You can miss so many interesting things by taking a two-week vacation. Take the report on the straightjacket 11 Utah cities find themselves in, otherwise known as UTOPIA.
That is the acronym for a public fiber-optic network that a consortium of cities pledged sales tax money to support 10 years ago. It’s easier to explain it simply as socialized Internet, although UTOPIA officials have always preferred to compare it to other necessary infrastructure, such as telephone lines, public highways or an airport.
The weakness of those comparisons has always been apparent to me. Internet technology seems to change faster than most people change the light bulbs in their livings rooms. Unlike roads and airports, and very much like modern telephones, plenty of private-sector ventures out there are happy to keep up with the changes and provide the service cheaply.
Which puts UTOPIA, with its years and years of bonding obligations, at a huge disadvantage.
A report last week from the Utah Legislative Auditor General showed UTOPIA has squandered more than 40 percent of the money it borrowed on the bond market through the years to cover its own debts and operating deficits.
That’s like a college student who uses his education loan money to pay the rent and go to some concerts.
And the cities that belong to the network have to pay $13 million a year in sales tax receipts to keep it afloat. It’s easy to forget they were lured into joining by assurances they likely never would have to cough up the taxes they were pledging as a backstop to UTOPIA’s finances.
Those pledges came mostly before the economy fell apart, although the cities approved new, extended terms after the recession began.
Simply put, they had little choice. This is one deal they can’t get out from under.
If UTOPIA goes under, they have to pay. If it continues and still falls far short of stated goals, they will have to pay. All those cities can do is hope the system catches on and is able to break even in three years, as officials have stated.
That isn’t likely, even though the current leaders of the consortium say they are making reforms.
Keep things in perspective. Ten years ago UTOPIA was supposed to make money after five years. That has now been extended to 13 years. Ten years ago, officials predicted they would have 49,000 subscribers by 2007. As of April 2012, they had 9,300, although officials say they now have topped 10,000.
Meanwhile, cities are struggling to meet the legitimate needs of government in a bad economy, and private Internet service providers seem to be giving consumers what they want cheaply.
When I started complaining about how wrong the idea of socialized Internet was 10 years ago, UTOPIA’s defenders used condescending tones. I just didn’t get it. I hadn’t done my homework. People who brought my columns to public hearings were dismissed as having listened to someone who was uninformed.
Well… most of those people are gone now, as are the city politicians who voted to join. They have left a mess that won’t easily go away.
This has meaning beyond the Wasatch Front. A few years ago the Pacific Research Institute in San Francisco issued a study of 52 such municipal networks and concluded they had “blundered (their) way through the marketplace, eroding private investment, slowing high-tech innovation, deceiving consumers and serving the interests of politicians.”
The 11 cities in UTOPIA have little choice but to hope it succeeds once and for all. I hope it succeeds. There is little other choice. Even if it sold its assets to the private sector, taxpayers would lose.
But a hallmark of successful private businesses is their ability to pivot to meet changing market demands. That’s hard for a huge company backed by long-term tax obligations to do.