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Utopia Close to Running Out of Cash?
Though Options Remain for Beleaguered Fiber Network
by Karl Bode 08:17AM Wednesday Sep 12 2012
The financials for the nation's largest municipal broadband deployment are getting somewhat dire. According to the latest numbers from Utah's Utopia, the fiber to the home project will be out of cash by the end of September. According to the project's director, that won't be the end of the road -- the UTOPIA board of directors can still decide to draw down more operating funds from an existing $65 million bond. The company also still has access to government stimulus funding, though that money must be used for construction but not operational expenses.

Click for full size
However, the problems still highlight the fact that the project never recovered from early executive mismanagement and relentless opposition from regional incumbent Qwest (now CenturyLink). Not too surprisingly, Utopia's Executive Director Todd Marriott disputes the Standard-Examiner article above, saying that while Utopia has not yet broken even, they remain on track based on a new model that was put in place in 2010:
quote:
“UTOPIA is not at break-even yet,” Marriott said, “so we borrowed enough money to make it through June of this year. We’ve been able to do much better than anticipated and are still operating on those monies intended to go through the June time period." He said the organization still has $3 million in financing in the bank for capital costs to grow the network and has been able to generate enough operating revenue to meet its $2.1 million debt service costs. As the group grows, he said, it will be able to begin to address UTOPIA’s debt.
An audit from earlier this year found Utopia has negative net assets of more than $120 million. While municipal failures are very much celebrated by those (largely ISPs and partisans) who don't want government involved in broadband, it's important to remember that these projects would not surface if locals were happy with the service being offered by local incumbents.

Update: the folks at Utopia sent us these additional financial details:
quote:
•The UIA board has previously approved a $65 million bond

•These funds are made available by annual tranches

•The last tranche was expected to fund operations through June 30, 2012

•Through prudent and judicious management, UTOPIA has been able to operate beyond that date

•UTOPIA spent several million less than expected through Phase 1 of the current plan

•As part of standard operating procedure, the UIA board is to approve the next tranche for the next scheduled draw down

•This approval provides another method of on-going city oversight of UTOPIA/UIA operations and is part of our standard practices.

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topics flat nest 

battleop

join:2005-09-28
00000

1 recommendation

If you look deep enough into the DSLR archives...

I told you so...

Alex J

@jillyred.net

Re: If you look deep enough into the DSLR archives...

I told you so...

When this website's knee-jerk anti-community broadband folks constantly claim all projects like this fail, that's not really impressive when you happen to get one right.
elray

join:2000-12-16
Santa Monica, CA
Reviews:
·Time Warner Cable
·EarthLink

Re: If you look deep enough into the DSLR archives...

said by Alex J :

I told you so...

When this website's knee-jerk anti-community broadband folks constantly claim all projects like this fail, that's not really impressive when you happen to get one right.

No one is anti-community broadband. We only object to the use of taxpayer funds and illegal takings. There are ways to have community broadband without violating the constitution or stealing from your neighbors.
Skippy25

join:2000-09-13
Hazelwood, MO

1 recommendation

Re: If you look deep enough into the DSLR archives...

LOL, that has got to be the biggest over reach of pure BS I have read!

First off, your are constantly being "stolen from" by any of the local duopoly cable / telecom companies and we all have been for decades. You can also extend the stupidity of this statement to schools, roads, libraries and hundreds of other community projects.

Second, what the poster you replied to said is 100% correct. You guys come here bashing every community thing (Including Google which is a private company doing a community thing) and then when you happen to get one right you gloat.

Third, Utopia isnt dead yet and until it is I would recommend keeping the gloating to yourself as it will probably still be up and running 10 years from now. Whether that is with their communities help through financing or just shear profitability is not relevant. IF the community wants it, they will continue to make it run and that is all that really matters.
hottboiinnc
ME

join:2003-10-15
Cleveland, OH

1 recommendation

Re: If you look deep enough into the DSLR archives...

First, local cable and phone companies PAY to use the ROW. Local Muni "companies" NEVER do. Tax payers are on the hook to pay for the up-keep along with the other companies that are required thus making rates HIGHER for everyone else- that is NOT fair and is stealing from those customers of another company.

2nd- local schools purchase their internet from actual companies, not the local Muni or Google. the USDOE requires them to use approved companies and DAS sites. Very few companies are even on that approved list, and Google is NOT one of them. And Schools are NOT operated by local gov'ts. They are seperate from the local gov't. The way they should be. Libraries also do not purchase services from the local ISPs nor Google wannabes. They use actual ISPs who can bid on those contracts and get actual services, hence WV using VZ/Frontier and those nice 2k routers and not some XYZ DSL ISP.

3rd- Google isn't competing and just wants a free ride, they did ALL they could to get around the red tape they should have been forced to follow, just like every other company. If Google actually cared, they wouldn't be out to sell EVERY damn thing they could find about you, nor would they be out to sell this project in 2 years and their agreement would be stated for at least 5 years. We've all seen that if Google can't make a dime off a project they kill it. GoogleTV and Google's Nexus product line trying to sell unlocked cell phones while making $$$ were two of those projects. And this will be a 3rd, and surely not the last one Google kills. Especially when the Shareholders are going to want to see ROI coming back into the company.

Time to put these munis to rest and sell their last mile networks.

PS- If Google even remotely cared- they wouldn't make these residents in KC beg for service like a bunch of starving dogs like they did just to get their name out in the public again. if this was any other company doing it, Karl and you as well would be all over them giving them shame.
fiberguy
My views are my own.
Premium
join:2005-05-20
kudos:3

Re: If you look deep enough into the DSLR archives...

You should re-think your 2nd point.. a lot.
JohnSJ

join:2004-08-14
Lafayette, LA

johnsj

BS. And uninformed BS.

1) Municipal johnsj almost always DO pay the local municipalities for the "use" of their own Rights of Way and other taxes. The mechanism is called In Lieu of Taxes (usually: johnsj) and provides a non-tax income stream to replace the taxed one presumptively lost. (This is the same nearly universal mechanism, very old, that is used to "tax" water and electrical utilities) Muni johnsj also typically have a contract with the city/county that mirrors the one a private provider has...thus explicitly paying the same ROW fee that a private provider does. (And other public obligations like monetary support of local Public Access Channels.) Case in point: johnsj Fiber in Lafayette, La. Look it up.

2) Local Schools and Libraries typically do use local muni providers where possible. Chiefly because they get a hugely good deal from sympathetic locals--like much larger pipes for a fraction of the cost that monopoly private providers charge. Again a great case in point is johnsj Fiber which holds contracts with both local entities.

3) Honestly, Google in the Kansas Cities is not remotely a muni provider; you've got a bad case of category confusion. (Not all companies that are not the sacred incumbents are the same...except they all actually provide competition, which I'd guess is the real reason they offend you.)
hottboiinnc
ME

join:2003-10-15
Cleveland, OH
99% of them use tax payer money one way or another. Bonds- all are backed by Tax Payer money- the project can't be funded on it's own- the tax payers on are the hook to pay that bond.

Funded by the City's Muni power company by using rate hikes and taxes from that company- backed by the tax payer. These are all funded some where or another by a tax payer. And they're on the hook again. Congress needs to setup and do as they promised; protect and serve the residents/citizens from being on the hook paying for these half ass projects that never float- let alone are fully finished being built.
fiberguy
My views are my own.
Premium
join:2005-05-20
kudos:3
said by Alex J :

I told you so...

When this website's knee-jerk anti-community broadband folks constantly claim all projects like this fail, that's not really impressive when you happen to get one right.

Yet, they always do! Sorry if the fact that you hold out and hope that it will not, but there's a reason why people call the failure of these sort of projects.. they just simply do not work! (ques Another One Bites The Dust)

Some, no, MANY people here WANT these things to work.. they sit back and do things like ponder, and think of all sorts of great and wonderful things for society.. sadly what they fail to do is figure out how our economic system is going to support such a "wonderful and humane thing".. again.. they just don't work.
hottboiinnc
ME

join:2003-10-15
Cleveland, OH
same here! This proves that Munis have NO BUSINESS operating broadband networks, even as the last mile wholesale operator. Time make Congress pass their pending bill to stop these from going any farther. If this was actually needed it would have more than broke even by now. But instead all of these poor residents are going to be stuck with their bill.

Way to go Utah!
fiberguy
My views are my own.
Premium
join:2005-05-20
kudos:3

Re: If you look deep enough into the DSLR archives...

Congress pass a law to tell states what they can and can't do with in their own borders? HAHAHAHHA That's a good one!

Since you're an expert at, well.. everything, it appears.. please, tell us what the role of the federal government is. Is it to tell the states how to operate their own business?

I am NO fan of muni projects because government can't run many things very well. An EFFECTIVE government provides ADEQUATE (not too much, not too little) over sight and regulation of business in order to lay a good foundation.. good policy allows business to flourish. However, I am STRONGLY against federalism and I do NOT agree with ANYONE that doesn't understand what state's rights are.

We are a nation of laws.. I'm sorry that some people, MANY PEOPLE, do not understand them and try to tread all over them in their own self indulgent anger.

battleop

join:2005-09-28
00000

Re: If you look deep enough into the DSLR archives...

+1

It's no secret that I hate Muni projects but creating laws outlaw will only make things worse.
--
I do not, have not, and will not work for AT&T/Comcast/Verizon/Charter or similar sized company.

battleop

join:2005-09-28
00000
The only way I can see room for a muni network is when the network is treated just like like roads.

The best thing about dialup was that you could buy internet from multiple sources. The Dialup ISP bought connectivity into the PSTN in the form of PRIs or Channelized T1s. The end user bought a POTS line and then they picked the ISP of their choice.

What ultimately killed the Dialup ISP was that there was no way for the dialup ISP to access a high speed last mile network that wasn't owned by a competitor who was hell bent on running them out of business by every means except fair competition.

If you really want to foster real competition stop catering to the mega huge multi billion dollar companies and look to small business to innovate. I.E. stop catering to Google, Verizon, AT&T, Comcast, etc...

Muni networks could help foster this if they helped to create a more competitive environment where they are focused on bringing high speed internet to citizens instead of putting them out of business.
--
I do not, have not, and will not work for AT&T/Comcast/Verizon/Charter or similar sized company.
tmc8080

join:2004-04-24
Brooklyn, NY
Reviews:
·ooma
·Optimum Online
·Verizon FiOS

1 recommendation

end game

well, they need a corporate raider like (a certain presidential candidate) to come in and fire all the staff, and sell the company to Century Link(tel) for pennies on the dollar who will sit on the technology and put dsl instead. afterall, that's one (in)credible vision for the country millions of people would vote FOR..
Telco

join:2008-12-19
Reviews:
·Callcentric

1 edit

1 recommendation

Re: end game

These projects rationally take over a decade to be self sustaining. However, much like anything the GOP disagree with, they want to sabotage and crush them, to stop it from spreading -- country and people be damned.

Why do you guys think they hate Europe and the rest of the advanced world so much? Because they know the second their base gets a taste of the lifestyle and perks realized by the people abroad, they'll never let it go.

You are right in also pointing out that this is exactly what Bain capital (i.e. Romney) did/do.
bradleym

join:2002-08-05
Peoria, IL

Re: end game

Do you mean the same 'lifestyle and perks' that Europe can't pay for and has put the economies of Greece, Spain, et al in the shitter?

El Quintron
Resident Mouth Breather
Premium
join:2008-04-28
Etobicoke, ON
kudos:4
Reviews:
·TekSavvy Cable
·TekSavvy DSL
·WIND Mobile

Re: end game

said by bradleym:

Do you mean the same 'lifestyle and perks' that Europe can't pay for and has put the economies of Greece, Spain, et al in the shitter?

Don't you mean hamstrung by the Euro and therefore unable to adjust their currency values, in order to adequately meet their liquidity needs?

Corehhi

join:2002-01-28
Bluffton, SC
Reviews:
·Hargray Cable

Re: end game

said by El Quintron:

said by bradleym:

Do you mean the same 'lifestyle and perks' that Europe can't pay for and has put the economies of Greece, Spain, et al in the shitter?

Don't you mean hamstrung by the Euro and therefore unable to adjust their currency values, in order to adequately meet their liquidity needs?

You mean devalue their currency against the Euro??? They should have never joined the Euro if they wanted to be able to devalue at will. Defeats the whole object of the Euro. You do know that devaluing your currency hammers the fix income people such as retiree's???? A whole chain of events happens it's not as simple as just saying, "Ok we are going BK let's use inflation to get us out of the mess".

El Quintron
Resident Mouth Breather
Premium
join:2008-04-28
Etobicoke, ON
kudos:4
Reviews:
·TekSavvy Cable
·TekSavvy DSL
·WIND Mobile

Re: end game

Not versus the Euro necessarily but to have a currency which the local government has control of.

Inflation isn't such a bad thing either considering it reduces debt that's in local currency, which is good for individuals.

Either way the point I was trying to make is that half of this mess comes from individual members not being able to manage their own cash flow, leaving them at a disadvantage... as opposed to platitudes about "evil socialism"
--
Support Bacteria -- It's the Only Culture Some People Have
tmc8080

join:2004-04-24
Brooklyn, NY
Reviews:
·ooma
·Optimum Online
·Verizon FiOS
History tends to repeat itself.. telco companies know Internet is the new "railroad", but they don't want anyone else to be a part of it and want profits all for themselves-- much like the land grabbed from the Indians and others in the Manifest Destiny (comically portrayed in Blazing Saddles).

»www.youtube.com/watch?v=-YBInZrRx5c
fiberguy
My views are my own.
Premium
join:2005-05-20
kudos:3
said by tmc8080:

well, they need a corporate raider like (a certain presidential candidate) to come in and fire all the staff, and sell the company to Century Link(tel) for pennies on the dollar who will sit on the technology and put dsl instead. afterall, that's one (in)credible vision for the country millions of people would vote FOR..

Well, you're right! why don't we just have ANOTHER certain candidate to come in and promise the people the world with the people's money and give them anything they want.. let's have that "candidate" of yours come in and make empty promises backed by a check that it can't cash.. and everything will be JUST wunnnerful!!!

oh wait.. that idiot is running to save his office and doing more of the same. Still promising stuff he can't pay for and watching things drop like flies as they run out of money. Oh wait.. and I give you Utopia! .. such an APPROPRIATE name..

The reason this crap fails is that the DREAM, of which comes from smoke, is not well thought through and winds up realizing reality in short order.

But yea.. your Obama guy is going to save the world. Now, would you mind paying up your 55K portion of the 16 trillion debt, 6 of which he gave ya? Thanks champ.
tmc8080

join:2004-04-24
Brooklyn, NY
Reviews:
·ooma
·Optimum Online
·Verizon FiOS

1 recommendation

Re: end game

Let's just say both parties have alot of power to lose should they keep to their current gridlock status quo.. Replacing major portions of congress with independants would be a breath of fresh air.. and if you look at the trust people have in congress, that could just happen in 2014 ( a record number of independent/nonmajor party candidates up for election ). Sentiment's been growing for over a decade that the wealthy (primarily profiteers in big business) got too much of a break in the last 12 years and that's due for a turnaround, whether it ends up in public/tax policy is anybody's guess.

Nevertheless, you'd think if consumers can get FTTP, they'd be subscribing in droves.. I'd really like to know why they aren't doing better in uptake/market share rates.. Almost 200 communities in Kansas and Missouri found FTTP's value a good proposition to sign up.. Maybe because they're offering paltry cablemodem speeds of 300mbits and less?

Anon2

@vzbi.com

What now??

Where is the guy that brags about Utopia on every post?

somms

join:2003-07-28
Salt Lake City, UT

Re: What now??

said by Anon2 :

Where is the guy that brags about Utopia on every post?

»utopianet.org/uploads/images/hom···31_1.jpg
»www.utopianet.org/blogs/general/bond

To Anon poster who tries to spin FTTH into a "socialist" failure on every post!

tshirt
Premium,MVM
join:2004-07-11
Snohomish, WA
kudos:4
Reviews:
·Comcast

1 edit

Re: What now??

We have no doubt they can make payments
Bonds for the fiber network are backed by sales tax revenue pledges from participating municipalities. The plan initially was that as the network expanded and added subscribers, the revenue would offset the need to tap into those pledges.

Local pledge amounts include $2.146 million a year for Layton, $427,697 for Centerville, $324,459 for Tremonton, $430,039 for Brigham City and $104,494 for Perry. That pledge goes up approximately 2 percent a year over the 25-year life span of UTOPIA’s existing bonds, according to Blaine Lutz, financial director for Centerville and a member of the UTOPIA board.

The question is what those payments really cost.
Because they will HAVE to make payments from the sales tax (which no doubt was already paying for something else) what else does EVERYBODY in those areas lose so that some can enjoy a fiber connection.
Is it roads, or schools or police service, or health care or what will suffer so that you get your porn a little faster?
We aren't opposed to faster porn, we just think porn users should pay for it themselves.

tshirt
Premium,MVM
join:2004-07-11
Snohomish, WA
kudos:4
Reviews:
·Comcast

Re: What now??

Before you get all up in arms, please note that the post above is partially satrirical (humor, arrh arrh).
I not opposed to fiber or muni fiber, but I have repeated argued that you (and others) are being unrealistic about the cost, the needed resources and the payback as are many (muni and otherwise) FTTx project promoters.
I can see the public value to really fast HSI, but until you become more honest about the cost and risks, I can't see backing most of them, and even those reported here that do seem potentially viable are frequently shouted down as overpriced corporate scams.
People can have FTTx or cable or? HSI and even own it, but it takes money and management and tough "we can't afford THAT" decisions based on supportable FACTS not, "I WANT" I NEED" pipe dreams.
StLCardsFan

join:2011-06-06
Lafayette, LA
Reviews:
·LUS Fiber

Re: What now??

said by tshirt:

Before you get all up in arms, please note that the post above is partially satrirical (humor, arrh arrh).
I not opposed to fiber or muni fiber, but I have repeated argued that you (and others) are being unrealistic about the cost, the needed resources and the payback as are many (muni and otherwise) FTTx project promoters.
I can see the public value to really fast HSI, but until you become more honest about the cost and risks, I can't see backing most of them, and even those reported here that do seem potentially viable are frequently shouted down as overpriced corporate scams.
People can have FTTx or cable or? HSI and even own it, but it takes money and management and tough "we can't afford THAT" decisions based on supportable FACTS not, "I WANT" I NEED" pipe dreams.

i guess its kinda like government mandated healthcare then.

tshirt
Premium,MVM
join:2004-07-11
Snohomish, WA
kudos:4

1 recommendation

Re: What now??

Can you better explain what parallels you see between those two subjects?
hottboiinnc
ME

join:2003-10-15
Cleveland, OH
Gov't health care was NEVER an issue when it was just for MA residents but now since it's a national issue, it has become the topic of everyone, time to move on, It's here to stay and it should be. Everyone is entitled to healthcare it is a requirement. One unhealthy person that can't afford healthcare can spread their illness just by standing next to you at your local supermarket. And yes, it does happen. But yet you'd rather have HSI from your local city than actually help those that are sick.
StLCardsFan

join:2011-06-06
Lafayette, LA
Reviews:
·LUS Fiber

3 edits

1 recommendation

the key word "entitled" ... nuff said.

Actually ..there is so much wrong with what you just typed its not really worth responding to other than:

The Federal Government was designed to be as minimal and un-intrusive as humanly possible. This is an undisputed fact.

Nowhere in the constitution or bill of rights does it say that people are entitled to healthcare nor does it say the Federal Government should control at least 1/5th of the economy.

People like you are so .... dense you fail to see the bigger picture. The argument wasn't about healthcare itself ...DUH ..it is about Federal Government and its hands in your life.

Lastly ..since you obviously need an education on entitlements:

What exactly are entitlements? The short and most correct answer is that entitlements enslave people to whomever is entitling them...and in this case ... the Federal Government. So..instead of promoting self-reliance (exactly like the founders of our once great nation intended)... people like yourself would happily trade the great gift you were given ..of self-reliance for enslavement.

The parallels are simple ... health care will cost the US Government so much that itwill either finally bankrupt the country or other "entitlements" will be slashed to the point where people will go hungry.
fiberguy
My views are my own.
Premium
join:2005-05-20
kudos:3

Re: What now??

He advocates socialism.. short and simple.

The socialists wannabees in this nation piss me off. They get so many things wrong, even their own desire to be a socialist what they often forget that is once you're enslaved by the government you are required to pay for your gifts/entitlements. THAT, however, doesn't work for them in their vision of entitlement. They want to just sit back, use their iPhone or Android, watch YouTube and Hulu, have their coffee dates with friends and use FREE Wifi and express themselves with creative writing OR talk with their fellow friends about how THEY can better the world (hahahahah, that one I love) all wall forgetting that in a socialist word, the government also doles out responsibilities for you. You're enslaved to the government. Oh, and one other point they forget.. socialism often falls and fails.

Socialists and enlistment minded people piss me off so much because they clearly lack any ability to comprehend life in any form yet they whine the loudest and screw up the world for everyone else who wants nothing to do with their lifestyle choice.

By the way the other day I actually head a "friend" of mine say "we just need to get into socialism so we can finally get this nation moving again..." that was the last thing he ever said to me.

•••
JesseHarris

join:2008-07-30
Sandy, UT

Completely untrue

The Standard Examiner (and the Daily Herald) basically made a bunch of crap up from second-hand stories. I spoke with Todd Marriott less than an hour ago (something neither paper bothered to do) and the real story is actually a bunch of good news.

Right now, UTOPIA runs an operating deficit. The Utah Infrastructure Agency (UIA) was formed by most of the UTOPIA cities to cover this gap for five years and provide funds for construction to be paid back by subscribers. The last draw of money for this purpose was intended to last through June 30, 2012. Instead, it's just now running out. UTOPIA had stronger operating revenues that resulted in money scheduled to cover 12 months instead cover almost 15 months.

The discussion was that UTOPIA needed to pull the FY2013 money now that the FY2012 money has finally run out after lasting almost 25% longer than originally intended. Someone without access to the full facts or willing to do actual reporting mis-interpreted that as being broke. This is what happens when "reporters" don't bother to do their damn job. (And, for the record, it also triggered an unnecessary audit from NTIA.)
--
--
Jesse Harris
Chairman, UTOPIA Citizens Advisory Network
»www.freeutopia.org/

•••
colorfulchew

join:2012-09-13
Layton, UT

The project runs out every month?

The idea is to get Utopia running independently without any tax payer money, which is why they don't have a large store of cash (in reference to the standard saying they will be out of cash by the end of September). As to Municpal networks being good or bad, I would say Utopia is about the only Municpal network I do like actually. You choose your provider and, if you don't like fiber for some reason, you can choose cable(still). Nothing stopping the current incumbents from joining Utopia. It's an intense roll-out of networks. Like the internet. Because normal business isn't fast enough for the change that the internet creates.