Tag: "utah"

Posted July 10, 2009 by Christopher Mitchell

In two articles, Jesse Harris offers some insight as to how one can evaluate UTOPIA as a success or failure. In the first article, "Defining UTOPIA's Success," he looks at some of the indirect benefits from the network.

Financial success is the most obvious kind. It’s very easy to look at expenditures and revenues and come up with a bottom line figure. I don’t mean to discount the importance of coming up with a positive number at the end of that statement, but it really isn’t the entire financial picture. (Take a look at my breakdown of Provo’s real and potential savings from iProvo for a good example.) Orem, for example, is saving somewhere in the neighborhood of $600K per year in telecommunications costs by using UTOPIA fiber in their city. None of the other cities have released similar figures (at least not that I am aware of), but I think it safe to say that they are experiencing similar savings. Such an approach also fails to recognize that incumbent providers are forced to offer better service and pricing to attract and retain customers. Based on national figures, a UTOPIA-served neighborhood is likely to save 25% or more off of telecommunications costs.

In the second and longer article, "FUD Alert: Utah Taxpayers Association Continues to Bend and Cherry-Pick the Truth," he directly answers one of the fiercest critics of UTOPIA - the UTA.

His response is well worth a read as a model example of how to respond to these ignorant attacks. We cannot allow lies against community broadband to go unchecked - thank you Jesse for your strong response.

Posted June 26, 2009 by Christopher Mitchell

Anyone who tells you that UTOPIA is a "success" or that it is a "failure" is probably minimizing important problems or victories for the network. The Utah Telecommunication Open Infrastructure Agency, like so many other things in life, is a mixed bag.

For those new to UTOPIA, it is a large multi-community full fiber network that operates by only selling wholesale access to service providers. Due to a law designed to protect incumbent service providers under the guise of protecting taxpayers, UTOPIA cannot offer any services itself and is strictly open access.

For a variety of reasons - that have not and likely will not be repeated by other communities - the network has not yet met expectations. The costs have been greater than expected and the network does not yet cover its entire intended territory (some 16 communities and 140,000 people).

However, where it does operate, it is blazing fast. The service providers offer the fastest speeds at the lowest prices (see a service comparison). It has offered a tremendous competitive advantage to the businesses and communities in which it operates.

Last year, Lawrence Kingsley wrote "The Rebirth of UTOPIA" that explored where the network went wrong and how it has also succeeded. Perhaps most notably, he notes that the churn rate (people switching to other networks) is ridiculously low at .5% - a common trait to community owned networks.

Last month, Geoff Daily reported on how UTOPIA is "Transforming Failure Into Success." They have greatly improved their marketing practices - which has historically been a large barrier to success. This is an important lesson for all - even though there are very few competitors in the broadband market, they do fight fiercely for subscribers. Broadband is competitive like boxing, not like a marathon.

But the news coming out of Utah is not all cheery. Jesse, the resident UTOPIA expert, has recently explained some of the current financial problems and their origin.

Perhaps the most important lesson to take away from UTOPIA is that plans always go awry. I have yet to find a community that did not have unexpected problems along the way to building their networks. Communities that take...

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Posted June 26, 2009 by Christopher Mitchell

Jesse of Free UTOPIA offered an in-depth explanation of UTOPIA's financial situation and some of the financial difficulties they are facing in mid-2009.

A snippet:

I had the opportunity to go down to UTOPIA’s office today to get updated on what’s going on down there. I walked away with a much better feel of what’s going on and a better understanding of what has caused the situation with the bonds. They also comitted to do a better job of keeping me up to speed on what’s happening. Here’s the lowdown on why the bonds are being called.

The bond situation they are in is complex, ugly, and not at all their fault. UTOPIA was required by the financing bank to use variable rate bonds instead of fixed rate bonds. Variable rate bonds obviously create a lot of issues with financial planning since you can end up with drastic and sudden rate changes. As a hedge against this, UTOPIA opted to create sort of a hedge against this volatility using a second type of bond. (If I screw up this explanation, someone send Kirt Sudweeks in to fix my explanation.)

The gist of it is that UTOPIA makes payments on a bond at a fixed 5.65% in exchange for receiving revenues on a type of variable-rate bond that has, historically, been withing 14 basis points (0.14%) of the type of bond they are using for financing. Because the bonds paid to them have historically been about the same as the bonds they are paying, it should, in theory, ensure that they pay no more than 5.65% on the outstanding debt.

Posted June 26, 2009 by Christopher Mitchell

Geoff Daily visits UTOPIA and discusses their strategies to get back on track. He notes what they have done to make up for past problems and what they are now doing. They've got a new team and still offer a vastly superior connection than their competitors.

A snippet from Geoff's take:

Whenever anyone tries making an argument against municipal broadband and/or open networks, more often than not it starts by citing UTOPIA as the poster child for failure, the example given for why other cities shouldn't pursue plans to wire themselves.

And in many ways, UTOPIA--the audaciously named, multi-city municipal wholesale-only full-fiber build in Utah--has been a cautionary tale. Started in 2002, the network still doesn't cover any of its pledging cities in total, it's not yet financially self-sustaining, it's already over $150 million in the hole, and it has struggled to attract service providers, especially any big names.

As Paul Larsen, Economic Development Director for Brigham City and member of UTOPIA's Executive Board, put it during my whirlwind trip to Utah last week, twelve months ago they were discussing what color UTOPIA's casket was going to be.

Posted June 9, 2009 by Christopher Mitchell

Lawrence Kingsley produced a short overview of the UTOPIA (Utah Telecommunication Open Infrastructure Agency) network from late 2008. Though UTOPIA is often cited as a failure, few have taken the time to understand where the network went wrong, why others will not duplicate the problems, and why locals still want to see UTOPIA continue.

Despite its problems, the churn rate from UTOPIA was .5%. This is a tremendous vote of confidence - people who take service from UTOPIA don't unsubscribe. Like so many community networks, the biggest problem UTOPIA faces may be the dirty tricks of incumbents who have used the legislature to attack UTOPIA.

Posted June 1, 2009 by Christopher Mitchell

Community broadband networks offer some the highest capacity connections at the lowest costs. Many of these communities, before building their networks, were dependent on 1.5 Mbps connections that cost hundreds of dollars, or less reliable DSL and cable networks.

The community broadband networks below are full FTTH networks, so the advertised speeds are the experienced speeds -- unlike typical cable advertised speeds, which users pay for but rarely experience due to congestion on the shared connection.

In comparing some of the fastest publicly owned broadband networks to some of the fastest national private sector networks, we found that the publicly owned networks offer more value per dollar. Update: A few weeks after this was published, Verizon upped its speeds and prices for several of the tiers.

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The data we used is below. We thought about comparing also Qwest's "Fiber-Optic Fast" speeds, but their fastest upload speeds are below 1 Mbps, which makes them too pokey for the above networks.


Community Broadband Networks: The Best of the Best

Note: Speeds are expressed as Mbps Down/Up. Each network has distinct offering for each tier.

...
Tier 1 Tier 2 Tier 3 Tier 4
City State Speed Price Speed Price Speed Price Speed Price Notes
Lafayette Louisiana 10/10 $28.95 30/30 $44.95 50/50 $57.95 - - All connections come with 100Mbps connections to others on the local network.
Wilson North Carolina 10/10
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Posted April 22, 2009 by Christopher Mitchell

Where we can have a free market, we should have a free market. That is one of the main reasons I support UTOPIA, because it allows competitive access on those lines. I know it is only one line, but it makes sense to only have one line. And if I only have one line, I would rather it be my local government owning it – it is a lot easier to get a hold of the mayor of Murray than it is the CEO of Qwest when I have a problem.

Posted April 22, 2009 by Christopher Mitchell

We looked at moving, but because of the cost savings, as has been recently mentioned, because of the cost savings of UTOPIA, consolidated T-1 lines, stuff like that, we’re not moving. We’re here to stay.

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