Transcript: Community Broadband Bits Episode 85

Thanks to Joeff Hoel for providing the transcript for the Episode 85 of the Community Broadband Bits podcast with Jesse Harris on the UTOPIA network in Utah. Listen to this episode here.

 

00:06:

Jesse Harris:  And so we could end up in a situation where CenturyLink or Comcast say, hey, you know what, we've got some lawyers who've come up with a really good argument.  We're going to sue to shut down every inch of fiber that's outside of a member city.

00:18:

Lisa Gonzalez:  Hello there.  You are listening to the Community Broadband Bits Podcast, from the Institute for Local Self-Reliance.  And I'm Lisa Gonzalez.

People familiar with happenings on publicly-owned networks are probably already aware of the long drama in Utah with UTOPIA.  The publicly-owned network has faced years of adversity.  Utah is one of the states with barriers that make it extremely difficult for municipal networks to function.  The telecommunications lobbyists have been active in the state capitals across the country again this year.  Once again, legislation has been introduced that targets UTOPIA.  House Bill 60, if passed, will prevent UTOPIA from expanding, and can eventually contribute to its demise.

This week, Chris talks with Jesse Harris, writer and editor for the FreeUTOPIA blog, and then he speaks with Pete Ashdown, Founder and President of XMission.  Jesse and Pete each offer details on HB 60, what it may mean for the network, the providers that use UTOPIA, and for the local community.  We see bills like HB 60 introduced every year in some form or another.  They claim to encourage free enterprise and competition, but under closer examination, those bills do just the opposite.  They propagate the current telecommunications environment, in which a few large providers call the shots, in the field and at the legislature.  Here are Chris, Jesse, and Pete.

01:37:

Chris Mitchell:  Welcome to another edition of the Community Broadband Bits Podcast.  I'm Chris Mitchell, and today I'm speaking with Jesse Harris, the founder of FreeUTOPIA, a website with a lot of information about the UTOPIA network.  Welcome to the show.

01:51:

Jesse Harris:  Thanks for having me.

01:52:

Chris:  You and I have actually spoken a number of times.  I was on your podcast a while back -- maybe four years ago, five years ago?  It's been quite some time since you did that.

02:03:

Jesse:  Yeah.

02:04:

Chris:  So, Jesse, I first got to know you because you were writing all this stuff about UTOPIA, and what was happening, on the FreeUTOPIA blog.  What is UTOPIA?

02:13:

Jesse:  UTOPIA is -- it's a municipal fiber agency.  It consists of 18 total member cities.  And so it has a lot of strength in numbers going for it, rather than being just one city trying to build a fiber network on its own, it shoves all the shared costs into one entity, so that it's not going to be split.

02:33:

Chris:  And you said 18 cities.  Now, not all of those cities are fully built out, right?  How does it work out, in terms of what cities are fully- and what cities are partially-built?

02:43:

Jesse:  Right now, there's eleven cities that are pledging cities.  They're the ones who have said, we will back bond money to get the ball rolling.  The others are non-pledging.  Essentially, all they've done is said, hey, you've got free right-of-way whenever you've got the money of your own to build here.  The build plan initially was pretty bad.  It was around the idea of, well, let's just build wherever it's cheapest to build.  But it didn't identify where are the customers.  And so, a lot of the build has kind of mushroomed from that.  Brigham City got entirely built out, because the city formed a special service district up there, so that participants could pay to have it extended and cover the whole city.  And Centerville was entirely built out using USDA Rural Utility Service funds.

03:37:

Chris:  And, just to let people know, what -- if you have access to UTOPIA, what kind of services can you get?

03:43:

Jesse:  It's got the pretty standard phone-video-data.  Except data connections, you're looking at gigabit connections for $70 -- quite a deal.

03:52:

Chris:  From a number of providers at that, too, right?

03:54:

Jesse:  Yeah.  There are, I believe, over a dozen providers now, split between residential and commercial services.  I haven't seen anyone doing anything really wacky on the network yet, but I do know that a lot of UTOPIA providers take their peering agreements very seriously.  XMission, for instance, has peering agreements with both Netflix and MALV, so that Steam games will download quickly.

04:19:

Chris:  There's been some recent news about a possible new partnership.  And a lot of people are excited.  You are the person who seems to know more about that than just about anyone not working directly for UTOPIA.  What's going on there?

04:33:

Jesse:  Well, UTOPIA has been looking at ways to get the network built out, and try and do it with the least number of tax dollars possible.  And what they found is an Australian company called Macquarie, who has done a lot of public works projects, and would be interested in doing something like this.  They have a lot of experience in doing things like water and sewer systems, bridges, toll roads, that kind of thing.  So they take a very long view of these kinds of projects.  They're not saying, we need our money back in two years.  They're saying, you know what, a 30-year contract is fine with us.  So, the initial details of the arrangement are: a 30-year arrangement, pumping somewhere around $300 million into complete building out to all the homes and businesses within member cities.

05:18:

Chris:  That would be incredible, for all those cities.  I mean, you then have some of the best access available in the country, available to -- what -- over hundreds of thousands of people?

05:27:

Jesse:  It would reach about 150,000 homes.  You can bet that once they're finished building member cities, more cities would be, like, hey, we want in on some of that action.  And it's actually a better deal for the cities than Google Fiber is.  When Google Fiber came to Provo, they essentially got to leap at an indefinite lease on the network for $1, plus $18 million in closing costs.  And they got to close down the network.  The city -- Provo is still on the hook for all of their bond money.  The Macquarie deal, on the other hand, is investing four times as much per household, it's preserving open access, and it's doing revenue-sharing with the cities, so they actually get some money to pay down their bonds.

06:05:

Chris:  Now, that all assumes that a certain mischievous bill doesn't go through.  You know, I think perhaps when we first talked about UTOPIA on this podcast, 18 months ago or so, we noted that the Utah legislature has been really hostile towards UTOPIA in the past.  Comcast, and previously Qwest, USWest, all now CenturyLink -- they've all really monkeyed around with it.  So what's the latest news, in terms of that bill?

06:33:

Jesse:  Well, the latest -- for anyone who's in the state, it's bill HB 60 -- it's originating from the House, with Representative Curt Webb, of Logan.  What the bill seems to intend to do is say, you cannot have ANY municipal network outside of a member city.  You know, for cities that are self-contained, this might not be such a big deal.  But for UTOPIA, they have to have network outside of member cities in order to connect all of the individual member cities together.  They also have to build outside of member cities to connect some of the service providers to the network, including XMission or Veracity.  They're in Salt Lake and Provo, respectively -- who are not member cities.  It could also cut off a lot of businesses, who have paid out of their own pocket to extend UTOPIA to their offices, even outside of member cities.  And these are businesses who have spent as much as tens of thousands of dollars to have the network come to them, because they need it that badly.

07:30:

Chris:  Now, I think, in reading it, it would have grandfathered an existing, but none of those businesses could move, because they wouldn't be able to extend to their new premises.  And they wouldn't be able to do any more VLANs or things like that, or hooking up other satellite offices.

07:46:

Jesse:  That's true.  But it's important to always look at the plain language of the bill.  It doesn't appear to include any sort of grandfathering provisions in it.  What's important to remember with any sort of legal arrangement is, courts always have to go by, what could the plain language of the bill mean?  They're not allowed to use any sort of intent statements to say, well, this is what it's supposed to do, or accomplish.  And so we could end up in a situation where CenturyLink or Comcast say, hey, you know what, we've got some lawyers who've come up with a really good argument.  We're going to sue to shut down every inch of fiber that's outside of a member city.

08:21:

Chris:  All right.  And it's often the lawsuits that are most damaging, as opposed to the verdict, because of the delay, the uncertainty.  And it would certainly be enough to scare off Macquarie.

08:31:

Jesse:  It could be.  Those kinds of suits usually stretch on for years.  They cost many millions of dollars.  And everything is at a standstill in the meantime.  It seems kind of backwards, though, because if this bill passes, you put the cities on the hook financially, you cut off services to businesses, and you chase away a $300 million investment.

08:53:

Chris:  That seems like a bad idea.  Do you think that's going to actually happen?

08:57:

Jesse:  I am not too confident that the bill's going to pass.  Now that there's a lot of attention on it, I don't think it could be passed anywhere close to its current form, or even at all.  You know, the members of the committee have been peppered with contacts to say, don't do this.  You've got local businesses contacting them saying, don't do this to my business.  It's going to be a very hard sell now.  The way that these kinds of bills work is, they need to move very quickly, try and stay under the radar for as long as possible.

09:31:

Chris:  Right.  That's what we've seen in just about every other state.  Is there anything else going on there that we should know about with UTOPIA?

09:37:

Jesse:  There's not really a whole lot else going on with it right now.  They're working with Macquarie to try and hammer out the full details of the deal -- get it going.  The good news for them is, they have been meeting or exceeding all their financial targets for the last four years.  They haven't hit their subscriber numbers.  But that's because businesses have come to them and said, hey, let me give you thirty grand to hook up.  And I think that is what has prompted this legislation -- is they're realizing, oh, oh, this thing might work, we've got to shut it down.  And that's the way they're succeeding; we've got to cut it off at the kneecaps.

10:10:

Chris:  Hmm.  Yes.  That would be too bad.  Thanks for coming on the show.

10:15:

Jesse:  Sure.  Thanks for having me.

10:16:

Chris:  And now I'm here with Pete Ashdown, the Founder and President of XMission.  Welcome to the show.

10:22:

Pete Ashdown:  Thank you.

10:23:

Chris:  It's good to talk to you again.  As we noted the last time, you were the first ISP in Utah.  And you just celebrated your 20th anniversary.  So, congratulations.  How did you learn about this bill that's going to prevent UTOPIA from expending, if it were to pass?

10:39:

Pete:  My representative up there, for my House district in Utah, keeps me pretty well attuned with the technology goings-on.  And she e-mailed me on Monday and said, what do you think about these two bills?  And one of them was a harmless redefinition, but the other one was specifically geared towards an interlocal entity that lays fiber.  And in Utah, there's only one of those, and that's UTOPIA.  And it was pretty apparent, after a quick read, that what it was trying to do is restrict UTOPIA.

11:19:

Chris:  Why would the Utah legislature want to restrict UTOPIA at this point?

11:24:

Pete:  That's a good question.  And I'm somewhat suspicious of the timing, in that UTOPIA has a suitor, in Macquarie, that may come in and build it out to its full promise -- complete, ubiquitous service throughout the member cities.  But they're also interested in looking at potential other cities that are not members.  So, maybe even a much larger build than what they were initially talking about.  And this bill would prevent them doing that.  And I can just see the execs at CenturyLink and Comcast grinding their teeth over it, because in no way do they want to participate and compete on a level playing field.  They make most of their money from captive customers.  And UTOPIA goes against that.

12:24:

Chris:  I'm just imagining a housing developer building a development, and I'm thinking to myself, well, I could either try and work with UTOPIA and I could have the best connections in the entire country, or I could have DSL and cable.  And this bill would have stopped that.  But I guess what I'm curious about, from your perspective, is what it would mean to your business if such a bill would pass.

12:47:

Pete:  There have been developers in the past that aren't inside UTOPIA cities who have invited UTOPIA to come and deploy in their greenfield projects.  And UTOPIA usually jumps at the chance of that, because it's much cheaper than digging up streets.  So there are already some on there like that.  As far as what it would mean, I think a lot of -- mean to us, I think a lot of it would stay the same, honestly.  But we are not -- XMission is not located in a UTOPIA city.  We have to connect to them over facilities that are run outside of UTOPIA cities.  It's not clear in the bill, to me, as to whether those activities would be immediately curtailed or whether they'd be grandfathered.  But definitely what would happen is, if another ISP came in, that was not located in a UTOPIA city, who wanted to compete on UTOPIA, they would not be allowed, unless they were actually headquartered in UTOPIA cities.  It causes damage for the future.  And, you know, as far as Macquarie goes, it probably would cause some damage in their evaluation of whether this is a viable project or not.  I would imagine the economies of scale apply here.  And if they can do all of Salt Lake County instead of three cities in Salt Lake County, that are member cities now, it might be more of an attractive project thing to do.  We'd like to see that move forward.  And, you know, living in the digital ghetto that is Salt Lake City, I would like to see it move forward in Salt Lake City as well.

14:19:

Chris:  As a small business that's -- you know, you have a very intimate relationship with your subscribers, often, located right there, physically close to them -- what would it mean to have access to 150,000 households?  Is that something you dream about?

14:34:

Pete:  It would certainly be a boost to our business.  And we have been gutted, over the past ten years, in residential access.  Both from Comcast and from CenturyLink.  You know, Comcast has never let us use their network.  But CenturyLink, with their fiber-to-the-node and ADSL2, actually cause INTERFERENCE problems for our existing customers -- cause their speeds to drop.  And when they call up and complain to us, we would say, well, we're not responsible for that portion.  And then they'd call CenturyLink, and CenturyLink’s only solution was move to the ADSL2 service, and drop XMission as an Internet service provider.  Yeah, it would be nice to see some of that access return.  I mean, people, they call us more often for just getting access from us.

15:29:

Chris:  Well, I certainly hope that we see UTOPIA able to expand and fulfill the original dream, and bring some choices to the community.

15:39:

Pete:  What's exciting about it, to me, is also, with Macquarie, they are no small entity.  They have done a number of other infrastructure projects around the world.  And, really, this is the first time they're looking at doing a fiber project.  If this works well for them, who's to say where else they could go in the United States?  I think, you know, there's demand all over this country for better access and robust competition.  And this could be a model for the entire country.  I think it's a viable financial model.  I think fiber is our future.  But getting our federal government on board with that has been slow in coming.  It's nice to see a private entity investigating it.  I hope they take it on.  But, you know, this is something I've been talking about for over a decade, that we need more municipal fiber to boost competition in this country, and provide bandwidth -- needed bandwidth -- to all Americans.  But the government has been slow to get behind this.

16:42:

Chris:  Yes, it has.  Well, thank you for talking with us today.

16:46:

Pete:  You're welcome, Christopher.

16:47:

Lisa:  Be sure to visit FreeUTOPIA.org for updates on HB 60 and all the news on UTOPIA.  XMission's website is xmission.com , and we have more on UTOPIA at muninetworks.org .  The UTOPIA website is, of course, utopianet.org .

If you want to e-mail us with questions or ideas for the show, write to podcast@muninetworks.org .  Follow us on Twitter.  We are @communitynets .  This show was released on February 11th, 2014.  We want to thank the group Fit and the Conniptions for their song, "Bless Your Heart," licensed using Creative Commons.  And thank you again for listening.

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