Building a Fiber UTOPIA in Bozeman

UTOPIA Fiber continues to grow and is now exporting its expertise into Bozeman, Montana – one of the fastest-growing cities of its size and often listed among the best places to live in the country.

Referred to by some as “Boz Angeles” because of the influx of Californians to the area, this Rocky Mountain city of 53,000, nestled in Gallatin Valley, is about to become even more attractive as a rising tech hub for millennials. At the Broadband Communities 2021 Summit last month, it was announced that Bozeman Fiber, a non-profit organization created by the city to expand high-speed Internet connectivity across the region, has partnered with Utah-based UTOPIA Fiber to build an open access fiber-to-the-home (FTTH) network.

Bozeman Fiber has already built an open access fiber ring, serving city, county, and school facilities. It has also connected 200 commercial customers. The partnership with UTOPIA will allow Bozeman Fiber to extend the network across the city, passing 22,000 homes and businesses, with plans to extend further out into the more rural parts of Gallatin County down the road.

Network construction, which is estimated to cost $65 million, is slated to begin in the spring of 2022 and is expected to take three years to be completed.

“This is the first phase of a project that will cover the city and some areas of the county, and the intention is we’ll have future phases that reach further out into the county to hit more rural areas,” UTOPIA Fiber executive director Roger Timmerman said during the press conference announcing the partnership.

Bozeman Fiber CEO Greg Metzger added: “with this project, we’ll be able to attract and retain more businesses, and create jobs.”

County Provides Access to Bond Market

To finance the network construction, Bozeman Fiber has partnered with the Gallatin County Commission, which earlier this month approved the issuance of $65 million in Industrial Development Revenue Bonds. It’s a financing mechanism the county has used for various other projects as a tool to support economic development.

However, as reported by the Bozeman Daily Chronicle, at the Gallatin County Commission meeting where the commissioners voted to issue the bonds, some residents questioned if taxpayers would be left on the hook if Bozeman Fiber should default on the bonds. But Nathan Bilyeu, who served as bond counsel for the county, explained that the bond issuance was simply a way for Bozeman Fiber to access the national bond market so the non-profit organization would not be limited to local investors. Or as Gallatin County Commissioner Scott MacFarlane said, “this is essentially very simply asking the county’s endorsement for this business to access the national credit market.”

“There’s really no downside here to the taxpayers, there’s no liability,” Commissioner Zach Brown added. “As our society invested in an interstate highway system 70 years ago, certainly today we understand that broadband is basic infrastructure.”

What helps bolster the project’s stability is the partnership with UTOPIA. UTOPIA will not only design the network, oversee the engineering and construction, monitor the network, and run the service provider marketplace, it will also serve as a management partner drawing on UTOPIA’s experience designing, building, financing, and operating over $330 million worth of fiber projects in 50 different cities across the country.  

The potential downside to this financing approach is that investors will likely demand a higher interest rate to invest in the project to compensate for the higher risk of the county not guaranteeing the bonds. Investors will be focused on the strength of the business plan and perceived demand for an alternative to Charter Spectrum (and pockets of CenturyLink/Lumen fiber). UTOPIA has experience with this situation, but the bonds still have to be sold at a reasonable rate before the project can move forward. 

Open Access Networks Popping Up Across the Country

Bozeman Fiber decided to work with UTOPIA because UTOPIA, owned by a consortium of 11 cities, operates the largest open access network in the nation. First built in 2009, UTOPIA has overcome its early difficulties to become a national leader in the building and operating of open-access networks, which led to UTOPIA partnering with Idaho Falls Fiber in 2019 to help build its network.

The open access model is an increasingly popular way for local communities to build and own network infrastructure, which municipalities then use as a magnet to attract multiple Internet Service Providers to lease the network and bring competitive pricing and service to end users in a market dominated by private monopoly providers.

While open access networks aren’t as common in the United States as they are in Europe, they have proven extremely successful in Idaho, Utah, and Washington state in fostering competition and greater network reliability.

Success Has Its Challenges

But with success comes surprising challenges from unexpected places. While cities like Bozeman are looking to UTOPIA Fiber to help bring cutting-edge connectivity to Montana, in UTOPIA’s backyard in Utah a former ally appears to be trying to undermine the popular provider. American Fork played an important role in helping UTOPIA Fiber get up and running in the early 2000s, but in recent years, city officials have inexplicably become adversaries of sorts, leading to UTOPIA filing a suit against the city for breach of contract.

As reported by Broadband Breakfast, the lawsuit “alleges the city had approved some (UTOPIA) permits that only allowed it to construct backbone transport lines through the city connecting other cities, but denied it key permits that would have allowed it to extend services to UTOPIA Fiber customers inside the city. Those services include connections to American Fork’s public schools.”

In July 2020, the lawsuit alleges, the city terminated a 2018 rights-of-way agreement without explanation and goes on to claim that the city singled out UTOPIA’s permit requests for extra scrutiny while not providing the same level of scrutiny for other providers.

In a press release issued when the lawsuit was filed in the U.S. District Court for the District of Utah earlier this month, UTOPIA’s executive director Roger Timmerman said the lawsuit was a “last resort and not an easy decision to make.”

It’s a legal skirmish in the background, which is where UTOPIA is comfortable operating to give up-and-coming cities like Bozeman the opportunity to be out front.

Inline image of downtown Bozeman courtesy of Wikimedia Commons, Attribution-ShareAlike 3.0 Unported (CC BY-SA 3.0)