UTOPIA

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"The Utah Telecommunication Open Infrastructure Agency (UTOPIA) is a consortium of 14 Utah cities engaged in deploying and operating a fiber optic network to every business and household in its member communities. Recognizing the need to provide their residents with superior communications technology infrastructure—and the reality that current service providers in the marketplace were not delivering first-tier services—the communities banded together to create a world-class, 100% fiber optic network for member communities. The ultra-broadband UTOPIA Community MetroNet will be open to multiple service providers to offer innovative and exciting services to citizens in the UTOPIA cities. In terms of the size and nature of the project, UTOPIA can probably be regarded as the most advanced Fiber to the Home project in the United States today." [1]

There is a lot of online information about Utopia, and there is a lot or repetition. Here it makes sense to provide an overview with enough detail to feel confident contacting an elected official, backed up by links to greater detail available online. The best overview located so far is one published May 2006 in the ieee spectrum online. Perhaps the strongest opinion piece in favor of UTOPIA is the 2003 article by Pete Ashdown of Xmission.

Contents

The New Model

There is history worth knowing if you care about UTOPIA, but significant changes are in the works. It probably makes sense to wait for the new model to be released before starting a push for new adoptions. While we wait, a lot can be done to look at the installed user base.

The new model was discussed Jan 8, 2008, in the Davis County Clipper:

"Though details of the new model have not yet been made public, UTOPIA members and their newest business partner, the Swedish fiber optics company PacketFront, have spent the past several months answering every conceivable question or difficulty that might possibly come up.

"'We don't want to roll it out until we're absolutely convinced we have a sound, strong model,' said Layton City Manager Alex Jensen, who also serves as chair for the UTOPIA board. 'We're very actively refining it.'

"Ideally, the board hopes to present the new plan to participating cities sometime in the next few months, after which the cities will vote on whether or not to take part in the new plan."

Jesse Harris at Free UTOPIA elaborated in his commentary on the Clipper article:

"Of great interest is a re-working of the model from PacketFront, the company that acquired DynamicCity last year. They bring a lot of experience to the table and have done a thorough top-to-bottom re-evaluation of the current way of doing business. Hopefully this will improve UTOPIA's abysmal policies concerning advertising and publicity, something that has left take rates low since most potential customers hadn't even heard of the project. The details are scarce right now so we don't have much to go on."

Build Out

Sometimes this is an issue: look how slow they are! The answer seems to be: look at the hurdles that were put in their way! But it would be nice to have a little more detail on this. It would also be helpful to know how things are moving now. That might suggest when they will get to non-pledging cities, and when they will complete them. Is it possible to move up in the queue by becoming a pledging city?

The UTOPIA website says: "Based on cost and engineering considerations, the construction schedule of the UTOPIA Community MetroNet has been divided into three phases. Participating cities are grouped according to the planned schedule of construction as follows:

Group I cities: Group II cities: Group III cities:
Lindon Brigham City Cedar City
Midvale Centerville Cedar Hills
Murray Layton Riverton
Orem Perry
Payson Tremonton
West Valley

Construction in Group I cities is well under way, and full build-out in these cities should be finished by summer of 2007. Construction is projected to begin in Group II cities by the second quarter of 2006 and should take no longer than 3 years. Group III construction will follow."[2]

Phase I

Phase I started in July 2004 when $85 millon in bonds were issued, but it is not clear in this article when actual construction began [3]. Phase I cities are marked in yellow on the map at the UTOPIA website. The map identifies them as still under construction. Clicking on a city brings up some statistics, some of which are summarized below.

UTOPIA Build Out Statistics
Phase I City Completion Fiber Feet Residents Residents Times Completion Businesses Businesses Times Completion
Lindon 10% 290,384 9,410 941 681 68
Midvale 57% 766,268 27,414 15,626 1,601 913
Murray 77% 861,590 46,500 35,805 2,577 1,984
Orem 38% 2,000,258 90,960 34,564 4,176 1,587
Payson 14% 432,888 18,852 2,639 550 77
West Valley City 18% 2,969,374 119,673 21,541 4,180 752
Totals 7,320,742 312,809 111,115 13,765 5,379

Notes on this table:

1. The figures were copied from the UTOPIA website on Feb 14, 2008. Use the city links to check current values, and update the table if you have an account. It is not clear how often the figures are updated by UTOPIA.

2. The percentage completion represents the number of locations for which service is available, not the number of locations actually connected. The final segment of cable to the home or business is installed when a subscriber signs up for service.

3. The fiber feet shown does not include backbone fiber between cities.

4. Completion times residents, and times businesses, simply multiplies those values. The idea is to suggest an estimate of how many of each can have service. But if a backbone cable ran up the main street and all the businesses were there, it would be a pretty bad estimate.

5. Eyeballing the estimates in relation to the total residents or businesses, it looks like a bit over 33% of the locations have service available.

Orem

From the Orem website in February 2008: "Current Update: UTOPIA has finished installing conduit in North East Orem as part of a footprint that overlaps with Lindon. Construction will resume in early 2008 to complete the install of UTOPIA throughout Orem [4]."

Update

A report in the Deseret Morning News, April 6, 2008 gives the following figures on completion:

  • Lindon: 95-99%
  • Payson: 95-99%
  • Tremonton: 95-99%
  • Perry: 50%
  • Orem: 50%
  • Murray: 50%
  • Midvale: 40%
  • Brigham City: 33%
  • Centerville: 25%
  • Layton: 15%
  • West Valley City: 15%

The UTOPIA website still shows Lindon at 10% completion, which might be explained by a failure to keep the website updated. But it also shows Murray at 77% completion, and it is hard to explain a 27% reduction in coverage. So at this point, we have no trustworthy data on completion.

Phase II

"After several months of delays, Utah's multicity municipal wholesale fiber-to-the-home (FTTH) network, Utopia, is now entering its second phase of construction, according to Paul Morris, Utopia's executive director....

"The next phase is a roughly $90-million construction funded mostly by grants from the federal government. In August, six Utopia towns with populations under 20,000 were granted a $66-million loan commitment from the Rural Utilities Service (RUS), part of the U.S. Department of Agriculture that dispenses funds to help defray the cost of deploying broadband in rural areas. 'I think we're the first municipal entity to be funded by RUS,' Morris said.

"Adding to the RUS loan is about $30 million unused from the $85 million in phase one, giving Utopia more than $90 million for phase two, he said. Ed Gubbins, Dec 15, 2006

Significant work has been done in Davis County, but not to the point that subscribers can be connected.

Phase III

"After construction of the first 11 municipal networks is largely complete and generating revenues, Utopia will consider using those revenues to fund construction in the remaining 3 cities (which did not pledge sales tax to back the project's construction loans)." Ed Gubbins, Dec 15, 2006

Take Rate

The take rate is the crucial factor in the financial model. The biggest issue claimed by critics is a low take rate. The main response seems to be that there is little to no advertising and the word has not gotten out. This implies that it is a good deal, so people would sign up it they understood it. Critics seem to think people are content with DSL or Comcast. What do we actually know about the take rate, and motivations?

In an April 6, 2008 article the Deseret Morning News reported the subscriber count has passed seven thousand:

"UTOPIA currently has just over 7,000 customers in the six cities where services have begun: Murray, Midvale, West Valley, Orem, Lindon and Payson.

"UTOPIA operations run about $300,000 a month, said Jim Reams, Orem city manager and interim UTOPIA director. But the consortium has reached the break-even point with its 7,000 subscribers.

"That means that any new subscribers will help pay down debt."

Usually reports give the take rate as a percentage of those who could take the service. That is a useful number, but the build out is a moving target. A spurt of building could shrink the take percentage while the number of subscribers is actually increasing. Of course, the number also needs to be understood in relation to the potential. That 7,000 would not look so good if it represented a take rate of 1 percent. So the point is, both numbers are important, and so is their relationship to operating cost and debt service.

It is interesting to note that 7,000 subscribers would need to generate $43 per month for UTOPIA, in addition to the charges for service providers. Does that imply many subscribers are taking more than one service?

In a mailing list discussion about UTOPIA in January 2008, Warren S. N. Woodward gave a number of reasons why the take rate was not what it should be. Warren is the Director of Broadband Services at Xmission:

Opposition is playing with numbers a bit. In citing the current percentages, they usually play up the actuals against the originally proposed time frame, which was severely delayed by RUS funding and legal obstructions from Qwest. If you actually consider the percentage of subs per residences that have it available, the numbers are still short, but not anywhere near as damning.
MDU support was mishandled. A large percentage of population in these cities are in apartment complexes that don't have UTOPIA available at all. PacketFront is trying to address this issue now.
Poor selection of early footprints. Areas were built out largely based on proximity to the main framework, and often ended up being those areas that are less interested in these sorts of services.
Incumbent pressure. Some UTOPIA communities have seen incumbents drastically discount their prices which makes even UTOPIA costs seem high.
As mentioned in this discussion, poor overall education. Some people just don't understand what it is. This has been a pet peeve of mine for a couple of years, although I freely admit that direct marketing makes sense for the immediate sale.
People surveyed said "Yeah, I'd love to subscribe to that kind of service." But when the piper called, they realize they're stuck in a two year contract and aren't willing to bet their phone and TV on a company they never heard of, anyway. I predict this take rate will greatly increase as time passes.
Fear of early adoption. We all know there is a price to be paid for being new to technology. Some people just aren't willing to gamble on the stability of their phone or TV and want to give it a few years before they take the plunge. Again, more reason I expect take rates to drastically increase as time passes.
Speeds. Another pet peeve of mine. DynamicCity and PacketFront have always wanted to exploit the potential speeds of fiber. And while that's all well and good, some people just have no interest whatsoever in 15 or 50 Mbps of internet, but just want be able to use the phone and internet at the same time for much less monthly cost. UTOPIA currently has no solution for these users, and that is a mistake I am personally attempting to correct.
All the other reasons, well, we're still trying to figure those out. There is no model anywhere in the world UTOPIA can look to for guidance. It is completely unique, and as such we're learning as we go.

Benefits

The immediate benefits are speed and price. These are best examined in relation to the specific services offered over UTOPIA. Many other benefits will not be appreciated until applications are developed that make use of the high bidirectional speed provided by UTOPIA.

The Board

The board is composed of a representative from each of the 14 member cities. [5] Most board members are city mayors, managers, or administrators.

Board meetings in 2008 are scheduled for:

March 10
June 9
September 8
December 8

However, the home page says the March meeting will be on the 17th.

Meetings start at 10 A.M. and are held at The UTOPIA offices, 2175 S. Redwood Rd., West Valley City, Utah 84119. They are normally open to the public, but can be closed under conditions provided for by Utah's Open and Public Meetings Act.

Links to board meeting records are complete up to the end of 2005. After that, the minutes are not available online, and the last entry for a meeting is for May 7, 2007.

Meeting March 17, 2008

                                          NOTICE OF
                       UTAH TELECOMMUNICATION OPEN INFRASTRUCTURE AGENCY
                                           (UTOPIA)
                                        BOARD MEETING
                              Monday, March 17, 2008 ***10:00 A.M.
                                         UTOPIA Offices
                                    2175 South Redwood Road
                                  West Valley City, Utah 84119
 
                                             AGENDA
                                *THIS IS AN ELECTRONIC MEETING*
 
This is a Public Meeting, but not a Public Hearing. Those in the audience may not participate
in the discussion unless called upon.

1.      Introductions
        ~Jim Reams, Interim Executive Director - UTOPIA

2.      Approval of December 10, 2007 Board Meeting Minutes
        ~Alex Jensen, Chairman of the Board -- UTOPIA

3.      Annual Election of Officers
        ~Alex Jensen

4.      Resolution 08-01: A resolution authorizing the issuance and sale of not more than
        $189,000,000 aggregate principal amount of telecommunications revenue and refunding
        bonds, Series 2008, of the Utah Telecommunications Open Infrastructure Agency; fixing
        the maximum aggregate principal amount of the bonds; the maximum number of years
        over which the bonds may mature, the maximum interest rate which the bonds may bear,
        and the maximum discount from par at which the bonds may be sold, providing for the 
        publication of a notice of bonds to be issued; providing for the running of a contest
        period; and related matters.
        ~Laura Lewis, Principal -- Lewis and Young

5.      Resolution 08-02: A Resolution of the Board of Directors of the Utah Telecommunication     
        Open Infrastructure Agency ("UTOPIA") authorizing the execution by UTOPIA of interest
        rate swap contracts and other documents required in connecton therewith; and 
        authorizing the taking of all other actions necessary to the consummation of the
        transactions contemplated by the interest rate swap contracts; providing a 
        severability clause; repealing resolutions in conflict; providing an effective date;
        and related matters.
        ~Laura Lewis

6.      Current Status Update
        ~Jim Reams

7.      Audit Report
        ~Kirt Sudweeks, C.F.O -- UTOPIA

8.      Closed meeting to discuss the character and professional competence of individuals.

* Board Members who wish to participate electronically must notify Whitney at the UTOPIA
office (801 990-5450 or wholland@utopianet.org). They will then receive email instructions on
how to join the meeting by telephone.

For purposes of the electronic meeting, the anchor location will be 2175 South Redwood Road,
West Valley City, Utah 84119.

I am signing my report of this meeting, since I have no authoritative source to cite. It should be obvious that I am not a journalist, so let's hope the guy with the laptop was. Items 1, 2, 6 and 7 were pro forma. The meeting was closed for Item 8, so the board could talk about applicants for the executive director position. Applications do not have a closing date: the position is open till filled. So we can conclude they had applicants, but not that one will be chosen. Item 3 was resolved by retaining the current officers and executive committee till the next board meeting.

The two resolutions were introduced with comments from Jim Reams, board member from Orem and Interim Executive Director: While things have been quiet publically in the past six months, a lot of activity has been going on internally. They have been reviewing the past, looking at the future, and doing internal analysis. They have worked on a new business model, aided by consultants in market research and marketing strategy. They now have a unified plan for going forward, and the bonds in Item 4 are part of the implementation of that strategy.

The bonds themselves, in the first resolution, are meant to re-fund all outstanding bonds, including the RUS loan, and also provide additional funds to carry out the future plans. The new bonds will be structured so the debt increases over time, so as to match the expected increase in revenues over time. It is expected that the total will not actually exceed $185 million. Pledging cities will have to make new pledges, and this will involve public hearings in each city. But they expect to close the deal by the middle of May. The resolution was approved unanimously.

The new bonds will also make changes involving fixed and adjustable interest rates. As best I could tell, this was not so simple as changing from one to the other. It sounded like they were issued one way and switched to the other way. And the second resolution was equally confusing to me. This involves swaps that apparently recognize the tax exempt status of municipal bonding and so improve the interest rate. They expect the rate to be under 6 percent, and apparently they will also extract a couple million in cash somewhere in the process. The second resolution was also approved unanimously. John Havey 12:03, 17 March 2008 (MDT)

External Links

Retrieved from "http://wiki.freeutopia.org/index.php/UTOPIA"
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