by Howard Stephenson
by Howard Stephenson
Socialism is alive and well in the most conservative state in the nation as the government operated municipal fiber-optic system called UTOPIA lumbers forward while mired in red ink. Despite undelivered Utopian promises and now precarious financial condition of UTOPIA, the cities of Vineyard, Cottonwood Heights, Apple Valley, and Farmington are considering signing on as non-pledging members! One wonders who these city council members are, which turnip truck they fell off, and whether they’re willing to use taxpayer dollars to buy snake oil too.
Last month the blog FreeUtopia noted that Corning has developed fiber-optic cables that are much more flexible and durable than traditional fiber optics. That FreeUtopia should celebrate this technology breakthrough speaks volumes about the lack of foresight in the UTOPIA model. While researchers push the boundaries of communications technology ever outward, UTOPIA wants to saddle cities with today’s technology.
Twenty years from now, when UTOPIA’s member cities have finally paid the last of their multimillion dollar annual fees, UTOPIA’s heralded 2007 fiber optic technology will look like dial up connections do today. The problem is that UTOPIA’s financial model isn’t generating the revenue necessary to profitably upgrade their system with the latest technology.
As the accompany chart shows, UTOPIA is suffering a substantial operating loss.
The Pacific Research Institute’s recent survey of 52 municipal telecom networks reports, “Muni telecom systems have proven to be nothing but a digital white elephant, costing the public much more than they’re worth.” With $840 million in collective losses and fewer than 1 in 4 are able to “pay their own way” (Sonia Arrison, Dr. Ronald Rizzuto, and Vince Vasquez, “Wi-Fi Waste: The Disaster of Municipal Communications Networks,” February 2007), UTOPIA’s predecessors across the country paved the path UTOPIA is leading its member cities down.
Second, in presenting the results of the Cottonwood Heights feasibility study to the CH City Council, UTOPIA noted that the city would have to secure the bonds with an annual fee for 30 years, not 20 years, like previous member cities. This requirement highlights UTOPIA’s Achilles heel. Their bonds are twice as large as iProvo’s, yet they have half as many subscribers. Unable to develop long term financial stability with subscribers, they are now extending the length of their membership pledge.
Unrelated to the above concerns, one other UTOPIA development is noteworthy. UTOPIA justified themselves originally by professing to build out the entire city of each pledging member. While Comcast, Qwest and other private providers only built their networks in parts of a city, UTOPIA would build out an entire city.
In the past several months, however, UTOPIA has begun recruiting non-pledging member cities. In cities like Vineyard, Farmington, Apple Valley and Cottonwood Heights, UTOPIA only proposes to build out new neighborhoods. This non-pledging member status looks suspiciously similar to the very business model the private sector already uses, and which UTOPIA and its backers railed against, before they actually had to build a network.