While nothing has yet been inked, I’m hearing a lot of rumors from multiple sources about the kinds of terms being discussed with Macquarie. While none of them will be out in the open until Macquarie finishes estimating the cost of network completion, this may give us some hints as to what to expect in the final product. Here’s what I’ve been hearing so far.
No installation fee. The install fee is rumored to be history. The network construction cost will cover getting the fiber to the side of the house. At that point, you’ve got maybe $200-300 in install costs to get it in to the house. Word is that Macquarie may work out the numbers to eat that cost to get people signed up.
Credit for any install fees already paid. You heard that right. If you paid the install fee up-front, that money will reportedly be applied towards the utility fee. Those who paid the install won’t be left swinging.
Construction completed in two years… or less. This one really surprises me. The plan is to complete the build-out of all pledging member cities VERY quickly. That kind of build speed would be incredible.
A free tier of service faster than Google. The utility fee is going to include a baseline level of service. The rumored speed is 6Mbps/2Mbps, better than Google’s current 5Mbps/1Mbps service.
A full build-out of the entire state. I’ve said it before, but it bears repeating. I keep on hearing that Macquarie considers UTOPIA to be getting their foot into the door in the US. Their reported intent is to wire every home, urban and rural, to gigabit fiber. Utah could quickly become the first all-gigabit state and have dozens of providers to choose from.
The cities maintain ownership. Yes, you heard right. When the 30-year deal is done, the cities still own UTOPIA. This provision would supposedly also apply to new cities that join up and maybe even the cooperative I’m working on (which would be the only option in unincorporated areas). That’s a pretty amazing deal.
Some of this sounds like it’s in “too good to be true” territory. Even if half of it pans out, I’ll be pretty impressed.
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I’m not surprised by what they are doing. If you take a 30 year view, and remove all of the political baggage, this is a really smart investment, and a model for other parts of the country to follow. Very clever I must say.
Where are these rumors coming from? How credible are they? What interests me is that the rumor to wire areas outside of the current UTOPIA footprint. That will cause comcrap and google to crap their pants. Centurylink could care less, their lunch is already being eaten by cable ISPs and WISPs.
I’ve been hearing these from member city employees/elected officials and service providers. A lot of it sounds too good to be true, so I’m eager to see what shows in the final documents.
When is the final deal supposed to be inked?
I hear sometime this summer. The full details should be hammered out in 10-12 weeks.
Jesse,
I would love these rumors to be true. BUT, to wire the whole state for a 300 million investment? Is the deal for more? iProvo ( Provo city) alone was 40 million. I can see building out SL valley for maybe 300 mil. I’d love to be wrong.
So what does Macquarie get out of this? Where do they make their money? Do they set up services on the network ala Hulu or netflix? This is what I’d like to understand better.
With a gig of bandwidth costing maybe .08 or less per gig free internet is a great marketing idea..
If this proves true, perhaps Google goes all in and wires Utah. Or, they pull out of iProvo because of teh better network Utopia offers ( after making their required upgrades) and iProvo joins Utopia???
All pure rampant speculation, but thanks for a good read this morning.
Yes, this is all based on hearsay. Hearsay from sources who would know better than I, but hearsay nonetheless. Keep your grains of salt handy.
$300M is to complete the buildout in current UTOPIA member cities. My back-of-the-napkin math is that it would be an additional $1.6B-ish to finish the rest of the state assuming 550K remaining households at an average cost per household of $3K. I’m guessing that Macquarie can go much lower based on the scale of the project. Since FTTH equipment vendors are in a slump right now, they’d probably cut some sweet deals for a large build.
Macquarie is getting a cut of the action for 30 years. It would be a very stable source of income for their investment portfolio. I’d assume they want a 5% or so return. That’s just my best guess.
I have no idea what Google would do in reaction to this. They’d probably be hesitant to overbuild any more areas. They may ever work to position iProvo to go to UTOPIA/Macquarie at the end of their contract (which would roughly coincide with when Macquarie would potentially want into that market).
Macquarie gets a stable longterm investment. They’re not VC’s looking for a 3-year 10-bagger. They’re an infrastructure company that realizes the value of fiber.
Where do you get your $.08/gig pricing?
The article below quotes 1.9 cents/gig. on a new deployment.. I’ve read other articles that put it around .04 cents.. I don’t have experience in this area.. I only know when people quote figures ( like how many customers required to make a FTTH deployment pay for itself ) I double it. It’s the skeptic in me. 🙂
You are in the biz.. perhaps you can shed some light 🙂
See link in below article that guesses Netflix movies at .05 cents to deliver.
http://blogs.howstuffworks.com/brainstuff/what-does-a-gigabyte-of-internet-service-really-cost-a-look-at-the-worst-case-scenario/
Ah, you’re quoting transfer (as in 1GB of data, not 1Gbps of service). I hear 1GB of data transfer is under a penny now. As far as the cost of deploying gigabit, it varied widely depending on if you use PON (Google Fiber and Verizon FiOS use GPON) or active Ethernet (UTOPIA, iProvo before Google). PON typically gets down in the $800-1000 per home range, but it’s also using a topology that has a lot in common with the shared rings of HFC coax networks. Active Ethernet is more like a REALLY big LAN, but it also costs a lot more (around $3K per home last I heard).
Not sure where best to post this, but I just received the following response from Senator Valentine (who is my senator) to my email about SB190. I replied and urged him to drop Amendment 2.
————————–
Dear Todd,
We have received a number of inquiries about SB 190 and want to answer a couple of questions about this Bill:
Our present statutes permit cities to provide cable television and public communication services (VOIP telephone and internet) to its citizens. However, cities are specifically prohibited from “cross subsidizing” those services with:
(a) Tax dollars;
(b) Income from other municipal or utility services;
(c) Below-market rate loans from the municipality; or
(d) Any other means.
(Section 10-8-14 U.C.A.)
Last year Provo City instituted a “Utility Franchise Fee” on every residence and business as part of a plan to sell off its iProvo system to Google Fiber. This fee was applied to everyone’s city utility bill, whether or not they used the city’s telephone, internet or cable television services.
The cities who participate in UTOPIA recently opened negotiations with an Australian Company to take over the UTOPIA operations, contingent upon imposing a $20.00 to $25.00 per month fee on every residence and business in the city. This fee would be imposed, not for the past debt incurred (approximately $300 million), but for future operations and expansion of the city’s system. We recently received information that UTOPIA’s plan includes expansion of UTOPIA to other cities in Utah with the same Utility Franchise Fee.
Legal questions have arisen regarding the ability to use this fee as being a violation of the state statute. Senate Bill 190 was drafted in response to these issues. The original version of SB 190 authorized a city such as Provo to use a Utility Franchise Fee to pay its past iProvo debt and authorized UTOPIA cities to also use a Utility Franchise Fee to pay its past debts as an exception to the general statutory prohibition. The Bill, however, did not permit such a fee to be used for future operations and maintenance or future development.
The Bill was amended in the Business and Labor Committee to permit cities to use the Utility Franchise Fee for future development and operation of cable television and public communication services (VOIP telephone and internet). As amended in the Committee, the Bill now applies to all cities, not just UTOPIA Cities, provided that the fee plan contained a provision for “a person who is economically indigent to opt out of the fee.”
I have drafted a floor amendment to restrict the fee only for use by the present UTOPIA cities and not expanding this fee statewide. I am still trying to decide whether to run it or leave the Bill as amended by the Committee. I would welcome you input on this next step.
He told UTOPIA that he was dropping the floor amendment. Seems like we have a case of serious double-talking going on here.
imposing a $20.00 to $25.00 per month fee on every residence and business in the city
Any idea where he is getting this number?
Either way completely worth it, I bet you with a competitive option in place even those that don’t subscribe will save that much from lower rates on their Comcast/CenturyLink bills.
Also given the good rumor mill on this deal, I can only imagine how hard the lobbyists from CenturyLink and Comcast and wining and dining people at the State House/Senate.
We need to call as well as email, And I know it sounds funny, but snail mail would make some effect as well. And if you snail mail, hand write the letter rather then print(tho i would still draft on the pc for spell check 8-P).
I would also do the same for house members starting now as well, tho it would be much much better to kill this in the senate, Might want to consider dropping a line to the Governors office.
Agreed and good point on the Governor’s office. Emails are too easily drowned out by other noise.
For example, when I emailed all members of the committee and bill sponsor for H.B. 60, I didn’t get a single reply. When I started calling and leaving voice messages following-up on my email, one member called me back and we had a good, short conversation. Another member texted me, and we had a quick text conversation, so following up on your emails with a call/voice message has a huge impact.
After all that, by the time they went home for the weekend, they all had letters from me waiting for them that reiterated my points more eloquently. I’m sure they didn’t like being bombarded, but they sure knew who I was and where I stood.
Be sure to point out that this will create good paying jobs in State, Jobs that can’t outsourced, This deal all together is $300 million to current Utopia members and $1.6 billion for the rest of the State, that is $1.9 billion dollars of direct growth, and quality fiber will bring a lot of other jobs as well.
It is much like the railroads or the highway system, most of the growth is indirect, the economic benefits to the network provider pale compared to the benefits the wider economic area will receive.
In other words that $1.9 billion is merely the tip of the iceberg for growth potential in State.
Also given the States current anti-federal money position, be sure to bring up the fact that Utopia does not receive any FUSF money.
Good question. Nobody knows what the utility fee will be until Macquarie gets estimates on how much it will be to build the network (7-8 more weeks). I’ve heard more in the $15-20 range. That would be a steal for the rumored “free” tier of service.
There’s already evidence that the Utah Taxpayers Association had a hand in HB60. I’ve got a GRAMA request in to see if they’re also behind SB190.
Any word about expansion to new cities? I fear in Sandy I’ll never see fiber until Dolan leaves office, which could be a long time. He’s a career politician.
I hear Dolan isn’t running again. That’s a pretty good opportunity for a UTOPIA proponent to get their foot in the door.
Anything from the rumor mill about who foots the cost for the freebie tier?
Nothing yet. The actual service would come from the existing service providers, but I don’t know if/how money changes hands. Maybe it would be structured in the same was that XMission currently does free WiFi?
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