Municipal ReportUtah at the center of the muni universe? ( old news - 04:16PM Thursday Dec 11 2003) tags: Fiber · alternatives · PoliticsUtah. You might not think of it as a technological wonderland, but the state is at the center of the nation's largest broadband political debate. The $470 million, eighteen city municipal push is seeing no shortage of controversy now that it has found the national spotlight. The largest municipal broadband project in the United States, Project UTOPIA (Utah Telecommunications Open Infrastructure Agency) should provide cable, phone and broadband service to some 723,000 residents in 248,000 households and 34,500 businesses via fiber. Though there is now hundreds of municipal operations nation-wide, they've primarily been ignored by mainstream media outlets. With the size of the UTOPIA project, the municipal push is finally getting some national attention. Incumbents argue they've worked hard to wire these communities, and municipal operations have an unfair advantage by sometimes pulling from taxpayer revenue. They also suggest it's unfair to have to compete with the same institutions that are often regulating them. As a result there's a push to ban municipal operations in a handful of states. Municipal supporters argue that these operations are born from a lack of service; and wouldn't exist if incumbents had provided timely connectivity to begin with. Muni-supporters often suggest that if a community votes to support such an initiative, why should they be stopped? They also argue the incumbents had no such barriers to entry when they began to offer service. In some of these debates, municipal supporters are often out-gunned and out-manned; in one such project in Illinois, a well designed PR campaign by local incumbents helped to quickly erode muni-efforts. Unless they're backed by a larger government or Utility provider, these are often grass-roots and small community efforts facing very effective and experienced public relations machines. UTOPIA is a far larger and more complex animal. The project has 18 interested cities, with planners claiming there is ten more waiting in the wings. The build-out of the network is expected to take between two and a half to three years. To ensure the initial launch goes smoothly, Light Reading reported earlier this month that one telecom provider will have a brief triple-play monopoly while the network gains its footing. Its size has naturally drawn the interest of its would-be competitors. One Utah Rural Telecom Association spokesman recently called the idea "wrong", and claimed private industry could do a better job. Jerry Fenn, president of the Utah division of Qwest, wonders "Why provide a Rolls-Royce when a Chevrolet will do?" The likely reason? Qwest's "Chevrolet" service (DSL) is only available to roughly 60 percent of residents in the state. As with smaller municipal project, money is at the heart of the debate. As the Salt Lake Tribune explores, some leaders of that city are suddenly beginning to get cold feet six months before the first fiber is laid. Likewise the Deseret Morning News reports area leaders are fighting growing criticism of the project in part prompted by national attention. We've posted an e-mail from Mayor Dan Snarr of Murray, UT, in response to local editorial criticism of the project in our Broadband Politics forum. A map of the areas that will receive service is here, and Converge Network Digest recently posted an excellent technical breakdown of the UTOPIA network here. The Utopia website also offers up this white paper in pdf format. Related:- Scott Cleland: Google Using 21x The Bandwidth They Pay For
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  aSic application specific Premium join:2001-05-17 Wakulla, FL clubs:
| Broadband in Utah, NOT RELIGION Right... back on subject.
The private sector companies are whining that they could do a much better job at this? Thats another huge load of crap. UTOPIA is looking to serve nearly 3/4 of a million people within a 2.5-3year timespan.. thats awful quick, compared to deployment rates of the private sector. I say, let UTOPIA roll forward... and if the private sector can build out just as fast and do a better job, let them do so. But dont stop UTOPIA from moving forward, as that would stall out the private sector companies, as they'd have nobody to set the pace, and the network would fail. -- Teamwork is a lot of people doing what I say. | irc.fj33r.com #dslr | Starband and DirecWay Certified Installer - Starband SRS GE4 C4/S69 | |
|  |  dylking
join:2001-07-31 Saint Paul, MN
| Re: Broadband in Utah, NOT RELIGION I agree...if they can do a better job....why haven't they? I'm a firm believer in "if you want something done right, do it yourself", and in this case, looks like several cities in Utah are too.
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|  |  looneytunes2
join:2003-12-12 Provo, UT
| 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
| Re: Broadband in Utah, NOT RELIGION 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. Lets 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 cant 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 youre 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 cant I get it where I live in Orem? Or where my office is in Provo? Thats 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 cant 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" cant handle the requirements? Could be...
In addition, we dont 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, thats 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
| Re: Broadband in Utah, NOT RELIGION 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 | |
|   MarkyD Premium join:2002-08-20 Oklahoma City, OK clubs:
·Cox HSI
| I've said it once... and I'll say it again. Utah is doing this right. In 3 years, Utah is going to be the most advanced state in the USA when it comes to broadband communications. Not to mention, UTOPIA is going to open the network to lots of providers (not initially, but after trials) which means lots of competition and great prices! I'll move to Provo to get my 10/10. | |
|  |  lesopp
join:2001-06-27 Land O Lakes, FL
| Re: I've said it once... I agree. Quoting from the white paper. (link at the bottom of the opening post) These are probably the two most valid reasons to support UTOPIA.
"The industry could replace its copper wire and coaxial cable networks with a virtually unlimited-capacity fiber optic infrastructure but business imperatives keep them from doing so. The long-term return on investment wouldnt meet investors short-term profit demands. It is not cost-effective for each company to implement fiber in every area, and forced infrastructure sharing has not gone well among providers forced to use competitors systems. Also, many sparsely-populated areas that are expensive to serve likely would be left out because serving them simply doesnt make financial sense."
"All major elements of infrastructure development have been sponsored by government efforts in one form or another, including: -Financing (railways, power plants, highways) -Granting franchises (power, telephone, cable TV) -Construction (airports, roads, interstate highway systems) -Operating (sewer, water, roadways, airports)"
Food for thought: Assume for a second we had left it to the automotive industry to build roads, in all but the largest cities we would still be driving on single lane gravel roads. Those with pavement and those with connecting paved roads would would have to pay unreasonable funds for the privilege of using a "state of the art" paved road. There would probably be "speed tiers" so you could travel faster but there would be limits on the amount of cargo you could haul. Too many trips to the grocery store could cost you for exceeding your limits. Finally, when the "left behind" community's attempt to band together and make their own paved municipal roads the automotive industry would either buy legislation or force the municipalities to unnecessarily spend funds on frivolous litigation in attempts to kill the competitive efforts. | |
|  Brisk Qwest's Spirit Of Service Inaction
join:2003-07-11 Colorado Springs, CO clubs:
·Qwest.net
| That's a used Kia, not a Chevy
quote: Jerry Fenn, president of the Utah division of Qwest, wonders "Why provide a Rolls-Royce when a Chevrolet will do?" The likely reason? Qwest's "Chevrolet" service (DSL) is only available to roughly only 60 percent of residents in the state.
That isn't a Chevy. Has anyone seen their service? 640/256 is what they dare to call "broadband". Qwest backed out and relied on MSN to provide sevice. Now that MSN is backing out of the broadband ISP business, who knows.
You might complain about SBC, Verizon or Bellsouth, but at least they acknowledge broadband as a feasible service. Even now, Qwest is still trying to sucker people into buying more voice lines and services. Forget about higher speeds. So with ILEC out the picture, and not much choice between CLECs and Cable, the mountain west needs muni now more than ever. -- Such is the way of the internet... 0 to 60, then back to 0, then back to 20-something.VeriSign.HasOwned.us - Help Stop VeriSign's Greed now! | |
|  |   dvd536 as Mr. Pink as they come Premium join:2001-04-27 Phoenix, AZ
| Re: That's a used Kia, not a Chevy said by Brisk : That isn't a Chevy. Has anyone seen their service? 640/256 is what they dare to call "broadband". Qwest backed out and relied on MSN to provide sevice. Now that MSN is backing out of the broadband ISP business, who knows.
Qwest is the 'Charter communications' of DSL. they seriously need to come out of the 1990's era. 640k might have been fast back then but almost everyone is offering 1500 as a standard package on DSL now. -- You can never be too rich, too thin or have too much Bandwidth | |
|  |   Steve I'm a PC, so shut up Consultant join:2001-03-10 Yorba Linda, CA
| said by Brisk : Has anyone seen their service? 640/256 is what they dare to call "broadband".
Of course they call it that: "Broadband" doesn't mean "high speed" though it's often used incorrectly in that context.
For instance, I-DSL is baseband, not broadband. -- Stephen J. Friedl * Security Consultant * Tustin, California USA * my web site | |
|  dylking
join:2001-07-31 Saint Paul, MN | nitpick It's Deseret, not Desert... | |
|   calvoiper
join:2003-03-31 Belvedere Tiburon, CA
| Jerry has his brands mixed up.... "Jerry Fenn, president of the Utah division of Qwest, wonders 'Why provide a Rolls-Royce when a Chevrolet will do?'"
Actually, Jerry, you've got it wrong. What Utopia seems to be doing is providing big, cheap, trucks when you're more interested in selling Chevy Luv pickups.
Now if you want to talk about providing a Rolls-Royce to someone who just wants a truck to haul data, you'd have to look at ISDN, which was a Baby Bell offering and largely a flop. I Still Don't Need it--and few others do.
Calvoiper -- VoIP--the death knell of remaining voice monopolies! | |
|   pmurdock Paul Murdock
join:2001-09-13 Riverton, UT
| Excellent... I live in Herriman, Utah. Not far from Salt Lake and I view this as a major boon to this area. I'm glad that people here in this state are willing to let their minds envision what might be possible with such a network.
I noticed Herriman city is not on the list of cities. I better go speak to my mayor! 
cheers, Paul | |
|  canelada
join:2002-09-03 Salt Lake City, UT 1 edit | qwest QWEST IS A FAILURE THEY OFFER 640K DSL..HUAUHAHUAHUAUHAHUHAUHUAUHAHUAHU COME ON, IS IT USA HERE OR WHAT?? | |
|  |   Camelot One Premium,MVM join:2001-11-21 Sarasota, FL clubs:
| Re: qwest The entire debate still kills me. Nothing like watching the telco's cry like babies. | |
|   plk bo may sleep in loft Premium join:2002-04-20 Ogden, IA
| The gravy train is running out of track Go Utah!!!!! Qwest has been milking the cash cow for years and laying off the help just to line a few pockets. I guess they will lay off more so that can pay off more politicians. Much cheaper than actually innovating for the future of this country. In my book fiber is a matter of national security. It's a must!. Just a hand full of projects like this one will open some eyes.
Come on Utah.... take a chance! | |
|  |   Octopussy2 Premium join:2003-03-30 Batavia, IL
| Re: The gravy train is running out of track Utah, and their leader, Paul Venturella, are amazing. Comcast and SBC may have spoiled our fiber optic network for now out here in the Tri-Cities, but Utah has the right vision and the right residents to back it.
Best of luck out there!!! -- It's muni-licious! »www.tricitybroadband.com | |
|  |  |  Bullet257
join:2003-11-18 Orem, UT
| Re: The gravy train is running out of track Correction:
Paul Venturella works for Provo City and is the manager for Provo's FTTH Project.
Paul Morris, City Attorney for West Valley City, Utah is the Executive Director for UTOPIA and one of the driving forces behind the project.
Both are great guys and true pioneers.
P.S> Stay tuned, Bullet257 will be coming to the TriCites with the solution to make that project happen, without a G.O. Bond referendum. 2004 will be a great year for you guys and a bad one for SBC and Comcast. The Evil Empire will crumble!! | |
|  |  |  |   Octopussy2 Premium join:2003-03-30 Batavia, IL
| Re: The gravy train is running out of track Bullet-
Of course you are right! Didn't mean to confuse anyone. Paul works for Provo. Just wanted to support Utah,in general, for their vision.
I would certainly like to hear your thoughts about how this would happen on a municipal level. Or would the solution be at the municipal level? Please contact me here or at www.tricitybroadband.com as I helped lead the citizen group here. Thanks. -- It's muni-licious! »www.tricitybroadband.com | |
|   Infymus
@xmission.com
| Qwest DSL Very Pricey
I wish that Qwest would change it's price structure. I pay $67 dollars a month for 640/256k DSL. That does NOT include the additional $19.95 a month for an ISP - that is just a DSL line. The alternative is Comcast, but then I would loose my ISP. No thanks. Either it's dialup or it's Qwest. Qwest has other packages, but you have to sell your soul to Microsoft - since Qwest partners to bridge DSL to MSN. | |
|  representing 5th Sniper
join:2001-01-20 Prince George, BC
·TELUS
| Let the project commence setting up getting a good fibre backbone is an excellent start to the eventual upgrade to the entire internet structure..also it will enable the cities to share data and research quicker wouldn't it?
This has so many good things that can come out of it and finally the taxes that we pay could go for something we WANT. As opposed to other things we may not want. the information highway is finally getting paved so we are getting away from the gravel and the chipped windsheilds now....let them get it setup and working...then see how many people complain...and it won't be because of the service offered...its cause they can't get it since their city opted out of the project..lol | |
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