BREAKING: Orem votes no on Macquarie’s Milestone Two for UTOPIA

Orem city logoOrem voted 6-1 to reject Macquarie’s proposal for the UTOPIA network. Orem represents 18.7% of the total addresses covered by the network. Midvale, West Valley City, Layton, Tremonton, and Brigham City have all voted yes while Payson, Lindon, Centerville, and Murray have voted no. A vote from Perry is expected tonight as well and they are expected to move forward, though the city accounts for slightly less than 1% of passed addresses. The total addresses that will be covered under Milestone Two stays at 51.8%, though Perry could nudge it close to 53%.

While the deadline for response to the Macquarie proposal is Friday the 27th, cities may still be able to work on a deal with Macquarie to get fiber infrastructure in their cities. It’s very likely, however, that the cost will be higher and they will be at the end of the line for construction. Macquarie has enough cities interested in Milestone Two to move forward with the proposal which should take about two months to complete. At that time, the cities who opted in will have the chance to review and vote on it. Upon acceptance, Macquarie is going to stick to an aggressive 30-month build plan.

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.

Updated List of Macquarie-related Meetings

I’ve just received an updated list of what meetings and votes are currently scheduled to take place regarding Macquarie’s proposal to UTOPIA. As always, theses are subject to change and could be added to. If you hear anything, let me know and I’ll update accordingly.

Public Meetings and Town Halls:

  • June 3 @ 7:00PM, Lindon: Lindon City Center, 100 N State St, Lindon
  • June 4 @ 7:00PM, Tremonton: Bear River High, 1450 S Main St, Garland
  • June 5 @ 5:00PM, Orem: Orem Senior Friendship Center, 93 N 400 E, Orem
  • June 5 @ 6:30PM, Murray: Doty Education Center, Building 6 of the Intermountain Medical Center, 5121 S Cottonwood St, Murray
  • June 5 @ 7:30PM, Centerville: Centerville City Hall, 250 N Main St, Centerville
  • June 17 @ 7:00PM, Lindon: Lindon City Centr, 100 N State St, Lindon
  • June 17 @ 7:30PM, Centerville: Centerville City Hall, 250 N Main St, Centerville
  • June 19 @ 6:00PM, Orem: Orem Senior Friendship Center, 93 N 400 E, Orem

Votes:

  • June 5 @ 7:00PM, Layton: Layton City Hall, 437 N Wasatch Dr, Layton
  • June 18 @ 6:00PM, Payton: Payson City Hall, 439 W Utah Ave, Payson
  • June 24 @ 6:30PM, Murray: Murray City Hall, 5025 S State St, Murray
  • June 24, Centerville: Centerville City Hall, 250 N Main St, Centerville
  • June 26, Orem: Orem City Hall, 56 N State St, Orem
  • June 26 @ 7:00PM, Perry: Perry City Hall, 3005 W 1200 S, Perry

Some of these are cutting it pretty close to the deadline to respond of June 27. Payson is reportedly interested in finding out more, but their years of not attending board meetings with any regularity has left a huge information and expertise vacuum within the city government. I haven’t heard anything about Perry at all. Brigham City will be voting on the proposal either on June 19 or 26 during the regularly scheduled council meeting.

Broadweave the Sequel? FirstDigital appears completely unqualified to make a pitch to Orem

insidelogoA company you’ve never heard of makes a pitch to take over a municipal fiber network despite no track record of providing residential services or network construction on a large scale. If this story sounds familiar, it’s because it describes Broadweave’s pitch to Provo that ended in a disastrous devaluing of the network that allowed Google to take it over for the price of a Coke at McDonald’s. Suspiciously, it’s also beginning to sound a lot like a proposal from Salt Lake City CLEC FirstDigital being made in Orem as a competing offer to Macquarie.

So who is FirstDigital? Judging from their very spartan website, it appears they provide services to business customers with a heavy focus on T-1 lines and old-school analog phone lines. There’s no evidence that they have experience with managing fiber infrastructure on their own or have any idea how to provide services to residential customers. A search of their employees seems to indicate as much. To say that this company would be in way over their head is a huge understatement.

Based on some third party notes about meetings in Orem, it appears that FirstDigital is trying to keep as many details of their proposal under wraps as possible. They’re meeting with one or two council members at a time to avoid open meeting requirements, a tactic that sends UTOPIA critics howling. What has come out in the public meetings has been concerning at best. The biggest issue is that FirstDigital wants to employ the Google Fiber “fiberhood” tactic, a plan where they only build out areas that are financially justified. This buries any promise of ubiquity under a rock in no time flat. Given that much of the remaining areas of Orem are very expensive to build (thanks to the infamous “Orem potatoes” rocky soil), it’s likely they wouldn’t build out much more of the city at all, but we already know that the half-finished network doesn’t break even. Macquarie is proposing to complete building the entire city, not redline those areas where they can’t make a quick buck.

I’m also going to immediately question the financial situation of FirstDigital itself. Broadweave had a bankroll of tens of millions of dollars to take over a completed network in a city of the same size and failed miserably. FirstDigital would be taking over a half-finished network with no NOC, no video headend, and no transport outside of the city. This is a project that requires a much larger sum of money than Broadweave had available and is unlikely to reduce the financial burden on the city any more than Macquarie would. Hoovers estimates that the company has a scant $900K/year in revenue and just 11 employees (though LinkedIn shows at least 20). For comparison, Macquarie manages at least $140B in assets and is bringing the top international names in network engineering to the table.

While many details are still shrouded in mystery, I feel pretty confident in saying that this looks like a small company about to get in way over their head. I asked FirstDigital for an interview, but they have failed to respond. Oremites, make sure your council knows that this apparently ill-equipped suitor should be kicked to the curb.

Schedule of Macquarie-related meetings

macquarie_logo_2638Want to ask Macquarie some more burning questions? Interested in seeing how your city council votes? Here’s the so-far definitive list of what is happening and where. Note that any of these is subject to change and I’ll do my best to publish updates.

  • Thursday May 22: Brigham City will have an open house at the Bunderson Center, 641 E 200 N, from 6PM to 8PM. Macquarie will be there to answer one-on-one questions.
  • Tuesday May 27: Orem will have Nick Hann at the regular city council meeting to answer questions and take feedback. The council meets at 3PM in the Public Safety Training Room.
  • Tuesday May 27: Both West Valley City and Layton will be taking votes on advancing with Milestone Two during their normal city council meetings.
  • Tuesday June 3: Lindon will have a public discussion item on the city council agenda. They meet 7PM at the Lindon City Center on State St.
  • Thursday June 5: Murray will have an open house at the Doty Center inside the Intermountain Medical Center complex. It starts at 6:30PM.
  • Thursday June 5: Centerville will have an open house, education session, and public Q&A at 7:30PM. I’m assuming it’s at city hall, but the location is unclear.
  • Tuesday June 17: Centerville, Tremonton, and Lindon should all be taking votes on advancing with Milestone Two during their normal city council meetings.

Notably absent from the list are Payson and Perry, cities that seem to have adopted “bury our heads in the sand and hope for the best” as their strategy. If you live in either city, you should contact your mayor and city council to give them a nudge.

Hans V. Anderson Jr.’s Curious Definition of Failing

I suppose it could be possible for UTOPIA opponents and critics to make their case without lies or misrepresentation, but much like discovering how many licks it takes to get to the center of a Tootsie Pop, the world may never know. The latest example is an op-ed published in the Daily Herald from Orem City Council Member Hans V. Anderson Jr. In addition to many of the usual talking points, he makes multiple assertions that contradict what we already know about the deal with Macquarie.

For starters, he’s stating that Macquaries investment would be a loan. No published source has stated this at all. In fact, the published information is that the money would be a required network investment similar to what Google did in Provo. If it’s actually a loan, how is it that Anderson is the only one reporting such, especially when numerous city council members and mayors were at the same meetings?

Anderson then asserts that a proposed utility fee is actually intended to repay Macquarie for their investment. His own source, however, show that it is to retire the existing bond service. Instead of covering bond service from the general fund, it would be a clear line item spread across all Oremites, similar to how Provo assigned the debt service from iProvo to everyone in the city, subscriber or not. It seems very curious that he would contradict himself to make the utility fee into something it is not.

So what, exactly, is failing? UTOPIA has met or exceeded every financial goal under it’s current five-year plan. It’s now bringing in a partner to finish the network, relieve the cities of shouldering any operating expense shortfall, and likely provide some revenues to reduce or retire the proposed utility fee. I don’t see anything for someone who wants to lessen Orem’s financial load to be upset about at all. Why is Hans furious to the point of lying?

This is what happens when UTOPIA opponents want failure at any cost. Any success, no matter the size, must be turned into failure in order to prove their larger ideological point. Instead of retreating to the absolutely defensible and logical “I don’t like this approach” position, they have to cling to the “it just doesn’t work” one, evidence be damned. I hope the citizens of Orem will ask themselves which kind of elected official they want running their city.

Local groups whipped Oremites into an unhinged frenzy

Tuesday night, the Orem city council approved a property tax increase to plug some budget holes. A lot of the people present (some council members included) chose to pin the blame squarely on UTOPIA even though that’s less than accurate. I wasn’t there, but the recap from Twitter made it abundantly obvious that the crowd had a lot more anger than information.

Who do we blame for creating an unhinged and uninformed angry mob? Precisely the people who tried to walk away with a non-chalant whistle: The Sutherland Institute and Utah Taxpayers Association. Both groups have been painting a picture of apocalypse from the tax increases while trying to pin the entire thing on UTOPIA. Neither of them discussed the shift from sales to property taxes that dozens of cities are currently involved in, nor did they try to inform the public with alternatives to raising taxes. This purposeful attempt to leave citizens uninformed created some of the wackier and downright dangerous suggestions of the night, things that both organizations need to now own as a byproduct of whipping the citizenry into a fenzy.

And what were these suggestions of fiscal suicide? Some people suggested either that the city wasn’t directly responsible for the bond or that they should just stop paying it. Anyone with any financial know-how knows that you can’t unilaterally declare that you don’t owe money on a loan or that you’ll just stop paying bills you don’t like. If the city chose to do that, it’s credit rating would be worse than junk and it would be a true financial catastrophe for the city. More than a few people suggested that the city declare bankruptcy over it. They obviously don’t know that UTOPIA’s payment comprises a scant 3.2% of Orem’s total budget, nor do they seem to get that the consequences would be roughly the same as not paying the bond. It would be akin to burning down the house because you found a piece of rotten timber.

Another popular suggestion is to sell the network, but this, too, is divorced from financial reality. At the end of the payments, the cities (and presumably the subscribers who paid for installation) end up owning the network free and clear. The only way a sale makes sense is if the sale price would exceed the estimated value of the network at the end of the payments. Anything less would mean a wider loss, and there is no sale that will cover the price of the bond. Evidence suggests that a sale would go poorly anyway. American Fork “sold” AFCNet, but the company that “bought” it hasn’t been current on its interest-only payments and will likely not have the required $500K lump-sum payment when it comes due in a few months. Provo tried to sell iProvo twice without success. Both of those networks cover their respective cities whereas UTOPIA does not have a contiguous service area. Odds are good that any sale would result in a substantial loss of value.

The core problem is that both UTA and Sutherland (the latter of which I expected better from) presented cherry-picked facts and fabrications designed explicitly to incite anger. This was done in lieu of presenting a full slate of facts (like the trend in dozens of cities of moving from sales taxes to property taxes), their proposed solutions, and a rationale for the conclusion. When you take that approach, you create a mob mentality problem rather than seeking solutions. When you call them on it, they back off with a weak “well, we didn’t mean that” which comes off as trying to weasel out of the situation they created.

You can see an obvious common thread from the suggestions and actions. None of them actually think through the full consequences of the actions proposed, they’re “shoot from the hip”, and they’re emotional responses to try and undo a decision that’s over, done with, and now has to be owned. These folks (citizens and think tanks alike) could learn more than a few things from mayors like Mike Winder and John Curtis who, despite not supporting municipal broadband, have accepted that their job is to make the best of the situation.

(You can read more from the Daily Herald here.)

UTOPIA Proving a Popular Scapegoat for City Revenue Issues

A lot of cities have been talking property tax hikes lately, and the most certain thing about all of the proposals is that elected officials are going to look for someone or something to blame. In UTOPIA member cities, blaming the fiber network has become the easy go-to solution, especially since so many mayors and city council members weren’t involved in the original decision. The problem, however, is that this blame is completely paving over a deeper problem of city tax structure that’s boring, doesn’t fit the anti-UTOPIA narrative, and is a much larger problem for city budgets. Let’s take the examples of West Valley City, Orem, and Taylorsville, the latter of which is not a UTOPIA member city. In all three cases, they’ve called for large (as a percentage) property tax increases to make up for lagging sales tax revenues. So if UTOPIA is the cause of property tax increases, why would a non-member city need to more-or-less do the same thing?

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Utah County Association of Realtors Planning Anti-UTOPIA Meeting in Orem

See below for update.  It appears that astroturfing isn’t just for the Utah Taxpayers Association anymore. The Utah County Association of Realtors, a very powerful lobbying group, has been organizing a “public forum” entitled “What does UTOPIA mean for your home?” and has been using robocalls to promote attendance at it. The call says that UTOPIA will be in attendance, but they never extended an invitation to them. They did, however, extend an invitation to the Utah Taxpayers Association and two anti-UTOPIA candidates for city council. Unsurprisingly, the low-scruples ousted Utah County GOP Chairman Taylor Oldroyd is the prime organizer.

I’d advise UTOPIA supporters in or around Orem to show up to the meeting at 1031 W. Center St. Orem on Tuesday October 25 at 2PM. There will no doubt be disinformation by the truckload that will have to be countered.

UPDATE: Per Chris Nichols, the president of the Utah County Association of Realtors, the Utah Taxpayers Association has been un-invited from the event. He stated that his goal is strictly to discuss the implications of transfer of title when a homebuyer has chosen to finance the installation including how it appears when doing a search on the property. He also made it clear that any attempts to derail the discussion beyond that would be thoroughly unwelcome.

Chris also stated that UTOPIA was invited, but the person whom he named as “someone who has done work for UTOPIA” was not a name I’m familiar with. Granted, I don’t know everyone on their payroll, but if the PR department doesn’t know anything about it, it kind of maybe didn’t exactly go to the right person. Sounds like they both had their wires crossed on that one.

For the record, he was pretty mad at me and spent over 10 minutes chewing me out on the phone. I tried to explain why I formed the opinion I did, but he had no interest in hearing it. The website for the event links straight to the light-on-facts UTA website and lists a smattering of candidates for city council in Orem, both of whom are anti-UTOPIA (though one of them is being a realist about the situation). These combined with questions that appear to imply that the UTOPIA contract causes significant real estate sale issues created a very bad public face. The website itself also has no contact information as to who the responsible party would be.

My take? He wasn’t holding a tight enough leash on his employee Oldroyd who then worked with the UTA to try and sneakily co-opt the event for his own political purposes. My publicizing of it was very embarassing (and understandably so) and he needed to take it out on someone right then and there. Hey Chris? No hard feelings this time, but maybe try to be a bit more understanding of where someone else is coming from next time around. A lot of bloggers wouldn’t be as gracious as I am to heavily update an article to show both sides.

UPDATE 2: For those who are interested, I have a copy of the robocall used to publicize the event. Link is below.

UCAR UTOPIA Robocall

Utah Taxpayers Association Spews More Lies

Several UTOPIA member cities are gearing up to start taking votes on the new Utah Infrastructure Agency designed to help fund new construction of the network. The Utah Taxpayers Association is trying to get people to show up at these meetings to protest the UIA and try and kill it. In their effort to do so, they continue to distort, twist, and outright lie in their efforts to rile people up.

First off, the UIA bonds are not an unconditional loan. They are funds that will be secured by payments from subscribers. If there aren’t enough subscribers to secure repayment, the money doesn’t get touched. You would think that such an arrangement would be acceptable to an organization that purports to represent taxpayers as it clearly shifts the burden from the taxpayers as a whole to the subscribers. Attempting to characterize the UIA as a big grab-bag is a big lie.

Secondly, the UTA says that UTOPIA is running a $20M deficit in “operating expenses”. The problem, however, is that their version of “operating expenses” is entirely unclear. I’m betting that they chose to include equipment depreciation and possibly even the bond payments in that figure in order to paint a much more dire picture than actually exists. For all of the accusations by the UTA that UTOPIA doesn’t disclose enough information, it’s hypocritical and extremely irresponsible of them to distort the numbers for the purposes of supporting their arguments.

Remember the last time the UTA tried to organize an anti-UTOPIA protest? UTOPIA and its supporters showed up and ended up turning half of the attendees into subscribers. Let’s show them it can be done again. Centerville meets tonight (October 19) at 7PM, Orem is October 26 at 6PM, and Payson is October 27 at 6PM. All meetings are at the respective city hall. Let’s show the UTA that lying won’t get them very far.