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looneytunes2
join:2003-12-12
Provo, UT
| reply to aSic
Re: Broadband in Utah, NOT RELIGION
I think that fiber to the home is a fine idea, but not at the taxpayers expense. Here are my problems with Utopia.
Point 1: The consultants (Dynamic City) for Utopia have basically told every city that they presented to that they NEED Utopia and that it wouldn't cost them a dime. There are two issues I take here, 1: Does every city really NEED Utopia? and 2: Was it appropriate for Dynamic City to mislead the cities into thinking they wouldn't have to pay for it, or was that part of their plan - to get a "critical mass" of cities that bought on to the idea and then pour cold water on them when they let them know the truth about where the financial backing would really come from? Anyway, most of the cities said, "Hell yeah, let's do it."
I do have to mention that IF Utopia could have got the bonding, without requiring tax revenues from the city coffers, then I think its a great idea! But Utopia didn't plan that the companies to provide the bonding would be looking at this risky venture as more of a VC deal and now want the cities to put some skin in the game.
Of course cities are rethinking it now - because up until this time nobody had thought they would have to cough up any money. Putting their own skin in the game requires a tough look at exposure and liabilities. But that's precisely my point. The cities know that if they sign for a major portion of the bond, that ultimately they'll probably end up paying for the whole thing if the project goes south.
Which brings me to my second point: How many overbuilders across the country do you know are doing financially fine? Knology just came out of bankruptcy, RCN is on the verge of bankruptcy. RCN is barely keeping their heads above water - and they built their outside plant faster than anyone to date. I predict right now - and no I'm not a "prophet" although I am from Utah - that if Utopia gets their funding that their build will only take place along the Wasatch front (forget Brigham City and Cedar City - they'll get written off as too expensive because in reality they're too far away to make it justifiable) and that their buildout time will definitely take more than three years to complete.
I know what you're probably thinking - if they can just pass over 100,000 homes they'll break even. Show us (the people) the financial model! If you want us to back it, it's not an unreasonable request is it?
I do have doubts about the financial model, in part because the model is in all probability the one used by the failed WINfirst company that pounded $450 million (sound familiar to the number Utopia is asking for?) into the ground in Sacramento, then sold off their assets in bankruptcy to SureWest. Why do I say that? Because Dynamic City hired the CTO of WINfirst to be the CTO for Dynamic City/Utopia. Whoa! There's a bright idea.
Last point: Now Utopia is going back to their respective constituents (cities) and asking for another quarter-million dollars to see that this idea can continue to run so that they can get their funding. What are they going to ask for next? How could you not budget in a quarter million dollars? Someone's butt should be hung out to dry for missing that!
Again, I am sold on the idea of FTTx. But at what cost and who's paying for it? | |
Bullet257
join:2003-11-18
Orem, UT
| looneytunes2;
Some of your facts and assumptions are in error.
First of all, I would like to state for the record that I am not involved in the UTOPIA project in any way, other than being a supporter. However, I do know a lot of what has, and is happening with this project and want to set the record straight.
DynamicCity was not responsible for telling the cities that they would not be required to provide any backing. The person who originally told the cities that was Paul Morris, UTOPIA's executive director and West Valley City Attorney. And, he was acting on the best information he had at the time from the independent financial advisors and bond underwriters.
After initially providing that information to the cities, which is what they (UTOPIA and DynamicCity) were being told at the time by the bond team, they went through the formal process of conducting a full feasibility study and having that study independently verified by a nationally reputable Wall Street telecom analyst (Dean and Company). Concurrently, the bond team UTOPIA put together went out to the market to assess terms and conditions for this project
Now, to the present, due to the extreme timidity of the financial markets, including the bond market, which is a general condition affecting everybody, not just this project. They were told they would need to get some form of “partial” municipal backing to obtain an investment grade rating and receive the interest rate they had originally planned for.
A high interest rate on a project like this is counterproductive and does not benefit consumer, service provider, or community.
The next important point to understand is, that this is a “revenue bond” and that the cities are not being asked to place the "full faith and credit" of the city on the line. In addition, "backstop" that the cities would provide, would only be for, a yet to be finalized, but relatively small portion of the project, presumably only about one third of the total project cost would need to be backstopped.
The main collateral for a revenue bond is the system revenue itself, not any “tax dollars” and second, the network asset value. The cities "backstop" would only be required if there were a short term revenue shortfall. Based on the conservative projections for subscriber penetration, this is not likely to ever happen. And, if there were any temporary shortfall, it would most likely not require the entire backstop amount. Any public funds used would be repaid with interest. So, it seems to me that any risk is extremely minimized.
Now, on to other matters, you reference the failures of certain over-builders, most notably WinFirst and RCN. Let’s take them one at a time shall we...
WinFirst went belly up for two main reasons. First, they spent a lot of their money purchasing franchises for large cities around the country, which consumed a lot of time and money that did not go into actual build-out. Second, after 9-11 their VC funding evaporated as the financial markets collapsed, which ultimately did them in.
WinFirst's assets were acquired by SureWest communications who is continuing the FTTH overbuild in Sacramento county and is experiencing great success, with average penetration above 50% , achieved against Comcast and SBC. At that level of penetration, UTOPIA not only covers debt service and opex, but returns free cash flow the cities that can use those funds for other community needs or to offset taxes and fees.
In addition, to saddle Jeff Fishburn, WinFirst's former CTO with the blame for that companies demise is a cheap shot, and simply wrong. I personally know and dislike the guy, but you can’t lay that failure at his feet.
Next, you mention RCN. RCN is facing a similar situation to Qwest. Their main problems are staggering debt (much of it shot term) at high interest rates, low market cap, with large amounts of that debt coming due soon, etc. The only difference between the two is that RCN's market share is increasing, while Qwest's is declining. ( RCN also provides a lot better service according to a friend of mine in PA who subscribes)
In case you’re not smart enough to decipher the difference between UTOPIA and RCN. RCN's debt was short term relatively high interest capital. Since the UTOPIA cities main objectives are economic opportunity and growth , by insuring that this state and it's businesses are nationally and globally competitive, and maintaining and improving quality of life for residents by unleashing innovation and creativity combined with a world class local access fiber optic infrastructure.
The cities look for long term "cost recovery" and not "short term ROI" which, makes them the best infrastructure provider.
Now, I ask you, who do you trust to look out for the best interests and long term well being of our communities??? The executives at Qwest? The previous execs may be facing jail time... Are they responsible to make ensure the future viability of our communities? What about the execs at Comcast?
Comcast stated they have spent over $500 million on infrastructure upgrades in Utah... You could build all of UTOPIA with FTTH in 18 cities for less than that! Where did all this upgrade money go? How come there are parts of Orem, Provo, SLC, etc you cannot get cable modem service in? How come I pay $89 per month for a supposed 3Mb connection but can rarely get over about 2.2Mbps???
What they are not telling you is that they are counting their cost of acquisition they paid AT&T Broadband for the subs. So how much has really gone into plant upgrades? Do they have upgraded plant in all of the 18 cities and the rest of the state? NO! How about the truth being closer to upgrades in only about 7 cities and then not even 100% of those cities are covered!
How about Qwest's big lies like, we have DSL available to 90 percent of the state. Really, then why can’t I get it where I live in Orem? Or where my office is in Provo? That’s because if they can reach more than one subscriber in a zip code then they count that DSL is available in that entire zip code, even though the vast majority of subs can’t get the service.
Their next BIG LIE, we already provide all the services anybody will ever need. How arrogant!! I have cable modem, but does my father have access to telemedicine services? NO, could it be because this low speed, non-symmetrical, un-reliable, non-secure, high-priced shit they are labeling as "Broadband" can’t handle the requirements? Could be...
In addition, we don’t live in a vacuum, and when you consider the FTTH initiative in Korea and Japan, who are aggressively pursuing FTTH deployments along with many other countries. And then consider that applications like grid computing that promise to revolutionize many areas of science like genome research bio-tech, and on and on… You can see how at risk our future technology and economic dominance is. Go do some searches on grid computing and genome research etc and you will find why these other countries are rushing to connect everybody with fiber, while we sit here and listen to the monopolists lies. Where will we be in 2010?
Let me ask you... If the incumbents really believed UTOPIA was going to be a boondoggle, why not just let it happen so they can show all the other cities in the country the failure and not have to worry about other cities initiating similar projects?
I have been doing independent research on municipal and other deployments for over four years and have interviewed and profiled most of the overbuilds and the overwhelming majority ARE successful and the incumbents know this, that is why they are working so hard to stop this project!!!
Including buying the journalistic integrity of the Deseret Morning News, who obviously, as bought off journalists do, didn't bother to check a single fact they published. They just had Qwest write the piece for them and then published it.
If you want to be held hostage by these lying monopolists and only have DSL or Cable modem at the prices they choose to charges, while the rest of the world moves ahead, that’s your choice. Just be prepared to bend over and assume the position, you deserve what your going to get.
As for me, I am contacting my mayor and council members and voicing my support. | |
iagree
@npd.com
| I completely agree bullet257 with everything you stated. For far too long, the consumer has been chained to what the incumbents (both cable and dsl) have been feeding us for years...BS.
Both are monopolies, and have done little in terms of giving us real value, and a reliable quality of service.
Once FTTH is built out, the governments can eventualy "lease" the network to competitors who provide isp or otehr services.
I imagine a future where our tax dollars provide for the "electronic infrastructure", and that we simply pay a flat fee and small tax to use it.
I think a lot of people don't realaize how serious behind our nation has become, in terms of fiber. Our technological superiority is at stake, and we will fall behind grid computing (and it's advances) sooner than we think.
cheers & happy new year | |
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