Liveblogging the Government Competition and Privatization Subcommittee

Thanks to the free WiFi in the committee room, I'll be liveblogging the entire entire meeting. Check back for regular updates! I'll be here at least until noon or the break for lunch, whichever comes first.

12:44PM I got the chance to mention the $200B broadband scandal as a primary motivator for projects like UTOPIA. If Qwest won't deliver on their promises, nobody will. The meeting is now adjourned for lunch. That's all, folks!

12:40PM Sen. Stephenson asked how Qwest feels about cherry-picking. He seems to approve of the concept, but he's trying to characterize UTOPIA as seeking Qwest-style exclusive monopolies in greenfield areas. I suppose he'd know something about that, wouldn't he? He's now trying to claim that they're somehow more trustworthy because they don't promise universal service. What the?

12:37PM Sen. Niederhauser repeated his questions about the break even point of new installations. The Qwest rep revealed that they will never be able to provide 100% coverage because they won't fully serve expensive customers. The Senator then asks if they would be willing to run at a loss to deploy to those areas and the Qwest rep said no. Hmmm. What's the USF for, my friend?

12:34PM No joke that non-pledging cities could join without a lot of public hearings. There's no risk to taxpayers, so what's the harm in joining? Oh right… it's just to your out-moded business model.

12:32PM Whoa whoa whoa. Hold on there, chief. How can you claim that you know the difference in percentages between aerial and buried cable? It's also misleading to point out all of the places where projections have been wrong because, regardless of entity, projections have a tendency to do that. You also keep on repeating the same old "unfair competition" stuff. I'm beginning to think that you believe that all competition to your monopoly is unfair.

12:29PM Yep, more lies. He's claiming that cities have to keep on paying and paying to get nothing in return. He's also saying that, contrary to the opinion of every industry provider, that fiber may not still be viable in 20 years. Then he claims that copper will be more efficient to deliver new services? I have to wonder where this guy gets his bad data.

12:22PM Now I know what Slashdotted websites feel like! The rep from Qwest has been on the floor since about 12:08PM and has done nothing but speak angrily about how unfair it is that Qwest has to compete with UTOPIA. Maybe you should have thought of that prior to gorging yourself on the Telecommunications Act of 1996 and not delivering on your promises.

12:07PM Mr. Kroeber is now trying to claim that UTOPIA and iProvo have not influenced their pricing and promotions. Maybe then they can explain the $75 triple-play promotion the month before SB66 expired and new cities could join UTOPIA?

12:04PM Mr. Kroeber acknowledged that rural underserved areas are prime for projects like UTOPIA.

12:03PM Good question, Sen. Niederhauser. Which customers are considered to be non-viable? Mr. Kroeber dodged the questions by calling it a geographic limitation.

11:58AM Rep. Morley continued asking why it's better to build a competing parallel network and risk duplication. Instead of addressing the question generally, he kind of dodged it and called iProvo mismanaged.

11:55AM Rep. Morley asked for some clarification as to why they haven't joined UTOPIA or iProvo and building competing parallel networks. Mr. Kroeber claims that if they don't control the network, they can't provide an adequate level of customer service. You know, as opposed to the "excellent" service they currently offer. The one that takes 5 days for an installation and 30 minutes on hold to talk to a "technician" that reads from the book.

11:53AM I'm curious as to what exactly Comcast bought with that cool $1B they spent in the last decade to do system upgrades. It seems to have been spent improperly given that they can't come up with enough bandwidth. He said he has no data on breaking even in greenfield areas.

11:50AM Comcast claims they receive no subsidies. I'll buy that. I'm not aware of any government programs to ensure universal cable TV access. It might not be too long before they start asking for things like the USF, though.

11:49AM Sen. Niederhauser has asked what Comcast is planning on speeds, if they get any subsidies and how long it takes to break even in greenfields. Mr. Kroeber has responded that they have up to 12Mbps with PowerBoost and cites that products like that aren't available when they don't control the network in a vertical monopoly. That's hogwash. PowerBoost is little more than a QoS service that temporarily allows you to use extra bandwidth. I suspect your main motivation is to be able to do things like kill torrents at-will, a practice that's certainly illegal based on the method you're using to do it.

11:45AM ORLY Mr. Kroeber? There's no exclusive franchises in cities? You're just so good at what you do that nobody tries to compete with another cable system? It might not be de jure exclusive, but it is de facto exclusive.

11:43AM Comcast is on the record that they plan to never participate in a municipal broadband project.

11:42AM "Comcast operates in an increasingly competitive marketplace"? What? Really? Aren't your chief competitors the two satellite TV companies and whatever incumbent phone company happens to be around? How can you have no apples-to-apples competitors and claim a competitive environment? This is totally mind-blowing.

11:40AM Mr. Kroeber is talking up the channel lineup from Comcast, yet he doesn't mention that a lot of the channels coming down the pipe are at a significantly degraded quality due to their intense compression. He's also claiming that Internet speeds have "just scratched the surface", yet he can't tell me how he can grab 150Mbps from that 4Gbps coax when they're trying to cram a few hundred channels on it. Anyone recall that a HDTV signal weighs in at 80Mbps uncompressed? It's almost more FUD and spin than I can handle.

11:36AM The spin starts right from the gate. Comcast is now trying to claim that they've been making all of the investments that they promised to cities that skipped out on UTOPIA. Maybe they care to explain the looming bandwidth crunch they face?

11:35AM A rep from Comcast is up on the stand now. Steve Kroeber is the main rep speaking.

11:34AM It seems that Provo uses the fiber network to be preemptively notified in the case of power outages. That's much more efficient than having a few thousand people calling a hotline to report that their lights are out. Add that to the traffic control stuff that they've already been doing with the network.

11:32AM Mr. Garlick responded to some questions concerning the loans from the city's electrical utility. He clarified that both sides are accounted for separately and employees in both have their hours tracked accordingly to keep the numbers clean. It seems that the implication is that the electric utility is loaning labor to iProvo without accounting for it. I'm wondering how it is that allegations like this keep popping up without any sources cited.

11:28AM Sen. Niederhauser is asking questions on the subscriber numbers. Mr. Parker (I think?) is pointing out t
hat business subscribers produce more revenue than residential and that multi-dwelling units have a higher subscription rate. Single-family homes in Provo seem to be the chief laggards in getting service, probably because someone moving into an apartment has to pick a provider whereas homeowners generally stick with what they have.

11:25AM Rep. Garn is asking some pointed questions about economic development. He's trying to peg that mission as a failure since few to no new businesses have been attracted, yet neglects that many businesses have grown stronger with the network available.

11:19AM I just realized that Pete Ashdown is sitting in the front row. I shouldn't be surprised, but it sure is nice to see him here.

11:18AM Mr. Parker (I think? It's hard to tell who's who when you're looking at their backs when they introduce themselves) is pointing out some examples of how companies in Provo have been leveraging the high speeds provided by iProvo including medical imaging companies and some architectural firms. They also have a partnership with Novell that keeps the landmark tech company going strong. Apparently Novell found the iProvo speeds to be several times faster and promote better productivity.

11:15AM You know you're in Utah when a public official in a public committee meeting makes an analogy to LDS pioneer history.

11:13AM Provo city is now taking the hotseat. Wayne Parker and Kevin Garlick will be speaking.

11:12AM Sen. Stephenson has said that Cottonwood Heights has been trying to structure a plan in the city to build 50% of the city and not commit to building the other half until the first half makes money. That sounds like a mis-characterization to me and contrary to the mission of UTOPIA.

11:10AM The questions have been focused on the risk to the cities. It seems that Sen. Garn is proposing legislation to prevent participating cities from being asked for more money beyond their original pledge. That kind of law, however, could be easily construed to keep new cities from being pledging, something I'm sure that Qwest would be giddy for.

11:08AM Oh good grief. Members of the committee, they don't have financial data. It's not there right now. Stop asking questions that you know that he doesn't have the answers to. Mr. Shaw did clarify that cities will not be approached for repayment of the bonds expect as a last avenue citing the possibility of refinancing the bond as an intermediate step.

11:06AM Rep. Gosgrove asked how UTOPIA will stay abreast of the rapidly-changing technology in the market today and pointed out how telemedicine helped assist with diagnosing an illness his father had. Mr. Shaw pointed out that without a high-speed connection, compression could degrade the quality of the images and such compression is not required on higher-speed fiber networks.

11:01AM Sen. Niederhauser is asking why MSTAR didn't build their own network. Mr. Gould responded that he was unable to get exclusive franchise agreements like Qwest can and noted that MSTAR has been paying franchise fees and taxes. Sen. Niederhauser then tried to call UTOPIA a subsidized system. Mr. Gould fired back that zero taxpayer dollars have been spent and that the public phone and cable systems receive subsidies in the form of mandated fees and exclusive provider status. Mr. Gould compared the relationship between UTOPIA and the cities as someone getting a loan and a co-signer on the loan. That's a great analogy and describes the relationship perfectly.

10:55AM This puts the "greenfield" issue in perspective. Private developers often pay the entire cost of deploying the infrastructure to the developments. How is that a bad deal for consumers and residents of the cities?

10:53AM Wow. Good stuff. Mr. Gould is citing various government programs that build infrastructure for Qwest that amount to subsidies. Good way to preemptively nail the "unfair competition" card to the wall. Public subsidies indeed.

10:51AM Ben Gould, President of MSTAR, is now speaking.

10:50AM Whoa now, Senator. Accusing UTOPIA of cherry-picking services is pretty strong stuff. Mr. Shaw rebuffed the accusation and re-stated that pledging cities are top priority. He also pointed out that developers are the ones requesting deployment and helps only as much as they can without degredation of the deployment in other cities. Sen. Stephenson, maybe you should back off on this one. You did, after all, vote for SB 209 that would have allowed state-wide franchise agreements and significant cherry-picking by private companies. For shame!

10:44AM Sen. Stephenson asked about how ubiquitous the access will be and what the timetable will be for full deployment to pledging cities. Mr. Shaw specifically pointed out the USF that UTOPIA doesn't get to draw from like Qwest does when responding to Sen. Stephenson's questions. Apparently developers are the most interested in services to increase the value and sale price of homes in their developments.

10:42AM Mr. Shaw pointed out that UTOPIA is "big broadband" and that cable and DSL are "little broadband". Rep. Frank pointed out that he's been very happy with his cable modem, though I imagine that's because he hasn't seen the difference first hand.

10:39AM Rep. Frank has brought up the specter of increased taxes if UTOPIA doesn't break even. He also brought up problems with no public hearings. Mr. Shaw corrected him to note that 43 public hearings were held prior to the 11 pledging cities committing sales tax revenues. He also stated that public hearings are still required for new pledging cities.

10:35AM Mr. Shaw has cited that around 40,000 customers are currently in long-term contracts for television or Internet services, mainly in townhomes, condos and apartments. This restricts the ability to enroll new customers.

10:34AM The questions now have moved towards the RUS loans. Sen. Stephenson asked if our Congressional delegation has helped with the loan but Mr. Shaw doesn't have that data. Rep. Frank then asked why they didn't get RUS loans for Cedar Hills. Mr. Shaw pointed out that they, like Cedar City, are a non-pledging city and that pursuing funds for them would violate the original bond covenant. Don't you guys wish you'd ponied up now? You might be getting your systems for free and much sooner.

10:31AM Lindon apparently is almost complete and Payson will be next in line. Other RUS cities are underway at the moment. It almost makes me want to move to Utah County. Almost.

10:30AM Okay, I've confirmed that since 10:14AM, it's been Mr. Shaw speaking. UTOPIA doesn't have any financial reps here to answer these questions but they plan on providing the data.

10:29AM Sen. Niederhauser is now asking the questions. He got some data from the Utah Taxpayers Association that seems to be further misrepresentations citing the losses to date, asking when the break-even will occur. (I've decided that I have no idea who from UTOPIA is speaking. Blah.) The rep said that he doesn't have that kind of data at hand but that the project is on-track. The Senator then cited the figures of $4.6M in operating expenses with just under $1M in revenues. Again, that ignores that the costs to date are for the backbone, not endpoints. This also ignored the construction currently underway. The UTOPIA rep also addressed the issues of ubiquitous service citing that with the RUS loan, 6 of the 11 pledging members will have a full buil
d-out by early next year.

10:23AM Sen. Goodfellow brought up Monticello, a charter school in West Valley. They've got a 1Gbps connection from UTOPIA (try getting THAT from Qwest) that they use to do video conferencing with schools in other countries as part of language immersion programs. That's some totally awesome stuff. They're also using telecommuting to have students be able to participate from home. Telecommuting for students? Me likey.

10:20AM And more truth. Qwest and Comcast were invited to join and declined. Just because they don't believe that it fits their business model (read: vertical monopoly) doesn't mean cities don't have the right to join. Based on some new comments, I think this might be Roger Black speaking. I'm still not sure.

10:19AM Wa-BAM! Shaw says that UTOPIA hasn't has to use a single red cent of tax dollars thus far in the project, depending solely on bond money. He also noted that Titch's rant about financial matters is that UTOPIA hadn't planned to be at a break-even point by now anyway. He also brought up that the RUS grant is a tacit approval of the solvency of the project from the federal government. Truth 1, fudged numbers 0.

10:16AM I think Mr. Shaw is the one speaking right now, but I missed that change of speakers. He's citing that some cities have lost businesses or missed out on new business opportunities because of a lack of broadband. He also brings up Brigham City's success in attracting a new business based on UTOPIA access.

10:14AM Now we've got a discussion about the immense interest level that UTOPIA has been received from private citizens and the wide speed delta between UTOPIA and other providers. Apparently UTOPIA has also been asked to speak at other gatherings internationally as a model for other fiber projects. That's all good for the residents of Utah.

10:12AM Tew made the great point that cities have the right to determine what services they will be providing. Sen. Stephenson then asked some questions about taxation in regards to UTOPIA pointing out that the wholesale portion may not be paying. This ignores, however, that the lower service prices increase economic activity and can produce a surplus of revenue for the cities with sufficient participation. Tew also rebuffed the idea of a further moratorium citing the previous one that just expired.

10:08AM There really wasn't a lot on broadband there other than a quick overview. Now we'll get to hear from UTOPIA, Provo, Comcast and Qwest in that order. Roger Tew is starting off.

10:05AM After a lot of information concerning the electrical industry, we're getting into broadband.

10:00AM This is good stuff, a first-rate presentation on what powers an incorporated municipality has especially in relation to public utilities. She also went into what constitutes a public utility and what method by which they can be delivered (i.e. by a well-regulated monopoly, municipal ownership, etc.). She also discusses arrangements like cooperatives.

9:54AM Steven Titch has left the stand. We're now going to have a presentation from Patricia Owen, a legislative researcher.

9:51AM Sen. Stephenson brings up a good point. Construction in newer areas ("greenfields", they're called) is progressing faster than in existing areas. Of course, that has more to do with the trenches that are already dug that don't disrupt existing areas. Just like new roads are often taken care of prior to resurfacing existing roads.

9:48AM And… another lie. Sen. Stephenson caught him on it too. He tried to say that UTOPIA's loans are guaranteed by the state. Uh… WRONG! They're backed by sales tax revenues from pledging member cities. If you're going to appear at a hearing like this, you'd better study first.

9:43AM Sen. Stephenson asked about Spanish Fork. Mr. Titch mis-characterized the nearly $500K of black ink as "breaking even" and tried to dodge the question as to how it's doing financially. He goes on to use this outright lie to insinuate that they are cooking the books! Man… anyone in the know can tell this guy is a total shill.

9:41AM Wow. I like Sen. Goodfellow. He's asking the really hard questions. He brought up that UTOPIA service providers are existing private companies. Now Steven is changing his tune: he's calling it unfair competition against wholesalers instead of Qwest and Comcast. Who knew he had waffles for breakfast?

9:38AM Titch finally said something I agree with: muni networks suck at marketing. Of course, any organization or company with bad marketing won't do so hot. Given that private broadband has been growing, it seems like a relatively cheap fix to make muni networks experience a better take rate. MSTAR? Nuvont? Are you guys listening?

9:37AM Sen. Goodfellow is taking Titch to task by asking him to cite our international competitiveness in the broadband market. Titch admits we're 15th according to the OECD report, but he's trying to pull the old density card. If density is the key, why don't we have 100Mbps in New York? Or Chicago? Or Philadelphia, Boston, San Francisco or Los Angeles? Apparently this doesn't mean we're falling behind, though. Totally silly.

9:33AM Here's the money. Titch is now recommending an extension of the moratorium on new UTOPIA members amounting to a renewal of SB66. Given that the Legislature won't be in session until February 2008, cities would still have a chance to join prior to such a death sentence. I guess he missed the memo that we already had a 3-year ban on new members.

9:30AM We're up to 8 members of the committee now. Titch has now gone on to say that muni networks are unprepared for high-bandwidth applications. It's kind of funny that he'd say that when UTOPIA provides about twice the steady downstream and over 20 times the upstream when compared to the fastest cable and DSL plans. He then goes on to say that Sprint's new Xohm service will blow it out of the water, but WiMax has been a perpetually-delayed product and the equipment is still rather expensive.

9:27AM Congrats to Lafayette Pro Fiber and Tri-Cities Broadband: you just got a plug from Titch. Unfortunately, he called you guys a bunch of one-sided hacks. The irony.

9:23AM Hey Steven? Did it occur to you that the poor take rate for muni wireless has to do with poor signals and that comparing it to wired service is kind of silly? Why no mention of Loma Linda, CA? Why no attacks on the Corpus Christi, TX wireless system? I smell cherry-picking.

9:22AM I just noticed that 7 members of the committee are now present.

9:21AM Okay, it's fair to hand Earthlink out to dry. However, classifying their 900-employee "streamlining" as almost the entirety of their wireless services business? That's an outright lie. Maybe he's forgotten that Earthlink has a significant amount of its business invested in dial-up and re-branded DSL and those businesses aren't doing so hot.

9:19AM Now comes the attacks on UTOPIA. Apparently UTOPIA revised estimated revenue to 33% of the original estimate and upped estimated costs by 44% over original. This fails to take into account the long wait for federal RUS funds which delayed construction. It also fails to note that most of the initial costs are backbone-related, not to-the-home deployments. He never mentioned the take rates for served customers.

9:16AM As expected, he went after iProvo first.

9:11AM Amazing. He actually disclosed that Qwest was a client of his. That wasn't so hard, was it?

9:09AM Steven Titch has taken the floor. We'll see what kind of hookum he comes up with.

9:08AM The meeting is now underway. We're missing 3 members of the committee including Sen. Niederhauser from my Senate district. 

9:04AM Seems like this meeting is going to start late and I'm only counting 5 of the 9 members of the subcommittee as being present thus far. Not cool.

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7 Responses to Liveblogging the Government Competition and Privatization Subcommittee

  1. mp says:

    This live blog is first-rate. One suggestion though, could you reverse the order that you post in? Having to scroll to the bottom after each refresh is harshing my mellow :]

  2. Jesse says:

    I’ll see what I can do. I didn’t even think about that. D’oh!

  3. mp says:

    Thanks! Cheers from all the folks over here at XMission following your updates.

  4. Chuck says:

    I sure hope you’re listening to the audio on the web, or listen to it after, because this blog is way off. Listen for yourself.

    Quick examples:
    #1 10:35 40,000 customers in long term contracts. Really what was said, they have 40,000 marketable addresses with 10,000 in long term contracts.
    #2…never mind I can’t take the time to correct all the misstatements made here.

  5. Jesse says:

    It’s hard to type and listen at the same time and I appreciate any corrections. You, however, seem to be more interested in calling me a liar. Especially with the sock puppet e-mail address you used.

  6. Pete Ashdown says:

    Jesse, your comment about the 1996 telecommunications act was spot on. Good job.

  7. Paul Cutler says:


    Thanks for the notes and the blogging so that those of us who could not attend could keep track of what is going on.

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