Who Gets UTOPIA Revenues in this Proposal?

                                     (Al Hartmann | The Salt Lake Tribune) UTOPIA director of network engineering Roger Timmerman shows the company's fiber-optic hardware at their corporate office Tuesday June 12. Utah has the fastest broadband Internet speeds of any Western state and one of the fastest in the whole country, according to the latest report from Internet content delivery network, Akamai Technologies. UTOPIA is one of the few munincipal Internet networks in the country that offers 1 gigabit of speeds to consumers.

The proposal

Macquarie Capital is conducting a feasibility study to see if it makes sense to invest in and take over the UTOPIA high-speed fiber-optic network.

If the firm agrees to assume responsibility for UTOPIA, it would pay for and manage the completion of the network to homes and businesses for 30 years. The 11 cities that are members of UTOPIA, however, would still have to pay off the initial debt from two rounds of bonds, which could total around $500 million.

If the feasibility study proves fruitful and Macquarie agrees to take over the network, it likely will entail a deal in which the firm would assume management of the network for 30 years and invest in building out and upgrading the rest of the lines to neighborhood homes, Hann said.

The network would remain an open-access network and Macquarie would partner with third-party Internet service providers, he said.

Macquarie would assume all risks with any new debts incurred in finishing the network, Hann said, but the cities would still be responsible for paying off the original debt. Member cities would continue to own the full network and they would receive an as-yet-undecided percentage of any profits it generated, he said.

Pyle, in West Valley City, said he believes UTOPIA’s outstanding debt can be covered by existing tax revenues. But his biggest concern, he said, is ensuring the network is completed so it can take on more subscribers.

Hann said his company viewed network completion as "the fundamental issue" in UTOPIA’s future financial solvency.

Vince Horiuchi, Tony Semerad. Salt Lake Tribune. Dec. 19, 2013.

Macquarie.com