Tag Archives: UTOPIA

If UTOPIA is a boat anchor, why is Orem the only one sinking?

  By Jesse | May 3, 2013 - 10:00 am |
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Over the last year or so, it seems that Orem has taken a real hammering over UTOPIA expenses. Witness the latest low-information rant masquerading as publishable material for further evidence of this. The common refrain is that UTOPIA causes nothing but financial despair for cities. If that’s the case, why aren’t we hearing more stories like this about other cities?

Maybe it’s because UTOPIA isn’t the giant sinkhole people like to think it is. As I’ve discussed before, the issue Orem (and Taylorsville, and, to a lesser degree, West Valley City) is facing is all about having made bets on sales tax revenue from retail driven by out-of-town shoppers. That worked for a few decades, and Oremites got to enjoy some great city services and frozen property tax rates for that time.

But then the perfect storm hit. Retailers ran out of space in fast-growing Utah County and moved up to American Fork and Lehi. The recession killed off a lot of companies not nimble enough to weather it. And, most importantly, online retailers like Amazon swooped in and ganked away business on everything from books to TVs to furnaces (yes, they sell those). Any city who depended too heavily on retail got creamed.

Smart cities developed office space to diversify their tax base. Murray scored the Intermountain Medical Center. Midvale turned a superfund site into a fiber-loaded business park. And Orem? They lost Adobe to Lehi while a giant mixed use development stayed half-finished for years. And why? Because retail is what mattered to them.

This has nothing to do with UTOPIA. It has everything to do with the city overextending itself in myriad ways during good times. The responsible thing to do would be to explain the problem to the voters and undertake the long-overdue rebalancing of revenue streams back onto other sources. Opportunists, of which there are many, instead bury the boring issue of an imbalanced tax base under a hot-button scapegoat to suit their own agenda. Don’t let them get away with it.

How likely is it that Google Fiber takes over UTOPIA?

  By Jesse | April 22, 2013 - 10:00 am | ,
9 Comments

Even before Provo announced that Google Fiber would be taking over iProvo, there’s been a lot of speculation that Google Fiber could potentially take over UTOPIA. UTOPIA made their pitch with 1100 other cities, and I produced my own video explaining why a partnership would be a good deal for both parties. Since then, Google has drastically altered the original terms of the arrangement, throwing both open access and municipal involvement under the bus (unless you consider providing tons on concessions “involvement”). Despite Google and UTOPIA being in talks shortly after the RFI closed, I don’t think we’re likely to see any kind of takeover or partnership between the two unless there’s concessions from one or both sides.

I think the largest sticking point is going to be open access. UTOPIA has repeatedly stated that their goal is to offer a world-class infrastructure that any private company can use to provide services. It’s not just enough to provide a third pipe; the network must allow you to pick between companies that differentiate themselves on what they can do with it. This kind of competitive environment has been proven to drive innovation and lower consumer prices across the board. While I have no doubt that Google’s network will do both, it runs the risk of being so superior to existing options as to become a new monopoly.

Google’s focus has been on residential customers. While this is a critical segment for service, there’s almost no mention of business needs. Yes, small businesses and startups can probably do just fine using the same tier as residences, but many need more than that. UTOPIA’s biggest customer uses 20Gbps of bandwidth. If all of their users on the network were on gigabit, they’d need even more to keep up with all of them. The lack of focus on the business end of the pipe degrades the value of the gigabit connections for residential customers. UTOPIA has a complete end-to-end vision; Google does not.

Another problem is the financial terms of any arrangement between the two. Google got a very sweet deal on iProvo, effectively a perpetual free lease with a $1 security deposit. The city is still going to have to pay off the debt on the asset themselves. In exchange, they’re hoping that improvements done to the network will improve it enough that it will be an economic net positive. I think the city could have negotiated a better deal and Google would still be doing well on it financially. I have no doubt that the UTOPIA cities, who are much more eager to pay off the bond, would hold fast for better terms.

If the numbers from iProvo translate to UTOPIA, Google would have to spend somewhere in the range of $40-50M to connect houses currently passed by the fiber and upgrade them to gigabit. This doesn’t include building fiber rings to areas not yet covered. That could easily add another $150-200M to the tab. Should they manage decent take rates (35% of customers paying for service split evenly between Internet-only and double play, and another 35% taking the freebie service), they’d earn $78.1M per year on expenses (including the bond) of about $36M per year. At the high end of finishing the network, it would take them almost six years to break even.

Given that Google seems to be aiming for seven-year commitments, that might be a price they’re unwilling to pay. The cities would have to make some kind of concession to sweeten the pot, and it would likely include tossing existing providers off the network and covering at least some portion of the bond debt. These actions would cause a decent amount of backlash both from residents as a whole and the power user subscribers who have been evangelizing the network for years. If Google’s goal truly is to increase broadband penetration, I’d like to think they would accept any offer that doesn’t make them lose a small fortune.

Legislation Alert: HB273

  By Jesse | January 19, 2013 - 7:07 pm | , ,
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Some years, muni telecom gets a break. This year isn’t one of them. Rep. Keith Grover has introduced HB273 which would effectively ban Provo from using utility surcharges as a way to cover iProvo debt payment shortfalls. It’s unclear as to if this would have any effect on UTOPIA, but the bill does include some vague language concerning charging “just and reasonable” rates. Depending on how the legislation is implemented, this could prevent UTOPIA from differentiating wholesale prices depending on volume or require that they match rates with other networks.

Any way you slice it, this is a bill very explicitly targeted at removing operational flexibility from municipal networks. I highly recommend you contact Rep. Grover to urge him to reconsider.

The long knives come out: Tribune articles on UTOPIA

  By Jesse | December 3, 2012 - 11:04 am | ,
1 Comment

Bad news sells, and the Tribune seems to think that business is good. Over the weekend, they published a long series of articles on UTOPIA that follow the all-too-standard pattern of raking the network over the coals with many of the same rehashed arguments from years past. Four of the nine articles make reference to network debt in their headlines (often spuriously), and eight of them use negative references there. Despite the overly negative tone of the coverage (no doubt fueled by the opinions of the editorial staff), there’s a few pieces of useful and interesting information to be gleaned (not to mention corrections to be made). (more…)

The Alternate Reality of the Standard-Examiner

  By Jesse | June 22, 2012 - 6:59 pm | ,
4 Comments

The Standard-Examiner published an anti-UTOPIA editorial yesterday that, quite frankly, makes me wonder if some sort of illicit substances are in use by their editorial board. Granted, these kinds of opinion pieces are not uncommon, but this one sets a new “standard” in incoherence and inaccuracy. Allow me to “examine” the various ways in which their editorial could only make sense in a conveniently parallel dimension.

Fife wondered why suggested prices quoted by Beehive Broadband are so pricey…

Actually, $45 per month for service is actually not too shabby. The only plan that Comcast offers near that price is both a temporary 6-month introductory offer and significantly less speed. It also undercuts Beehive’s own pricing on their own FTTH network ($60/mo and up to a $895 install) for what I can assume is less speed (20Mbps both ways). On UTOPIA, they charge either $45 per month (half of which disappears in about 20 years) or $22 per month with a $2750 install cost. In a pure apples-to-apples comparison, UTOPIA is offering a very competitive price, especially when you compare like speeds (or as like as you can get) from Comcast and CenturyLink. But they deny this reality as well:

If the Beehive Broadband deal is approved, customers will still have to pay Internet prices that frankly, are not very much different from prices that can be found in the private sector.

Oh really? Comcast charges around $60/mo for 25Mbps down, 4Mbps up. CenturyLink will do 40Mbps down, 5Mbps up for the same price. XMission and InfoWest are happy to sell you a 50Mbps bi-directional connection for that much, and $23 of that monthly cost vanishes when you’ve paid off the connection.

The fact-free piece doesn’t end there, though. Consider this gem:

While elected officials in UTOPIA-yoked cities are for the most part, too stubborn to admit they made a mistake hooking up with the public/private group…

Wait, what? Cities didn’t join UTOPIA, cities created UTOPIA. It’s their baby. As much as choice elected officials like to disown it for cheap political points, that’s about as asinine as insisting that the fire department is a separate entity.

While it’s pretty obvious that the editorial board is already failing math and civics, they decide to flunk out on history as well.

And again, as mentioned, while UTOPIA may provide quality services, the prices are still similar to what could have been garnered without cities having shelled out millions in dollars.

That’s another thing that just isn’t so. Brigham City tried for years to get Comcast and Qwest to deploy more broadband with no success. Lindon even offered to pay them for it and was declined. Tremonton residents could barely get 1.5Mbps DSL, a connection that would have been top-notch more than a decade ago. Once they decided to join UTOPIA, higher-end services magically became feasible in their town and the incumbents got busy digging. Had they not joined, what would they have right now?

I don’t necessarily have an issue with someone opposing UTOPIA. I do, however, have a problem with people who have zero grasp of the facts and try to do so. It appears that the editorial board of the Standard-Examiner is such an uninformed group, although to such a degree as to have me question if they are perhaps in the wrong line of work. We expect our journalists to dig in a find facts, a task to which they appear to be ill-suited.

UTOPIA Joins the Exclusive 1Gbps Club

  By Jesse | June 12, 2012 - 3:24 pm | , ,
23 Comments

Today UTOPIA announced that they will be offering 1Gbps connections to every home they pass. Word on the street is that getting a connection that’s faster than your hard drive (!) should run in the neighborhood of $330-ish per month if you’re leasing the connection. Right now, only a handful of providers in the country offer such blistering speeds to residential customers.

Some other fun facts from the media day:

  • UTOPIA’s highest bandwidth customer consumes 20Gbps worth.
  • Centerville is completely built out. If you live in Centerville, you can get service right now. About 500 residents have already chosen to do so, just over 10% of total households.
  • Homes with multiple set-top boxes will have the greatest need for 1Gbps connections. Currently, 4-5 of them can saturate a 100Mbps connection.
  • You could, in theory, get 10Gbps at your home, but UTOPIA isn’t all that comfortable leaving $10K worth of electronics sitting in your house.

You can check out pictures of the event on Google+ or Facebook.

Here’s UTOPIA’s full press release: (more…)

Press Release: UTOPIA supports DISH Network’s Efforts to Provide Consumer Choice

  By Jesse | June 4, 2012 - 12:02 pm |
5 Comments

FOR IMMEDIATE RELEASE

Media Contacts:

Robyn Geist 801-364-0088 ext. 106 or 801-680-1135

Brian Wilkinson 801-364-0088 ext. 102 or 801-673-5615

 

 

 

UTOPIA Supports DISH Network’s Efforts to Provide Consumer Choice

 

DISH Network faces lawsuit from TV networks over its newest technology:

a user-enabled commercial skipping feature called AutoHop

 

Salt Lake City (June 1, 2012) – UTOPIA, the open-access fiber-optic network formed by 16 Utah cities to provide critical advanced communications infrastructure to their residents, is announcing strong support for one of its newest services providers, DISH Network, and its efforts to promote consumer choice in the face of a lawsuit from three of the major television networks over DISH’s ad-skipping AutoHop technology.

 

“Among one of the many reasons we partnered with DISH Network as a service provider on the UTOPIA network is because they are at the forefront of providing unique entertainment options and more choice to consumers,” said Todd Marriott, Executive Director of UTOPIA. “DISH Network recognizes that consumers desire the options to be able to view the content they want, when they want it, and, most importantly, how they want it, particularly when they have already paid for it. Competition and consumer choice were fundamental reasons UTOPIA was formed as an open access network”

 

DISH’s AutoHop technology allows its customers to enable a feature that automatically skips over commercials in primetime TV programming from the major networks that has been recorded on consumers’ DVRs. It does not skip over ads when subscribers are watching the programming live.

 

 

# # #

 

About UTOPIA

The Utah Telecommunication Open Infrastructure Agency, more commonly known as UTOPIA, consists of a group of 16 Utah cities that joined together to form a state-of-the-art fiber-optic network and provide critical advanced communications infrastructure to their residents. The network offers fiber-to-the-premises technology allowing for faster services that are uninterrupted by copper wiring or shared connections with neighbors. Its open access model fosters competition among private sector service providers who offer Internet, television, telephone and other services, giving customers the freedom to choose their own service providers, the best prices and the best service.

 

For more information on UTOPIA including member cities and business and residential service providers, visit www.utopianet.org.

UTOPIA Proving a Popular Scapegoat for City Revenue Issues

  By Jesse | May 29, 2012 - 1:30 pm | , ,
12 Comments

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?

(more…)

Return of the lease? UTOPIA offers a new connection option

  By Jesse | March 12, 2012 - 2:20 pm | ,
4 Comments

In a flashback of the old model, UTOPIA is offering up a new connection option very similar to the leasing option they started with. Customers who have the fiber in front of their homes can opt to enter into a 2-year agreement at $30/mo to cover the cost of installation. At the expiration of the two-year period, they can either go month-to-month or choose to re-up the contract. The upside is that there’s a shorter commitment term, but the downside is that the infrastructure charge won’t go away like it does when you buy it out. Customers who opted to purchase the connection can switch to the leased model and have their down payment applied towards the monthly charges.

To be honest, I don’t see that this is much of an advantage for users since you’re not saving any money and will end up paying in perpetuity for the connection. Since it’s only available to areas where the fiber is already on the curb, it also won’t do anything to get the network extended into your neighborhood either. It could, however, be a good way to sign up fence-sitters in existing service areas.

What do you think? Would you go for the short-term lease or buy out the connection?

UPDATE: Just to clarify, the conversion of a down payment on the connection into lease payments is only if you haven’t purchased the connection outright. If you’ve already bought the connection or have payments going towards doing so, this will still continue and you’ll still own the line. The line ownership option isn’t going anywhere.