UTOPIA Reaches Milestone

Thing’s have been looking up for the Utah Telecommunications Open Infrastructure Agency’s fiber optic network (UTOPIA) in recent years and in December network officials reported they’ve reached a significant financial milestone. For the first time since the open access network began operations in 2003, revenue will cover bond payments and will provide a 2 percent dividend to most of the member communities.

Despite The Limitations

In keeping with state restrictions, UTOPIA can only provide wholesale services via their fiber infrastructure. Ten ISPs offer residential services on the network, which establishes ample competition and all its benefits for subscribers, including lower prices, better customer service, and the ability to switch providers. Businesses can choose from 25 ISPs.

The wholesale-only model, however, significantly reduces the revenue communities can expect from their investment, which was the case with UTOPIA. The eleven member cities bonded approximately $185 million, but revenue limits due to the restriction, some early management decisions, and general apprehension from member communities, created political controversy. At one point, member communities considered selling out to Australian investment firm Macquarie.

Fortitude Paying Off

In 2011, eight of the member communities created the Utopia Infrastructure Agency (UIA) in order to spur more network expansion. UIA collaborates with UTOPIA as a separate entity; its purpose is to deploy the network in more locations and connect more premises and has issued the dividend to its member communities.

Communities in the region chose to stick with their investment, however, and gradually, as Jesse Harris from FreeUTOPIA noted in 2016, negative public opinion turned around. Things for the eleven member communities were on an upward trajectory and soon neighboring communities would also experience the benefits of the publicly owned network.

Last spring, UTOPIA started a branching into nonmember towns by entering into a franchise agreement with Bountiful, Utah. Executive director Roger Timmerman described the deal as a “natural progression” and a “win-win for both UTOPIA and non-UTOPIA cities alike.” Network officials have since entered into similar agreements with Kayesville and Springville City. They’ve also discussed an arrangement with Taylorsville.

As the network grows, reaches more premises, and brings in more revenue, member communities like Orem feel more secure in their initial investment. The additional revenue goes a long way toward debt service for the necessary infrastructure.

“That is a savings of $50,000 to Orem,” said Roger Timmerman, UTOPIA’s executive director.

“A portion of the debt being covered by UTOPIA/UIA is as much about the money as it is about the message this sends to Orem residents about the direction that the organization is heading,” [Orem city spokesman Steven] Downs said. “It is a large financial benefit to have the debt payment being offset, but it also clearly suggests that the demand for this service is increasing rapidly.”

UIA continues to deploy throughout the region, having recently completed construction in an area near a local golf course. This spring they will begin more construction in Orem to meet intense demand, according to Timmerman. Four hundred homes in Orem connected in 2017 bringing the current total in the community to 1,200. The UTOPIA network will pass an additional 2,000 in Orem in 2018.

Downs added, “In my four years working for Orem city, I am yet to encounter someone who has said that they don’t need greater Internet capacity in their home, and it is unlikely that the demand for bandwidth will ever decrease.”