A very common problem in UTOPIA cities is living near the fiber but being unable to get service. I’ve heard stories of having it stop 100 feet away, barely two lots. It’s pretty frustrating to be so close, and yet so far. So why does it happen? The answer lies in how fiber gets deployed.
You’re probably used to the idea of how copper plants get deployed. For DSL, all the phone company has to do is cut in a copper pair and call it good. That’s cheap and easy (especially since the infrastructure is already built), but it’s also a very different technology. Same deal with cable. Fiber requires a very specific build pattern with huts for the fiber and rings running through a deployed area. It doesn’t take kindly to trying to splice in a connection that wasn’t planned for.
Yes, this stinks if you’re right on the edge of a deployed footprint. But running fiber to include you wouldn’t work and would probably break the existing footprint.
No sooner did Sen. John Valentine promise to UTOPIA and Macquarie to withdraw Amendment 2 to SB190 than he started telling constituents that he hasn’t made up his mind yet. As previously covered, this amendment would keep Macquarie from doing the same kind of utility fee deal in new cities that it’s currently arranging with UTOPIA. It seems now that Sen. Valentine is dealing with UTOPIA and Macquarie in bad faith, telling them one thing while he tries to do another.
This means we need to keep up the email campaign to oppose it. In addition to hitting the Senate body, you should also contact Rep. James Dunnigan, the House sponsor, to let him know that you don’t want to support Amendment 2. The only way this goes through in a way to benefit all Utahns, not just those in UTOPIA cities, is if the bill is preserved as amended in the Senate Business and Labor Committee.
There’s only 13 days left in the legislative session. Make them count!
PS Yes, I have a GRAMA request in to see who’s been talking to Sen. Valentine about this bill.
While nothing has yet been inked, I’m hearing a lot of rumors from multiple sources about the kinds of terms being discussed with Macquarie. While none of them will be out in the open until Macquarie finishes estimating the cost of network completion, this may give us some hints as to what to expect in the final product. Here’s what I’ve been hearing so far.
No installation fee. The install fee is rumored to be history. The network construction cost will cover getting the fiber to the side of the house. At that point, you’ve got maybe $200-300 in install costs to get it in to the house. Word is that Macquarie may work out the numbers to eat that cost to get people signed up.
Credit for any install fees already paid. You heard that right. If you paid the install fee up-front, that money will reportedly be applied towards the utility fee. Those who paid the install won’t be left swinging.
Construction completed in two years… or less. This one really surprises me. The plan is to complete the build-out of all pledging member cities VERY quickly. That kind of build speed would be incredible.
A free tier of service faster than Google. The utility fee is going to include a baseline level of service. The rumored speed is 6Mbps/2Mbps, better than Google’s current 5Mbps/1Mbps service.
A full build-out of the entire state. I’ve said it before, but it bears repeating. I keep on hearing that Macquarie considers UTOPIA to be getting their foot into the door in the US. Their reported intent is to wire every home, urban and rural, to gigabit fiber. Utah could quickly become the first all-gigabit state and have dozens of providers to choose from.
The cities maintain ownership. Yes, you heard right. When the 30-year deal is done, the cities still own UTOPIA. This provision would supposedly also apply to new cities that join up and maybe even the cooperative I’m working on (which would be the only option in unincorporated areas). That’s a pretty amazing deal.
Some of this sounds like it’s in “too good to be true” territory. Even if half of it pans out, I’ll be pretty impressed.
Earlier this week, I sat down with UTOPIA to discuss the Macquarie deal and their general operations. One great part of these sit-downs is that I can get candid answers to some of your common questions. Some of you have asked more than a few times about TV service. Right now, only Beehive Broadband and Brigham.net sell video service to new customers using UTOPIA’s headend and Veracity is using their own. Most providers sell satellite packages to plug the gap. Why? Because video doesn’t make money.
Yes, it’s true. Video is a break-even product at best. Look at the numbers from any cable provider and you’ll see the same story: video and voice make data customers more “sticky”, but it’s the broadband that pays the bills. They’ve quickly become commodity products that help the revenue side but don’t do much on the profit side. The consensus at FTTH conferences is that video isn’t something that most of them want to do.
So what does this mean for you? Right now, you’ll have to fall back on satellite TV or pick one of the providers that does video service. Since Brigham.net is sticking to Brigham City, that means Beehive or Veracity. This doesn’t mean that all hope is lost, though. UTOPIA has been talking to its video partners about an over-the-top live TV service to plug the gap. It would be sold Netflix-style, but it would have all of your favorite TV channels and possibly some good on-demand stuff too. It’s a ways out (I’d guess years), but it’s where we’re all headed anyway.
Did you have a glimmer of hope that you’d be able to get UTOPIA service in your city once Macquarie comes in? Sen. John Valentine just smashed it with a hammer. His floor amendment to SB190 makes it so that only current UTOPIA cities can use a utility fee to finance construction of the network. Any new cities that join would be unable to do so at all.
Why does this matter? Because Macquarie has structured the entire deal around it. If future cities can’t do it, they can’t get the same terms that Macquarie is offering UTOPIA. This could derail their rumored plans to cover the entire state in gigabit fiber with over a dozen competing providers.
Right now, the bill is in the Senate and will come to a floor vote. It’s urgent that you contact members of the Senate, particularly your senator, to tell them to oppose this amendment. Sen. Valentine is working in bad faith by not involving UTOPIA cities either in this new amendment or the original bill.
Click here to email the entire Senate body and voice your opposition! They need to hear from you.
UPDATED 2-27-2014 2:25PM: We won! Valentine has committed to UTOPIA mayors to pull Amendment 2. Now if it can just go through without any other trickery…
Almost all of our broadband heartburn comes from uncompetitive markets. Even in areas with at least two wireline competitors (which is only about 95% of the urbanized Wasatch Front), you’re usually stuck picking between faster speeds from Comcast and cheaper speeds from CenturyLink. I’ve already written that it’s looking like CenturyLink is going to let copper die without a replacement, but it’s entirely possible they just want to get out of the residential market entirely. This would be a nightmare for competitive choice in our state.
Do you remember the last time CenturyLink upgraded their ADSL2+ product? I do; it was 2009. The year before, they stopped doing FTTN deployments entirely, occasionally lighting a new FTTN node here or there. Most of the Wasatch Front is still limited to 7Mbps ADSL with real-world performance usually coming in much less than that. I know people in Sandy that struggle to squeeze 3Mbps out of that aging copper. It makes CenturyLink’s claims of doing their own gigabit fiber seem pretty hollow and underscores that their main purpose in deploying FTTN may have been to try clubbing competitors in the kneecaps.
Just look at how CenturyLink has been not responding to competitive threats. In Provo, Comcast very quickly pushed their system to its absolute limits with a 250Mbps/50Mbps tier that price-matches Google. What did CenturyLink do? Nothing. They haven’t uttered a single word about doing any kind of upgrades in Provo at all. Who can blame them? It would cost them tens of millions of dollars to go after a customer base that hates them. The ROI would be so far out as to be disastrous. It’s noteworthy that the only places CenturyLink has announced doing FTTH have been duopoly markets, places with a more-or-less captive customer base. Given their non-response to Veracity rolling their own ADSL2+ using CenturyLink cabinets, this isn’t too surprising.
At the same time, CenturyLink has been chasing down deals to build fiber to cell towers and focusing heavily on their business services through acquisitions like Savvis. These premium services command much greater profit margins and more stable user bases than residential markets, plus they can easily convince businesses to pay the full cost of installing the latest technology. Even when the fiber to cell towers goes into residential areas, CenturyLink has been noncommittal about using it to upgrade DSL users to better speeds or technologies. It seems very strange to not want to use the investment to upgrade other services. I’d usually say they just don’t have the money, but they just approved spending $1B on a stock buyback program, money that would deploy gigabit fiber to as many as 1M homes and businesses.
This all paints a very disturbing picture for the future of telecommunications where open access systems like UTOPIA aren’t or won’t be available: Comcast will be the only real ISP for most users, and cities who go with Google Fiber will be right back into the “fast vs cheap” duopoly they hate so much right now. This is one of the many reasons why I’ve been so sour on both Provo and Salt Lake City for going with Google instead of fixing the underlying anticompetitive problems in the telecommunications space. Why would you expect Google to be any better than Comcast when they no longer really have to work for your business?
Still thinking that Google Fiber is your only gigabit option in SLC? Think again. I’ve heard from several reliable sources that Salt Lake City got on Google’s short list for a new round of expansion because of fears that UTOPIA would beat them to the punch (and possibly go into Provo as well). Macquarie is reportedly interested in expanding UTOPIA across the entire state and has particular interest in Salt Lake City since it’s the largest and most visible municipality. UTOPIA already has several fiber rings within the city it could use to fuel the expansion. If this rumor is true, it could mean that Utah would soon be not only the first gigabit state, but one with 17 separate companies competing for your business.
I’ve also heard rumors about details of the Macquarie deal that make it an even better deal that I possibly imagined. Once I get confirmation on some of the details, you’ll be the next to know.
On a 4-0-3 vote, SB190 was amended and passed from the Senate Business and Labor Committee this morning. XMission founder Pete Ashdown and myself both spoke in opposition to the bill while Macquarie themselves endorsed the amended bill. Layton sent Gary Crane to represent them to oppose the unamended bill and support the amended bill. It now goes to the second calendar of the Senate for its first floor vote.
During the bill presentation, Sen. Valentine explained the rationale behind the bill as a potential ambiguity in the state code. As currently worded, it prohibits any subsidy of a municipal network by the city. His interpretation is that this could include a utility fee that covers existing bond debt but not operating expenses. Naturally, I disagree and think it’s silly to call paying your debts a subsidy. All the same, the state code now explicitly states that it’s not a subsidy provided that there’s a plan to waive the fee for the indigent.
Speaking of that provision, I found out that it was something the cities were all planning on doing anyway. In the end, SB190 codified what cities were already doing on their own, but only after first attempting to kill the Macquarie deal without input from UTOPIA cities. Kind of a useless bill if you ask me.
This doesn’t mean it’s all a done deal, however. The bill also needs to be voted on in the Senate, go to a House committee, then get voted on in the House. Amendments to the bill could be proposed at any step. Right now, the best thing you can do is email your legislators and make sure they’ll accept the bill as-is so we don’t get anything worse.
I just got a notice that SB190, the bill that could chase off Macquarie, will be heard Monday February 24 at 8AM in the Senate Business and Labor committee. Word on the street is that members of the committee have been getting a lot of emails in opposition (good job, folks), but we also should show up to speak against it. Make sure you spread this around so we can show up in force!
Salt Lake City just can’t seem to make up its mind on broadband. Given the chance to join UTOPIA in 2004, Mayor Rocky Anderson turned down the offer citing “risk [to] taxpayers’ money”. His successor, Mayor Ralph Becker, similarly waffled, giving a response that neither closed the door nor endorsed the idea. In that time, much of Salt Lake City has been unable to get CenturyLink’s ADSL2+ service (with speeds up to 40Mbps down), often getting a meager 3Mbps on vanilla DSL. As a result, Comcast doesn’t offer the same high-speed packages it does in areas with better speed choices, sometimes maxing out at 25Mbps. The reluctance to make a bold choice to improve the city’s infrastructure has cost residents dearly.
Now it appears that SLC is about to double down on those past mistakes. Google revealed that they’ve been in talks with Salt Lake City to extend Google Fiber from Provo into the city. While Salt Lake City officials are claiming that “no tax dollars” will be involved, it’s well-known that Kansas City provided a lot of concessions to Google worth millions of dollars. Provo effectively gave Google an indefinite lease on the network for $1 plus $18.7M in closing costs. We don’t know what Austin provided yet, but we can probably take a guess. Google loves it some public funding but without all of that pesky partnership business.
And what does SLC get from the deal? Sure, they get gigabit, but not with great terms. If you don’t sign up during the initial push, you’re forever cut off from the network. Kind of sucks for renters and new move-ins. Don’t like how Google does things? They’ll be the only gigabit option in town. If Comcast and CenturyLink hurt enough, they could effectively withdraw from the market and leave Salt Lake City with a real monopoly. Can’t afford $70 per month? Too bad; there’s no alternative pricing plans like UTOPIA’s 100Mbps for around $35. And if history is any indication, Google won’t sign a contract with the city for longer than 7 years. They reserve the right to get bored and just turn off the network when it runs out. Compare that with the 30-year deal that UTOPIA has been working on with investment bank Macquarie Group. The only reason Google Fiber sounds good is because you’ve been in an abusive relationship with Comcast and/or CenturyLink for far too long.
Given the stark differences between how UTOPIA and Google Fiber operate, how badly Provo was jobbed on its deal, and how much better a deal UTOPIA was able to negotiate, you have to wonder how there’s even a debate about the choice between dealing with Google or joining up with UTOPIA. It seems that Salt Lake City’s elected officials, mayor and city council alike, are too cowardly to do what’s best for the city instead of what’s best for their next election.