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Back on March 15, I filed a GRAMA request to get some more details on American Fork’s sale of AFCNet, their municipal broadband network, to a private party. The request was dutifully filled exactly 10 business days later on March 29. The documents revealed the terms of the sale, what was sold, and the payment history on the network. The following day, after years of silence about American Fork’s broadband, the Daily Herald publishes an article asserting that the city has managed to turn their city-owned broadband fortunes around. This, however, is an obvious snow job.
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In a flashback of the old model, UTOPIA is offering up a new connection option very similar to the leasing option they started with. Customers who have the fiber in front of their homes can opt to enter into a 2-year agreement at $30/mo to cover the cost of installation. At the expiration of the two-year period, they can either go month-to-month or choose to re-up the contract. The upside is that there’s a shorter commitment term, but the downside is that the infrastructure charge won’t go away like it does when you buy it out. Customers who opted to purchase the connection can switch to the leased model and have their down payment applied towards the monthly charges.
To be honest, I don’t see that this is much of an advantage for users since you’re not saving any money and will end up paying in perpetuity for the connection. Since it’s only available to areas where the fiber is already on the curb, it also won’t do anything to get the network extended into your neighborhood either. It could, however, be a good way to sign up fence-sitters in existing service areas.
What do you think? Would you go for the short-term lease or buy out the connection?
UPDATE: Just to clarify, the conversion of a down payment on the connection into lease payments is only if you haven’t purchased the connection outright. If you’ve already bought the connection or have payments going towards doing so, this will still continue and you’ll still own the line. The line ownership option isn’t going anywhere.
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It’s a huge thing for UTOPIA to score a major national provider like DISH Network.
First, let’s consider that DISH already has a lot of customers in UTOPIA areas. They could immediately start marketing both data and voice service to those subscribers. Given that they can cross-subsidize using revenues from other markets, using the MStar tactic of aggressive marketing would be sustainable. They also have installation and customer service staff in place to handle that influx.
That cross-subsidy can also help them pick up new customers on a triple-play package. One of the main barriers to signing up new customers has been the acquisition cost. DISH could potentially opt to subsidize or entirely eat the install cost as a way of speeding up deployment, something they have the cash to do. They can also double up their marketing to hit up potential new customers while marketing to existing ones.
This may also prompt other operators to take a closer look at UTOPIA as a means of delivering services. While UTOPIA has had no problems picking up a plethora of commercial operators, the residential options have remained somewhat limited. The addition of a large national provider will no doubt attract attention from other providers, especially as the network expands and creates a greater opportunity to grab new customers. It was rumored that Cox Communications, the largest privately-held cable company in the country, was interested in joining UTOPIA if they thought they could get at least 50,000 new customers out of it. (FWIW, Cox operates in Las Vegas where UTOPIA’s fiber backbone terminates.) Such additions would make take rates in excess of 50% not just feasible, but assumed.
In all, I think this deal has major implications for changing the competitive landscape. I’m looking forward to seeing what DISH will do.
