Broadband • Municipal network’s 11 member cities
have four weeks to accept new terms.
BY TONY SEMERAD THE
SALT LAKE TRIBUNE PUBLISHED: JUNE 2, 2014 01:01AM
One way
or another, June will be a historic month for Utah’s biggest experiment with
what is called “municipal broadband.”
Eleven
Wasatch Front cities involved in a project called UTOPIA have the next four
weeks to opt in or out of an Australian investment company’s plan to take over,
finish and operate their struggling high-speed fiber-optic network for them, in
exchange for a share of its profits.
Officials
from Brigham City to Payson continue to comb through a detailed business study
of the financially troubled grid compiled by Sydney-based Macquarie Capital
Group as a June 27 deadline to sign on approaches. But they’ve also brought in
another suitor, Utah-based broadband provider First Digital Telecom, to proffer
its own proposal to finish and run the UTOPIA network.
Leaders
in Midvale and West Valley City already have approved the Macquarie bid,
authorizing it to do a full analysis of extending high-end data, video and
voice capacity to all homes and businesses within their city limits. The global
firm specializing in large public-works projects will bring back its detailed
business, legal and technical analysis for final approval by year’s end.
Lindon,
Murray, Layton, Tremonton and Centerville have scheduled public meetings in the
coming weeks to debate being part of Macquarie’s vision. Other cities,
including Murray, Lindon and Orem, are also polling residents to gauge
sentiment on key elements of the plan, including its proposed $18 to $20
monthly utility fee on all households to help defray network construction
costs.
Referred
to as an “availability fee,” the charge is drawing opposition to Macquarie’s
plan in some quarters.
The
per-household fee would entitle residents to basic Internet service with speeds
of 3 megabits per second, but all households would pay the charge whether they
take the service or not.
“I love
the idea of fiber and want every citizen to have it,” Orem Mayor Richard Brunst
said. “But I don’t want to force it on them.”
As debate
over UTOPIA’s future moves to various city halls, a Macquarie official said the
company remains “very hopeful” that members cities will choose to participate.
“Our big
push is to get all the cities and we feel we’re making good progress,” said
Nick Hann, senior managing director with Macquarie.
While
drawing as many of the 11 cities’ estimated 160,000 combined households as
possible “certainly gives the transaction scale and critical mass,” Hann said,
“we don’t need all 11 to create a viable project.”
Short for
the Utah Telecommunications Open Infrastructure Agency, UTOPIA was envisioned
12 years ago as an economic-development tool, meant to connect businesses and
homes in member cities with Internet access at speeds of one gigabit per
second, up to 200 times faster than download and upload rates typically available
from private vendors.
But
UTOPIA has struggled over the years, due to a combination of mismanagement,
heavy debt, opposition from private-sector telecommunications companies,
construction problems that left the UTOPIA grid partly finished, and low sign-up
rates from potential customers.
While
UTOPIA’s finances have improved recently, its member cities continue to
subsidize the quasi-public agency’s budget losses, as well as pay millions of
dollars a year in city sales and business tax revenue to cover UTOPIA’s massive
debt obligations. That debt burden on taxpayers would persist even if the
UTOPIA network was shut down or sold off in pieces.
