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Australian Company to Give UTOPIA Significant Cash Injection

We recently noted that the nation's largest municipal fiber operation, Utopia, was forcing partner cities to sign non-disclosure agreements regarding a significant deal that could help the effort's financial viability in a big way. Given Provo's recent deal Google Fiber was a possibility. However, according to a report in the Salt Lake Tribune, Utopia's mystery sugar daddy instead appears to be an Australian investment company by the name of Macquarie Capital Group.

Macquarie would buy and run Utopia, ultimately finishing the build though cities would remain responsible for the significant debt they've incurred trying to upgrade regional infrastructure because regional ISPs wouldn't:
quote:
The goal, according to a senior Macquarie executive, would be to develop a private-public partnership with any of the UTOPIA cities that wanted to participate, with Macquarie paying to build out the municipal Internet grid and then running it under a 30-year revenue-sharing contract. The cities, which are saddled with millions of dollars in debt to build UTOPIA to this point, still will have to pay that off on their own.
Utopia struggled out of the gate eleven years ago courtesy of a slew of bad management decisions, though an endless stream of lawsuits from regional incumbent Qwest certainly didn't help. Utopia claims they've since stabilized finances somewhat, but overall subscriber count continues to be low (a fairly uninspiring 11,200 at last count), and a significant private cash injection certainly should help shore up the project.
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elray
join:2000-12-16
Santa Monica, CA

elray

Member

Which is it?

If they've stabilized finances, after 11 years of bad management, then why do they need an outside cash infusion from foreign fools?

All this nonsense does is assure that healthy, well-managed, for-profit firms avoid entering the market, leaving the citizenry at the mercy of government hacks.

Why NDA's? I thought we were living in a new era of transparent government.

WhereRUsers
@comcast.net

1 recommendation

WhereRUsers

Anon

Re: Which is it?

said by elray:

If they've stabilized finances, after 11 years of bad management, then why do they need an outside cash infusion from foreign fools?

All this nonsense does is assure that healthy, well-managed, for-profit firms avoid entering the market, leaving the citizenry at the mercy of government hacks.

Why NDA's? I thought we were living in a new era of transparent government.

Why only 11,200 households? Where are all these people supposedly demanding very high speed broadband at reasonable rates?
elray
join:2000-12-16
Santa Monica, CA

2 recommendations

elray

Member

Re: Which is it?

Time and again, the pundits simply ignore the fact that consumers are unwilling to pay market rates for "better" broadband, as evidenced by Fios take-rates, and national broadband survey data affirm that a majority of non-adopters are either disinterested or unwilling to pay.

Rates offered by munis aren't necessarily "reasonable" at all, and may not be lower the private offerings. The point that the DSLR fan club misses most often (except for my comrade sonicmerlin), is that price is more important than speed - with a national average price point of ~$45/month for broadband, $70/month isn't going to sell to a majority of households. Gigabit speeds don't matter.

Eliminating profit isn't an automatic recipe for cost reduction, in fact, it can invite corruption, waste, and slovenly work habits; government-based enterprises often achieve their "reasonable" price points only through subsidy, which is only acknowledged years later when bankruptcy occurs, the system is closed down, or ... massive cash infusions are required.

tshirt
Premium Member
join:2004-07-11
Snohomish, WA

1 recommendation

tshirt

Premium Member

Re: Which is it?

"I think it should be 5 cents"
Everytime, I see people here "suggest" some unrealisticly low price, without any analysis of the costs, I think of Lucy

»www.youtube.com/watch?v= ··· UB69_pR8
sonicmerlin
join:2009-05-24
Cleveland, OH

1 recommendation

sonicmerlin to elray

Member

to elray
No one is denying the price-sensitivity of consumers with regards to broadband. Seriously, no one. The whole point of this exercise is to show muni competition keeps private companies from jacking up prices on an annual basis and often results in them lowering prices and eliminating caps.

FIOS's lowest tier is $70/month for 15/5. That's absurd. Compare that to various successful munis around the country who will price significantly lower despite having much lower economies of scale and the massive disadvantage of being 2nd or even 3rd comer in an infrastructure market.
TBBroadband
join:2012-10-26
Fremont, OH

TBBroadband

Member

Re: Which is it?

The things that have been overlooked at that point are the bonds that are paying for that muni network- paid for by taxes or other fees that the locals tacked on, and have no real agenda of making a profit at all since their money doesn't dry up regardless. and VZ is a private company set out to make a profit and repay their shareholders.
sonicmerlin
join:2009-05-24
Cleveland, OH

1 recommendation

sonicmerlin

Member

Re: Which is it?

The bonds are paid for by subscription revenue. EBP muni fiber earned a profit and allowed the city to maintain electricity rates despite higher costs over the previous winter.
elray
join:2000-12-16
Santa Monica, CA

elray to sonicmerlin

Member

to sonicmerlin
Fios' lowest tier is $60/month on contract in all the markets I shop, not $70. That's not absurd, that's what they ask, and neither you nor I have to pay it if we don't want to.

Please, show me your "successful muni" that isn't cross-subsidizing, that isn't cooking the books, that isn't relying on massive tax and bond subsidies, that isn't shopping for a bailout or cash infusion, that isn't running out of money and ceasing its expansion, that is charging $50/month or less, for 10-100 Mbit service.

You can't. They simply don't exist.
sonicmerlin
join:2009-05-24
Cleveland, OH

1 recommendation

sonicmerlin

Member

Re: Which is it?

What tax and bond subsidies? You mean like the billions upon billions private corporations have been given through the USF?

Cooking the books? Cross-subsidizing? You know what doesn't exist? Your distinct lack of evidence.

And for what it's worth, a quick search of muninetworks.org led me to Wilson, NC's fiber service: »www.greenlightnc.com/abo ··· nternet/.

They offer 20 Mbps for $35/month, and 40 Mbps for $55/month. Not to mention keeps the competiton's price very low.
elray
join:2000-12-16
Santa Monica, CA

elray

Member

Re: Which is it?

Wow. One of your team finally admits USF is a tax.

Indeed, USF funds should be reclaimed from said corporations and returned to the ratepayers from which they were extracted, and the USF-designated programs should be required to fund themselves - there is nothing but corruption throughout, especially on the public receiving end.

Cooking the books always happens when government gets into "business" - they illegally borrow funds from other accounts and trust funds, issue contracts to their friends by cleverly writing the RFQ's and choosing "the most qualified" over the low bidder, or vice-versa, then allowing for massive cost overruns later, but not holding anyone accountable, until a bankruptcy judge or receiver comes into the picture much later. (Note that this activity is not unique to municipal broadband, nor is it unique to one political brand.)

EPB, for instance - their CEO is on video acknowledging the cross-subsidies from electric ratepayers ($150M), while denying they use any tax money. I guess he forgot the $220 million in municipal bonds they floated and the $115 million in federal stimulus money. If he can (take your pick) forget, lie, misstate or discount figures that significant, what else is he not telling us?

Today, Wilson's entry-level tier is definitely more in line with what the people want, but those weren't their initial rates, so how were they able to cut them so quickly if they're not borrowing from somewhere?

Greenlight was created using municipal bonds; their electric and gas rates are abnormally high; could it be that Wilson's refusal to make public their application for $15M in Federal stimulus fund was meant to shield officials from inquiry?
sonicmerlin
join:2009-05-24
Cleveland, OH

1 recommendation

sonicmerlin to elray

Member

to elray
Ah yes, because obviously well-managed for profit firms were banging on the door to be let into Utah and overbuild the competition... You know, just like in every other region of the US where thriving competition sees newcomers constantly vying to overbuild the incumbents, thereby keeping the incumbents honest and their prices low.

Oh wait, that's all fantasy.

utah
@xmission.com

utah to elray

Anon

to elray
The low subscription rates are due to legal and legislative actions from the State of Utah to prevent the expansion of Utopia. NDAs are commonplace in Government/Private Company negotiations, and the NDA's have since been voided.
TBBroadband
join:2012-10-26
Fremont, OH

TBBroadband

Member

Re: Which is it?

how is it due to legal issues? the network passes more homes and business than the number of customers. the numbers show that their isn't that high of customer rate in those markets that can get it.

KrK
Heavy Artillery For The Little Guy
Premium Member
join:2000-01-17
Tulsa, OK
Netgear WNDR3700v2
Zoom 5341J

1 recommendation

KrK

Premium Member

Re: Which is it?

CenturyLink (last century, formerly known as Qwest) has been blocking Utopia at every turn dragging them into years long legal battles which drive up costs and prevent deployments, They have sued them over everything from access to right of ways to Power Utility pole connections (claiming they had exclusive rights) etc etc etc

In short, Utopia, and Clecs and independent ISP's in general have had hurdle after hurdle placed in front of them. Most of them have folded, to our great loss.

Milliwatt
join:2010-01-26
Hotchkiss, CO

Milliwatt

Member

Utopia cash

Let me start off by saying that wireline telco cable is dead. The best, far sighted thing you can do is tear it down, roll it up and haul it to a junk yard. Fiber is the future. The faster you can get there the more profitable your community will be. Take rates are currently only 3 out of 10. For those who see no value in fiber and the Internet give them a Tracfone smart phone for $7.00/mo and call it good.

Here us an interesting article from Oakland, CA -

»wsrl.org/oakland1.jpg

For those who feel fiber based Internet connectivity is not an absolute requirement to attract new business, for health care, for education, tell them to move to such communities where property value will be declining, property taxes will be increasing along with welfare rolls.

For lovers of the Incumbent telcos., go here -

»wsrl.org/tds2.htm

After stealing $750 billion -

»www.amazon.com/Broadband ··· 71660612

from the American public, this is what you will get. Paid for by the American taxpayer.

»wsrl.org/fiber.htm

Really, really stupid.