BREAKING: Payson says “no thanks” to Macquarie Milestone Two

PaysonlogoIn a move surprising precisely nobody, Payson’s city council voted 4-1 to pass on Macquarie’s proposal to UTOPIA. You may recall that this is the same city that passed on rebonding in 2008, didn’t join the UIA in 2011, and didn’t bother to show up to board meetings with any consistency since 2009.

From a fiscal perspective, it’s easy to see why they made the decision. Since joining the network, the population has grown by several thousand, so there are a lot more homes to cover. At this point, there’s less than a decade of the original bond payments left for them to make. I’m sure they’re figuring that the cost to pay off the bond and walk away from their share of the network is less than taking the deal. Unfortunately, it also means that the city probably has little chance of seeing an open-access fiber network. Anyone who’s using the network in Payson is probably also looking at going dark Real Soon Now(TM).

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24 Responses to BREAKING: Payson says “no thanks” to Macquarie Milestone Two

  1. Daniel says:

    I attended the meeting and the big sticking point was the government forcing them to pay $20/month. It was almost more of a freedom issue than a cost issue. They have 12 years left on the bond and pay 260k each year.

    As a current Utopia subscriber in Payson I’m curious what happens and what timeline we have for going dark. Why would Utopia go dark in Payson?

    • Jesse says:

      Nothing is more dangerous than a city council willing to cast philosophical votes that are not financially sound.

      If Payson opts to not pay their share of operating expenses, maintenance, and network refreshes, the network will be turned off to eliminate those costs. They have a long history of trying to get the other cities to cover for them (see linked articles above) and that is about to end.

      • Mike says:

        If they do this, wouldn’t their bonds be called immediately?

        • Jesse says:

          That’s entirely possible. Bear in mind that Payson has been a freeloader since the UIA was formed. They’ve contributed nothing towards the operational shortfall during that 5+ years. That’s going to catch up to then as soon as this fall.

          • Mike says:

            Well that’s just grand :/

            And CenturyLink proudly proclaims “your address qualifies for ‘up to’ 7Mbps service” At least they aren’t trying to call it “broadband”. I wonder though, I’ve seen billboards all over for their “up to 40Mbps” speed, but I’ve never been able to find an address that actually qualifies for that.

            At least comcast has 100Mbit service, but again “up to” with no guarantee you will actually see that rate, not to mention the ability for your neighbors to see your traffic. On the other hand, I guess that means I can watch their traffic, too, so maybe it’s not a total loss …

            Then again, C-L’s plan is 1/2 the price for less than 1/10th the service, so that’s a pretty horrible deal (in effect, it’s more than 5x more expensive). Comcast is “only” twice the price for about 1/2 the service. 105 down, 20 up compared to 100/100. If I allow them to proxy my traffic and attempt to compress it more, the ratio is slightly better (1/2 the price for just under 1/2 the service, but that’s only if the compression and ‘transparent’ proxy are working correctly). Without that, you’re back to 25/5, so less than 1/4 the performance, for 1/2 the price, so it’s still at least twice as expensive. I guess I can take solace in the fact that it’s not 5x more expensive like C-L?

            Yes, LT, sounds to me like Payson made a GREAT choice to screw their citizens.

            More seriously Jesse, do think that Macquarie may come back to payson and use that as leverage? (“we’ll agree not to sue you for the 5+ years of operational shortfalls, if you agree to sign on to the plan”? That strikes me as extortion, but then again, it seems like something that might legitimately result from a settlement agreement). Any idea what Payson’s share of that operational shortfall comes out to be? How is it allocated between the cities?

            • Jesse says:

              I think Payson will get the bill for opex and maintenance and be forced to seriously reconsider their position. The rumor mill says the “pay or lights off” moment is this fall. There’s very little time left.

              I’m not sure how the shortfall has been assessed or how much Payson’s share is. I’d say ask the city council.

  2. Ted Laser III says:

    This is all starting to make me a little nervous about how Centerville will go. I’ve already got a couple of those lying mailers from CenturyLi……. I mean the Utah Taxpayers Association. Any info on how Centerville might go?

    • Jesse says:

      I’m hearing that it’s very much on the edge. You’ll need to hit the city council pretty hard with phone calls and emails to make sure they get on board. And make sure everyone you know does the same.

  3. Brent Wolsey says:

    This is really disappointing to my wife and I. As a Utopia subscriber in Payson, we feel strongly that it provides tremendous value to our little corner of the Utah. I wasn’t able to go to the meeting tonight due to being out of town for work, but my wife was there and voiced her support for the purposed Macquarie deal, even saying we would gladly pay more for the privilege to have our Fiber. I know their response surprises no one, but that doesn’t mean it doesn’t bother no one. I sure hope Payson city can figure out a way to keep the network going so all of us already on the network don’t get shafted.

    And THANK YOU Jesse for keeping us all up to date on what’s going on and for all you do!

  4. LT says:

    Good move Payson, the MacQuarie deal has too many holes in it.

    • John says:

      Care to share what those holes are? Having read the proposal, it looks pretty solid to me. They’re hiring top-notch firms, they’ve been extremely transparent about their processes, and they’re not spreading misinformation and FUD like the incumbents trying to protect their profit margins while refusing to upgrade service.

    • Richard says:

      Milestone 1 was never intended to be exhaustive, but a first step to allow everyone to consider if moving to milestone 2 which will include virtually all of the details. What questions where not answered for you?

    • Greg says:

      All the more reason to vote yes and find out exactly what is going to happen. Right now, the network has too many holes in it…I’d like that remedied.

  5. JeffC says:

    I am a long supporter of UTOPIA (and former employee of Dynamic City who managed / built the network), and a current subscriber in Payson. I unfortunately could not make the meeting, but I am glad to see that Payson City passed on this deal. I love the project, but this is the wrong approach in my opinion (are there better options? not currently, but it doesn’t mean we should jump at this one….).

    I would be surprised to see my service “Go Dark” but if it does, oh well, its only internet (the TV service currently offered isnt even a concern… its lacking).

    • Jesse says:

      The time for alternative options is almost gone. Payson hasn’t exactly been constructive in the process either, choosing to be non-participatory for years. This is the best option on the table, even if you don’t think it’s a good one.

  6. Brent Wolsey says:

    I fear they Payson and the other cities which decline the deal on the table today are setting up themselves, and more importantly, their residents for years of disappointing internet and other technology based offerings like inexpensive Phone service (mine is something like $3.27 a month for 5000 minutes of USA and Canada calling), home security monitoring, etc. Any city which started and walked away from such a cutting edge endeavor will not be favored by others looking to bring in and offer their own cutting edge technology. I’m afraid that means that this area may be doomed to only have Comcast, Century link and the handful of high latency/less robust (yet adequate for many today) wireless solutions. I certainly know that if I was looking to invest big dollars into technology, I wouldn’t go to a community who was so ignorant and walked away from such a good thing, especially when it was already partially implemented and paid for.

    Then again, I could be completely wrong (which definitely has happened more than I’d like to admit in my life) and maybe it just makes the area ripe for the picking and some company comes in and buys what’s there for pennies on the dollars and turns it into something acceptable (like Google Fiber). Unfortunately, if that happens, I seriously doubt it would end up being an open infrastructure which encourages healthy competition (like Utopia is where it’s built out).

    I guess only time will tell.

  7. Mike says:

    We already know that Google Fiber isn’t open. They won’t even give you a dedicated IP. That may change, but in my opinion is quite unlikely to.

    For me, as we were leaving the meeting, I overheard someone say “sometimes you fight city hall and win” and I replied ” I honestly hope it’s a win. I know it ‘feels like’ a win today, but in five years, we will know for sure” I really do hope it’s a good decision, but I agree with Brent: without support from the City Council, nobody is going to come in and offer to finish the build. At the very least, such an undertaking will require access to utility easements and building permits, which are going to from City Hall. By refusing to even take part in the more thorough investigation, they are telegraphing that they aren’t really that interested in “broadband as infrastructure” which means that 1) nobody will attempt to build an open network to be infrastructure and/or 2) once it does happen (in 20 years when it’s all but ubiquitous) the city will wind up having to pay full price rather than getting in a bargain.

    They only companies that are going to be willing to undertake such a deal in the current climate is.. well, nobody, except maybe Google Fiber. However, they have a lot of commitments elsewhere still; in addition, though they have committed to universal rollout, they move into areas where there is support first. This means that it could take a loooong time for a universal build out. Verizon *might* but FIOS is reputedly horrible to work with, and pretty much an east coast thing; I doubt they will suddenly decide to build 1000 miles away -especially in the light of the city’s lackluster desire for broadband. Is anybody else even building fiber to the home in the US?

  8. yeah baby, maybe those city council heard the news of the type of people in charge of Utopia right now. discriminating assholes.

  9. Matthew says:

    The current UIA financing is making progress. It’s cities like Payson who aren’t paying their way that are forcing a final solution like the Macquarie deal. If they’d do their part, city managers would be able to let the UIA process continue to succeed in organically operating the system in an economically optimal fashion.

    The alternative is to put all the risk and liability into a big spreadsheet, sum it up (stage two objective), convert it to a monthly fee for every address in the participating cities, and build a contract around it. This is the worst case scenario, by definition.

    • Jesse says:

      The UIA was a good idea that was poorly executed. The cities demanded that UTOPIA focus on high-margin commercial users about two years ago and very little (if anything) has been done to use UIA money to build out residential neighborhoods. The only major residential construction (Centerville) was done with ARRA money. It didn’t even come close to covering opex either. The only success that came from the UIA was punting long enough to get a firm like Macquarie interested in making a proposal.

  10. Pingback: BREAKING: Murray says no on Milestone Two by a unanimous vote - Free UTOPIA!

  11. Mike says:

    Oh the irony…

    I just went to to the Payson web site so I could email the city council and see if I can get a straight answer on the operating expenses, and lo and behold, front and center is a giant “Go Fiber Utah” banner….”fiber gives you a choice”….

    I also find it humorous how many “uNOpia” signs showed up AFTER the city voted not to proceed with Milestone 2.

    • Daniel says:

      Yeah, the signs going up after the vote are incredibly funny. I was unhappy with them since most of them appear to be on vacant land that the owners probably have no idea is posted with signs.

      Let us know if you hear anything about the opex expenses. I plan on attending all the city council meetings from now on to do all I can to prevent the network from going dark in Payson.

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