Bye Bye, Deadbeat Providers

One of the more interesting parts of UTOPIA’s new plans via the Utah Infrastructure Agency (UIA) is to have cities start taking over billing operations directly. In the past, service providers operated all of the billing and then remitted payment to UTOPIA for the wholesale transport. That arrangement works well for most providers, but every now and again, you get an Mstar that racks up a huge debt to UTOPIA. While the step to diversify the video offerings so that no provider can hold triple-play over their head, it only gives UTOPIA a hammer to cut off the deadbeats, not a way to get their money. So, in an effort to make sure that UTOPIA always gets their cut and isn’t giving any provider a free loan, it looks like they’re going to consolidate billing into the UIA which will then disburse the money to both UTOPIA and the service providers.

I have some mixed feelings on this. Sure, it sucks when a crappy company like Mstar takes the network for a multi-million dollar ride. And it would suck if a company decided to not pay their bills for a month or two and leave UTOPIA holding the bag. I can certainly see how this improves the cash flow on their side. On the other side, billing is a way for providers to differentiate their customer service. I know a lot of people who have sworn off Qwest because their bill couldn’t ever come out quite right. I also wonder if providers will be hot on the idea of a third-party provider collecting the money and delaying the cash flow on their side. It also raises the issue of what happens when there’s non-payment by the customer. Instead of the provider having to pay UTOPIA anyway while they seek payment (or, more likely, shut off service), UTOPIA is left holding that bag. Granted, it’s a lot less than if a provider stops paying their bills, but it’s something worth thinking about.

In any event, this seems like an overall positive move with a few caveats. If nothing else, UTOPIA is working its tail off to try and protect itself from these kinds of financial problems.

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4 Responses to Bye Bye, Deadbeat Providers

  1. DoxAvg says:

    I would be interested if you could link to any more information about the change. It seems to me to impugn UTOPIA’s status as the wholesale provider of the infrastructure to retail entities. It puts another unresponsive government bureaucracy in between customers and their service providers, and leaves a lot of room for ball-dropping and finger-pointing.

    The wholesaler/retailer model seemed to be a good fit to me; the customer is contractually obligated to the retailer, and the retailer to the wholesaler. At each step of the cash flow chain, there’s one person to call (or sue, if things go sour).

    How solid are these plans? Is there still time and impetus for public comment?

  2. Anon says:

    To me, the more likely explanation for the new approach to billing is to remove the pricing confusion from the providers. Your monthly bill will vary depending upon how your connection install was paid for and where you live. Making all the providers advertise pricing for each situation would be cumbersome and confusing. Instead, they can now market a service with pricing like “$25 + connection charges”.

  3. Jesse says:

    DoxAvg: The source was Steve Oberbeck’s latest article in the Tribune. He sometimes gets the finer points incorrect, so we’ll see. I’m trying to find time to meet with UTOPIA to find out a bit more about the specifics (though they may ask that I keep a fair amount of it under wraps for now).

  4. Its pretty straightforward, actually. Part of what we currently charge subscribers goes directly to UTOPIA to cover the obvious infrastructure costs. Under this new model, that part will be instead treated more like a utility, paid directly to the cities, thus lowering the ISP charge by the same amount.

    By equal measure, the end subscriber has *always* paid for their fiber drop. That long term cost was factored into the monthly “utility” fee mentioned above. When the drops became a self financed option in Brigham, that monthly charge was reduced in return to keep the user’s bottom line intact.

    AS to the cities acting as a billing department for our service, this we haven’t been told about, and I can’t say I’m initially warm to the idea.

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