Egg on MY Face: UTOPIA is likely to ask for pledges after all

A month ago, I laid into the UTA and Rep. Craig Frank for claiming that UTOPIA could call bond payments this year. As far as I knew, the financing plan would not allow for UTOPIA to call any pledges until next year when the first payment came due. Now it looks like I’m the red-faced one as UTOPIA has confirmed that it plans to ask cities to chip in this year.

Apparently UTOPIA was only able to secure a variable-rate bond as part of the refinancing deal and was unable to convert it into a fixed-rate one. That’s not surprising given that credit markets were running a bit dry, but it is unexpected since that little detail never seemed to come up. Barring a sudden large increase in subscriber revenue, this has left UTOPIA short anywhere from $50K to $300K a month because of increased interest rates. The article didn’t reveal if that is the only shortfall in bond payments or not, but they are covering operating costs.

I’m especially upset because UTOPIA didn’t tell me that I was wrong after I published my lambasting. And I ended up finding out this morning by reading the article in the DesNews instead of getting any kind of head’s up. The lack of information available to the public is bad enough, but leaving your loudest supporters hanging out to dry just won’t fly.

Tagged , , , . Bookmark the permalink.

11 Responses to Egg on MY Face: UTOPIA is likely to ask for pledges after all

  1. If you comment on enough things, that’s going to happen at some point. Your commentary on broadband issues is wonderful and quite helpful to the policy dialogue. In this case, you simply were denied better information (by those who, as you mention, should do a better job).

  2. I agree – if you do a good job, you will make mistakes from time to time. The important thing is to fess up and explain the situation – which you have already done.

  3. Mike Taylor says:

    This doesn’t surprise me, the picture for UTOPIA always looked pretty bleak financially, largely, I believe due to mismanagement of the early money.

    However, the principle of UTOPIA is still one worth fighting for since it is not a market that I believe can be adequately serviced when left to private industry alone, the barriers to entry (cost) are too high to allow for the kind of robust competition that is what makes free markets special.

  4. luminous says:

    wow just wow, well I feel sheepish!

  5. Capt. Video says:

    I strongly believe the shame is UTOPIA’s and not yours. As I’m suggested on may posts over the past year or more, UTOPIA has an obligation to the PUBLIC to be much more open and forthcoming with information.

    It is good to hear that UTOPIA is covering operating costs (hopefully) with subscriber revenues (and not interest on unused bond proceeds, etc.). This makes me feel much better about the current management team.

    But I would still call for replacing them IF they continue to withhold information and require filing GRAMA requests to get items that should be public like their by-laws and their budget (which becomes public when they file it with the State anyway).

  6. Stench says:

    I wonder how many other skeleton’s they have in the closet? One always seems to be coming out…. unfortunately.

    Whats next?

  7. Capt. Video says:

    I don’t believe this one is fully out yet.

    The range of $50k to $300k is rather broad and we don’t know when the draw might begin or how much operating revenue they have available to contribute to the payment…or will the cities be called upon to make the full payment with nothing coming from UTOPIA’s operating revenue?

    Some of those answers might give us a clue as to how much the cities should expect to pay once the full and regular bond payments become due in 2010.

    I think those payments were to be about $1.3 to $1.6 million? Has that amount changed if their interest rate is variable?
    At today rate, how much should the bond payments be?

    UTOPIA has many questions to answer and I would expect (based upon past performance) they will do everything possible to keep the answers a secret. Those additional skeletons will likely have to be painfully extracted by using GRAMA request, etc.

  8. u235sentinel says:

    I don’t feel sheepish or with egg on my face. Though when I am lied to I tend to get really angry and things happen (no I don’t turn green or anything ::grinz::).

    Utopia should be ashamed of themselves for misleading people. I also feel our government should also be ashamed as well. They bear some measure of responsibility as well as other’s like Qwest or Concast. Tying these guys up so they waste resources on lawsuits (for example) is wrong.

    Goes to show you that the entry level is very high in this space. No wonder America isn’t even in the top 10 in the world anymore. Pity

  9. Capt. Video says:

    The actions taken by Comcast & Qwest are very bad, but legal and understandable…they do not care about the citizens but care only about their profits.

    It’s more shameful that they were able to get the legislative body to support them and defend them and NOT work for the citizens they represent.

    I’m not sure UTOPIA “mislead” people as much as failing to come forward with information that could have (and should have) provided. I don’t think UTOPIA actually lied about anything?

    I think the cities need representatives (board members) that will demand to see the business plan and that are smart enough to drill down on the data, knowing what questions to ask to not be “surprised” by what happens. Either the cities don’t have that representation now, or they too are keeping “mum” about what citizens can expect, next year and in the next few years and beyond.

    Is there really a reasonable business plan that shows UTOPIA not subsidized by the cities? If not, let’s allow the cities to make long term plans to support them or look for a buyer to cut their loses while the system is still ahead of Comcast. I think the network value goes down as Comcast improves their own network.

  10. Jesse says:

    Capt: The problem is that UTOPIA depended on the board member from each city to keep the rest of the city government in the loop. Most of them, between day jobs and the demands of their elected or appointed positions, didn’t find the time to fully brief them. UTOPIA has told me that they’ve taken steps to try and involve more people from the member cities to try and avoid that in the future, but it is ultimately the city’s responsibility.

  11. Capt. Video says:

    I say the Board Members should keep not only the rest of the city government but the citizens informed too!

    That is where the blackout seems to be!

Leave a Reply to Christopher Mitchell Cancel reply

Your email address will not be published. Required fields are marked *