Still searching for an Internet UTOPIA
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.
While I don’t totally disagree with your article Mr. Evensen, you failed to mention a few critical points.
1. FO is not going anywhere for many, many years. If anything, the use of FO will be expanding to encompass what UTOPIA does, and that’s bring fiber all the way to the home.
2. Yes, the technology does change fast. But riddle me this. How much of the services we are using are still based on decades old copper connections? Do you have a land line? Copper. Do you have cable TV? Copper. Yes, these services still depend on copper to at least the demark point.
3. Most importantly is the simple fact that the free market wasn’t working. UTOPIA was born as a result of cable and phone companies not brining in high-speed and TV services to more urban areas because their smaller numbers couldn’t justify the costs. They just didn’t think they would make enough money. As a result, some one one stood up and said this isn’t going to cut it, and UTOPIA was born.
Ever tried to splice fiber optic? Know the costs and probabilities of damage to FO if taken to each home? Copper cable is used for more than one reason! UTOPIA should have died a quick and early death before its inception. Sorry for those 11 cities whose leadership couldn’t see beyond the deceitful claims of “public good”.
I’m certainly glad there are not many like you around. In Colorado Eagle-Net is in the process of being installed.
http://www.co-eaglenet.net/
Taxpayers are picking up the bill. The entire system is “open carrier access” which means the fantastic transport capacity of fiber can be shared by many providers.
I see little difference between say trucking freight carriers having access to an Interstate highway system and communication carriers having access to an open an available fiber system. Do you work for some dirt bag Bell-Head telco company?
Great article, though I have to agree with Mike that fiber is probably about as “future proof” as you can get. The problem as I see it with government run ISPs is the same as with most mass transit authorities: access to tax money without having to comply with the usual standards of government agencies for open meetings, open records, and direct accountability to voters.
It is interesting to contrast UTOPIA and other government run ISP ventures with the news this week out of Kansas City about Google using private money to deliver low cost, high speed fiber-based internet service. They have used savvy marketing and have managed to get local governments to ease normal regulations and restrictions to allow faster decision making. The whole thing looks very promising…but even if it fails, it is private money, freely invested, rather than tax dollars taken by force that are at risk.
There are some things government must do. But as a big city mayor once pointed out, if you can open the yellow pages and find more than about 3 private firms offering a service, there is probably no need for government to mess with it. High speed internet is a great thing. But the best role for government is to get out of the way and let private industry handle this one.
“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.” After reading this I was forced to ask, “What planet do you live on?” At my suburban home, in the middle of a very large Utah City, I struggled to get 8 mps downlosd and 10 mps upload speed from my carrier who doesn’t think twice about robbing me of $175.00 a month to deliver the less than adequate service. My Son, on the other hand, has Utopia fiber that delivers 50 mps up and down, all through a competative carrier, for under $50.00 per month. Tell me again about how this is not “necessary infrastructure” and how the private-sector is providing this essential service “cheaply?”