Howard Stephenson
April 25, 2010

Happy birthday, UTOPIA! You’ve turned 8 and reached what LDS Church members believe is the age of accountability. Let’s hope that you will stop blaming others for your financial and operational woes, accept responsibility and quit asking taxpayers for another bailout.

UTOPIA’s creation was heralded by hopeful promises that municipal broadband would usher in an era of economic growth and long-term revenue streams for its far-seeing member cities. Having fiber-optic cables running to every home and business in each UTOPIA city, its backers claimed, would make those cities economically competitive with cities worldwide that have similar broadband Internet, phone and TV capabilities.

Unfortunately, those lofty promises proved to be mere fantasy. UTOPIA’s tale of financial and operational mismanagement is well known, but a few key stats from its own audited, year-end financial report bear repeating. As of July 1, 2009, UTOPIA’s net assets were in the red $125 million. In other words, if UTOPIA sold itself to repay its debts, it would still owe its creditors $125 million.

Unfortunately, the longer UTOPIA has been in business, the larger its net asset hole has grown. And that trend is not improving. For the budget year ending June 30, 2010, UTOPIA anticipates an operating deficit of $25 million. Deficits this large are possible because they consistently rely on rosy revenue projections, and ignore or minimize the pressures of an already competitive telecommunications services market.

If UTOPIA signed up all 48,646 of its marketable customers, and received from them the same $417 per year that it receives from its current customers, UTOPIA would receive $20.3 million. That’s hardly the $54.6 million it needs for its operating, principal and interest costs.

Instead of acknowledging its failure, UTOPIA hopes taxpayers in its member cities will bail it out by backing another $20 million in bonds, hoping to keep the lights on just a little bit longer. UTOPIA stubbornly refuses to acknowledge that its own actions created its current plight. Most importantly, it refuses to accept that the market does not demand ubiquitous fiber-optic cables. The vast majority of Utah businesses and individuals find the market offers a price and service balance that they like.

UTOPIA, and its enablers on the city councils in UTOPIA’s member cities, have heard these concerns repeatedly. Many even agree that these arguments should have persuaded their predecessors in the city governments to not venture down this path at all. However, they feel compelled to pony up more money, to make sure taxpayers don’t lose the money already committed to back UTOPIA’s bonds. Unfortunately, that money is already gone.

It’s time for UTOPIA to grow up. Instead of blaming predecessors, the Legislature, the federal government or other participants in the telecommunications services market, UTOPIA must acknowledge that it has failed. The na?e hope that elected officials, with none of their own money at risk, will better gauge the state of the market is what got UTOPIA into this mess in the first place. The responsible decision for UTOPIA, and for today’s elected officials, is to acknowledge failure.

It’s time for UTOPIA’s member city councils to require that UTOPIA make do with the resources it has. That’s very tough love and may be politically difficult. But like a child, no organization can grow up unless it’s allowed to fail.