Muni fiber project in Utah in deep trouble

[David Farber <dave () farber net>]

________________________________________
From: Richard Bennett [richard () bennett com]
Sent: Thursday, July 31, 2008 11:03 PM
To: David Farber
Subject: Muni fiber project in Utah in deep trouble

Here's an interesting bit of news on the publicly-owned fiber front. Here we have all the elements of network nirvana, 
fiber to the home, public ownership, and structural separation, but it's a boondoggle of major proportions. And it's 
not like these are network-ignorant areas, this is the home of Novell.
-------------------------------------------------------------

When the idea of municipally-owned state-of-the-art fiber-optic networks -- UTOPIA and iProvo -- was first pitched to 
Utah cities and residents about six years ago, it created a hailstorm of debate.

Many who bought into the idea of a government-run fiber-optic network did so because they were frustrated with the 
broadband offerings of incumbent telecoms Qwest and Comcast, and were seduced by the promise of next-generation 
ultra-high-speed Internet and other services that only fiber-to-the-home has the capacity to handle.



Critics however argued that governments, whom they perceive as lacking industry expertise, shouldn't be dabbling in the 
high-risk telecommunications market, or even worse, gambling with Utah's tax revenues.

But fiber-to-the-home advocates won the first round, as elected bodies were wowed by impressive projections of Utah's 
market potential and the lure of economic opportunity.

In 2003, when an 18-city consortium began organizing UTOPIA's build-out, the $400 million network was glowingly seen as 
serving nearly 249,000 residences and 34,580 businesses. Eventually, the projections were cut roughly in half. Eleven 
cities in Utah, including Orem, Lindon and Payson, committed to the bonds, pledging $202 million in sales tax revenues 
over 20 years to pay them back.

Now, unexpectedly low subscriber counts and revenue shortfalls are threatening UTOPIA's ability to continue to make its 
bond payments. Tax revenues haven't been tapped yet, but if UTOPIA fails, the 11 cities could be on the hook for up to 
the full $202 million, the Utah Taxpayers Association warns.

To avoid that, UTOPIA wants to refinance. It is asking the cities this week to increase their sales tax pledges and 
extend their guarantees to 33 years.

The question facing city councils this week is whether UTOPIA's track record gives them enough confidence of future 
success to commit taxpayers for three decades.

------------------------------
Read the whole thing at:

http://www.heraldextra.com/content/view/263223/18/

RB

--

Richard Bennett




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