July 13, 2010
The fiber-optic network UTOPIA is very good at delivering information at the speed of light. But opponents contend that it’s also good at losing money just as fast.
The Utah Taxpayers Association held a rally in Orem on Tuesday night to highlight what they see as problems with the system. Association Vice President Royce Van Tassell says that UTOPIA has maxed out its bonding capacity and that cities within the group have created another taxing agency to get more money.
Orem is among the cities that have created the Utah Infrastructure Agency that plans to bond for an additional $60 million on top of the $200 million in current bonds. (That number balloons to $500 million if taxpayers are on the hook for the whole thing plus interest over 33 years.)
It’s not just the bonds, Van Tassell says: “In every case, their operating expenses, by a long ways, exceed their operating revenues.”
Van Tassell and UTOPIA Executive Director Todd Marriott sparred recently on a radio program.
“It’s really, really working out well right now. There’s a lot of economic development occurring with it,” Marriott said. “There’s no doubt it’s had its issues and problems with it.”
The system operates on a wholesale plan: UTOPIA builds the network, then private companies like Xmission and Fibernet sell to consumers. There are currently 15 companies offering services on the network.
UTOPIA advocate Jesse Harris agrees with Marriott that the system has had plenty of problems.
“To say they haven’t bungled so far is denying reality,” he said.
But Harris says it takes seven to 10 years for any telecom — public or private — to get into the black. UTOPIA has been installing infrastructure since 2005.
“If you call them a failure now, you’re saying you failed because you failed to do what no one else can do,” said Harris, who points out that Qwest and Comcast — also Internet providers — are contributors to the Utah Taxpayers Association.
The new bonding effort by Orem and other UTOPIA cities would target specific areas where people are ready for the fiber-optic network, instead of the blanket approach used so far.
Van Tassell sees it as good money after bad. The only answer at this point, he says, is to find a business to come in and buy it and reduce the cost to taxpayers.
“It’s not a comfortable answer. It’s not an ideal answer, by any means. At this point there are no good answers,” he said.