Back to top Jump to featured resources
ILSR Press Room filed under Broadband

UTOPIA: World-class Broadband, Sky-high Debt

| Written by admin | No Comments | Updated on Dec 2, 2012 The content that follows was originally published on the Institute for Local Self-Reliance website at http://www.ilsr.org/utopia-world-class-broadband-sky-high-debt/
saltlaketribune

The Salt Lake Tribune, December 2, 2012

Both public and private fiber-optic networks commonly borrow heavily as they build infrastructure and develop a viable subscriber base, several industry observers said.

“When you build a network like this, it takes a minimum of several years of spending a lot of money before you start to get it back from your customers,’’ said Christopher Mitchell, an expert in municipal broadband-network financing with the Institute for Local Self-Reliance, a Minneapolis-based nonprofit think tank for sustainable community development.

But by any definition, Mitchell said, “UTOPIA is at the far end. Its debt far exceeds what it should.’’ And although he praised UTOPIA for what he said is world-quality broadband service at a competitive price, Mitchell said its model of “borrowing a lot of money to build an open-access network just does not work.’’

An informal survey by the Utah Taxpayers Association, an avid UTOPIA critic, found the Utah network had the single highest bond indebtedness of about 40 municipal grids the group studied.

As many as 834 companies, government agencies and other providers offer some combination of broadband data, video, voice or other services to U.S. residential and business customers, according to an industry database kept by Broadband Communities, a New York-based industry publisher and consultant to broadband users.

UTOPIA and iProvo are among at least 114 municipal fiber-optic networks across the country, the industry survey shows.

At least 24 providers offer broadband access of some kind in Utah, most of them telecommunications firms, ranging from CenturyLink, formerly Qwest, to an assortment of local phone exchanges such as Beehive Telephone and Manti Telecommunications.

Phone companies are by far the largest segment of the fiber-to-customer market nationally with about 625 U.S. broadband networks, run by the national carriers left over from the early 1980s breakup of AT&T and by smaller companies created since then.

Intense competition between municipal networks and private companies plays out on many fronts; battles are especially fierce in public relations, lobbying government for regulatory advantages and municipal rights of way for cable conduits alongside roads and on telephone poles.

State law requires UTOPIA to operate as a wholesaler, a limitation conceived at UTOPIA’s inception when telecommunications giants such as CenturyLink and Comcast, now called Xfinity, grew wary of plans by Spanish Fork and Provo to get into the cable television business and lobbied state lawmakers for protections.

…snip….

Read the full story here.