consistency since 2009.

From a fiscal perspective, it’s easy to see why they made the decision. Since joining the network, the population has grown by several thousand, so there are a lot more homes to cover. At this point, there’s less than a decade of the original bond payments left for them to make. I’m sure they’re figuring that the cost to pay off the bond and walk away from their share of the network is less than taking the deal. Unfortunately, it also means that the city probably has little chance of seeing an open-access fiber network. Anyone who’s using the network in Payson is probably also looking at going dark Real Soon Now(TM).

In a surprise move, Tremonton is in on Milestone Two

macquarie_logo_2638I honestly did not expect this. Despite being one of the few cities with a near-complete network, Tremonton voted 5-0 last night to move forward with Milestone Two. This makes the tally so far four in favor (including Midvale, West Valley City, and Layton) and one against (Lindon). Votes are still scheduled in Orem, Centerville, and Murray. Payson and Brigham City have both been discussing it, but Perry has been pretty quiet.

If you live in a city that hasn’t voted, there’s still time to talk to them and urge them to move forward with Milestone Two. Check the list of events to get an idea of the when and where of what I know or contact your city directly.

UPDATE: Payson votes tonight at 6PM.