M. Royce Van Tassell. Salt Lake Tribune.
In the wake of the Legislative Auditor General’s audit of the Utah Telecommunication Open Infrastructure Agency, UTOPIA officials have repeated one line over and over again: The original management created problems, but the management team installed in 2008 has resolved them.
Now, they say, UTOPIA is “alive and well,” as board chair Kane Loader recently argued in The Salt Lake Tribune.
That assessment is simply false. The “new” management team — are you really new if you took control while George W. Bush was president? — hasn’t spent millions on useless electronics. Congratulations. And their average revenue per user is up over that time. Well done.
None of that obscures the high-speed broadband network’s ongoing financial failure. As noted in the audit, UTOPIA’s net assets are negative $120 million. In other words, UTOPIA would have to pay $120 million to sell itself. And this isn’t an isolated data point. “UTOPIA has had nine consecutive years of operating losses” (page 9), including the four years the current management team has been in place.
On the subscriber front, the current management team hasn’t performed any better. Quoting from page 32, “In the past five years of operation, UTOPIA has failed to reach its target take rates (projections for subscribing residents).”
Page 34 notes that UTOPIA gained an average of 190 new subscribers per month between July 2011 and April 2012. If those 190 new subscribers told the whole story, this management team might have something to celebrate. However, page 8 of the audit notes that over the same 10 months, UTOPIA’s total subscribers increased by just 768. In other words, UTOPIA lost 1,132 subscribers. Churning through subscribers doesn’t inspire confidence in this management team.
Just as troubling, the current management refuses to hold itself to the standards at the heart of their current plan. Assessing the managers’ performance, the auditors wrote that “many of the agency’s past practices have not changed. For example, the agency has not followed its commitment to invest funds only in those locations where 25 percent of residents have agreed to purchase the service” (page 42).
The auditors note how little of its plan UTOPIA has articulated. “When asked for a description of the new business plan, UTOPIA could not provide us with a formal written narrative of the new business model,” thereby preventing the auditors (and taxpayers!) from verifying “whether the plan does in fact correct past mistakes” (page 41).
Another example from the audit seems especially telling about the abilities of the current management to successfully guide UTOPIA, which was organized in 2002 by more than a dozen municipalities along the Wasatch Front. Centerville officials provided the auditors a document entitled, “UIA Five-Year Plan: Executive Summary” (Appendix B). When asked for the plan that this summarized, “UTOPIA officials said they were not even aware that such a document had been presented to Centerville City” (page 43).
Such mismanagement is shocking, especially given that the officials who publicly led UTOPIA’s Centerville outreach were CEO Todd Marriott and general counsel David Shaw. Perhaps they don’t recall writing and distributing that document. Perhaps they don’t know who wrote and distributed it. Either explanation raises serious doubts about the ability of this management team to lead UTOPIA.
UTOPIA has wasted hundreds of millions of dollars. It has consistently failed to meet its own subscriber and financial goals. Those critiques apply equally to UTOPIA’s original and current management teams. UTOPIA’s member cities must demand the same accountability private investors would. Anyone who’s read the financial news knows that a management team that fails to fix fundamental financial failure in four years isn’t “new,” and should probably update their resumes.
M. Royce Van Tassell is vice president of the Utah Taxpayers Association.
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