Tag Archives: UTOPIA

UTOPIA Moving Forward in Brigham City

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UTOPIA has obtained the approval of Brigham City to move forward with the plan to create a voluntary SAA to provide services to over 1,600 residences. Reports from the meeting were that the crowd was almost unanimously in favor of approval and the city council voted 4-1* in their favor. This means that residents who have opted in will be able to receive service in exchange for either a $3,000 connection fee up-front or paid over a period of 20 years via a city-backed bond. Anyone who has not signed up for service will not be expected to pay any part of this bond.

The good news is that with the number of homes participating, the entire city will be covered with service. Residents have until early December to opt to participate in the bond. Anyone who wishes to get hooked up after that will have to come up with the money up-front or join up with enough other residents to form a new bond. Best of all, the city will retain ownership of all portions of the network built under the SAA with the potential to get other portions of the network placed under city ownership in the future.

UTOPIA also picked up a new service provider, Brigham.net. They’re the typical dial-up-come-DSL ISP that’s hit hard times as Qwest plays hardball. (While Qwest will deny it, they’ve been using the list of wholesale line orders from other service providers to poach DSL customers.) While it is unclear if/when Brigham.net plans to expand beyond its home town, it certainly is a good thing for residents of Brigham City to have even more competitive choice. This could also bring an additional 145 customers to UTOPIA beyond the 1600 that have already opted in.

As part of the launch, the long-delayed white label video product will be ready to go. (It’s about time since it was starting to feel like the Duke Nukem Forever of fiber networks.) Apparently the hold-up was Turner. UTOPIA wanted to transport the video signal over a secure fiber network to their headend and Turner was the only programmer who would have none of it. After much negotiation, UTOPIA had to get a dish to bring in Turner networks like TNT, TCM, CNN, and Cartoon Network. The packages are only going to come in a few basic flavors and I wasn’t able to get details on what VOD options, if any, will be included with it. The channel lineups are currently posted on their website if you want to take a look; it appears to be pretty complete to me.

So how is Qwest reacting? Just as you would expect them to. They have filed a GRAMA request with Brigham City to obtain the documents forming the SAA and may take legal action to stop it from forming. The problem here, though, is that UTOPIA is just a contractor in the middle of it all. Qwest will have to sue Brigham City to stop the SAA to, in effect, tell them that they can’t let their residents buy a fiber optic network of their own. (Yes, it’s as dumb as it sounds.) I sincerely hope Qwest will back off on this one.

(*Unsurprisingly, Ruth Jensen was the lone no vote and continued to parrot telecom talking points. She was also reportedly excessively harsh and unprofessional with the UTOPIA representatives at the meeting to the point of being called out by some residents. I’m also a bit concerned that she apparently didn’t know the difference between a voluntary SAA and an involuntary SAA. Isn’t that the kind of thing that a city council member should know?)

Clarifying UTOPIA's Financing Models

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While I was on KVNU’s For the People tonight,  a caller expressed concerns about how UTOPIA is financed. It became clear to me that this caller had confused the various funding models and bonds UTOPIA has been and is currently using. I thought I should clarify how exactly UTOPIA got its money and who is on the hook for what. There’s a lot of confusion about how UTOPIA is backed and financed and this is because there have been two rounds of bonding under one financial model and new potential rounds of bonds under a new financial model.

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BREAKING: Gov. Herbert Recommends UTOPIA for Broadband Stimulus

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Peter Pratt at StimulatingBroadband.com tipped me off that Gov. Herbert has made his recommendations to NTIA and that all three of UTOPIA’s proposals are on the list. This could pump over $57M into the network at a time when capital for expansion is rather difficult to come by. The money could be ready to use as early as February. While this isn’t the final word on which projects will be approved, the NTIA is very likely to go along with the recommendations from the states. The feds didn’t give independent reviewers a lot of time to screen applications before sending them to the states.

The money will be set aside for rural and underserved areas of member cities, so expect to see the money flow into Lindon, Centerville, Payson, Brigham City, Perry, and any leftover portions of Tremonton first. Residents in these cities are very likely to see a sharply reduced cost for an SAA (most likely) or the return of the free install (quite unlikely). Overall, this will mean a big expansion of UTOPIA availability which can only help the bottom line. UTOPIA’s new management will likely have a targeted build plan meant to maximize new subscribers; previously, the building had been willy-nilly.

UTOPIA isn’t the only winner in Herbert’s recommendations. UEN and the UTA picked up endorsements as did several projects from the Navajo Nation. Emery Telecom also got the nod for its three proposals to bring FTTP to its service areas in rural Utah, no doubt to unify its separate CATV and phone systems as part of the upgrade. (Seriously, guys, kudos on being one of the few rural ILECs doing something so ambitious.) There’s also an application to build a community WiFi cloud in Washington County.

All in all, it’s good news for Utah’s broadband.

Comcast Reportedly Stealing UTOPIA Signs in Brigham City

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I just got word that several witnesses have spotted Comcast salespeople stealing UTOPIA yard signs in Brigham City. Undoubtedly Comcast will try and distance themselves from the actions of their employees. Some of their contractors have already gone so far as to disconnect their competitors’ service to drive sales, so I suppose this doesn’t come as much of a surprise.

You stay classy, Comcast.

Final Call: UTOPIA Breaking Ground in Brigham

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Residents of Brigham City, the wait is apparently over. UTOPIA is holding a groundbreaking ceremony on Saturday October 10th from 11AM to 2PM to close up registration for service and finalize construction timelines. The ceremony will be held in Pioneer Park at Forest St. and 600 W. If you’re interested in getting service via UTOPIA, this could be your final chance before the SAA closes and you have to pay the install cost upfront.

Broadband Stimulus Applicants Revealed

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As of a couple of days ago, applicants for broadband stimulus funds are now listed on the NTIA’s website. Utah has a number of applicants including the University of Utah, The Utah Transit Authority, and, not surprisingly, UTOPIA.

Several rural ILECs have also gotten into the game including Emery Telecom and Manti Tele Communications. Emery is apparently looking to deploy FTTP to beef up their triple-play offerings and replace their existing HFC CATV network. The finished product would be active Ethernet like iProvo and UTOPIA with up to 1Gbps at each address served. A separate request would use FTTN and wireless to reach more remote areas. Manti, meanwhile, is looking to use WiMax to reach more remote areas that currently do not have broadband service. Both of these projects are good news for Utahns.

Ogden City has also made an application to provide broadband access to government services and underserved residents. There is also an application for what appears to be a city-wide WiFi network. Given their reluctance to join UTOPIA, it’s rather surprising that they have done an about-face on city-provided services. My best guess is that they were holding out for someone else to pay for it.

So what about UTOPIA? They made three separate applications totaling around $54M. The only thing available is a general overview, but the requests appear to be targeted at Orem, Murray, Midvale, West Valley City, Layton, and Centerville. One of them hints at using a special assessment area (SAA) to triple the impact of at least $10.5M of the money applied for. Depending on how fast NTIA can review and approve applications, we may soon know if there will be more money for UTOPIA construction in the near term.

With applicants asking for 7 times what’s available in the first round, it will be interesting to see who makes the cut.

Layton Languishing: No New UTOPIA Construction for 1-2 Years

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I received word from a reader that an engineer with Layton City has indicated that new UTOPIA construction in the city will be on hold for at least a year, possibly as long as two years. That’s right, up to two years without the men in work boots, that’s is going to retard progress. The existing fiber will be served, but new installs will now entirely depend on either developers or members of a special assessment area to foot the bill. The city blames the slow economy and lack of federal funding for the halt in construction. Given that the first tranches of broadband stimulus funding from the feds is meant for rural and underserved areas, I wouldn’t count on any federal assistance to get things moving anytime soon.

(h/t: Dan Langford)

An Evaluation of the Broadweave/Veracity Merger

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I’ve spent the last week rolling over the proposed merger of Veracity and Broadweave as well as their proposal to Provo City upon which it is contingent. I’ve gotten  more information from Veracity and Broadweave on their position and talked to other people who’ve been keeping an eye on things. I’m still not sure if the deal is in the city’s best interests, but I don’t know that it’s necessarily rotten or the only option either.

Veracity’s proposal to the city is, for all intents and purposes, a loan of $1.5M over the next 18 months to reduce the bond payments to be paid back over the seven years following that at 5.1% interest. (Ironically, this is the amount Provo City would have paid on the bond had they kept the network.) Veracity has said it has pursued private financing for the deal and has been unable to secure it, though I imagine the terms were also not as favorable as what’s being proposed to the city. Under the proposal, Provo would use the energy reserve fund to make the payments, money that would have been earning 1% interest. Taxes wouldn’t increase to finance it nor would other budgets be cut into.

So why does Veracity want a loan to reduce the payments? They’re looking to buy time to move their Provo customers onto iProvo to slash costs and improve operating efficiencies. Not only does that cut Qwest transport out of the picture, but they can also sell services that would not have been easy to provide given the wholesale rates that Qwest charges. Moving those customers will cost a fair amount of money, so Veracity needs time to get it done.

Given Veracity’s financial state, I have my doubts as to whether or not they could secure private financing for this deal. They reportedly operate debt-free with a very healthy cash flow and I would hope that they presented the council with scenarios under which they use private financing combined with current revenues to accomplish the same ends. They have been opening the books to the city council and some staff for their review, but there also needs to be a Plan B. Right now, the proposal feels very “take it or leave it”.

This isn’t to say that I doubt Veracity’s capability. They’re an exceptional company offering exceptional service that I use in my job every day. Their management team is full of smart people and Broadweave has done a much-needed sweep of almost all of its management team. My reservations hinge on asking the city to extend their role in the financing of the sale.

So what’s the alternative? Broadweave is fast-approaching the date where the network will have to be returned to the city since investors aren’t willing to put any more money into it. If that happens, Provo will have several months of the reserve to use for paying off the bond while they regroup. It sounds like a worst-case doomsday scenario, but I don’t think it’s quite as dire as even I would have once predicted. Provo will still have a couple of options at their disposal.

The first option would be to resume control of the wholesale side and allow Broadweave to continue as the main retail provider. This option would only work if, after being relieved of the wholesale obligations, Broadweave would have sufficient funds to find new customers and finance install costs. There’s also the problems of re-staffing the NOC as a city department and relocating Broadweave to another office. It may also be very difficult for a single retailer to secure enough customers to cover the wholesale side of the operation

The second option would be to bring in new retail providers to compete with (or replace) Broadweave. If Provo entered into some kind of reciprocity agreement with UTOPIA that allowed a provider from one network to participate on the other, it would secure the residential contract on UTOPIA that Broadweave wouldn’t mind having and bring in a half-dozen new providers to Provo to scoop up new customers. This would also mean that at least two different head-ends on both networks would be competing for customers, a win-win for served residents. New providers, however, may be leery of making a deal with Provo after the way that they threw Mstar under the bus. Granted, Mstar wasn’t paying its bills and didn’t have much goodwill to cash in, but they were also bullied into the deal they got. In either scenario, Provo would have several months of lead time to figure out what to do and find a way to make the payments once again.

Provo isn’t necessarily locked into the merger option. If the council still wants to get out of the business, they believe that Veracity is good for the money, and they don’t have qualms about extending some more financing, they can go with the merger. If they want city money to result in a city asset, don’t have heartburn about doing the work to fix iProvo (now that we’ve seen that a private company wasn’t able to), and don’t think this is the last time they’ll be asked to extend their risk, there’s options for taking the network back.

No matter what happens, this should be an example of how difficult it is to try and undo the decision to get into the business of telecommunications. We’ve seen that a private company operating a closed network is not necessarily any more successful than a public entity operating an open network when in an overbuild scenario. We’ve also seen that self-financing means you aren’t really out of the business until the last red cent of the bond has been paid off. Any city thinking about jumping ship would do well to consider that it’s not an easy way out like the Reason Foundation and Utah Taxpayers Association claim it is.

Rumor: Broadweave on UTOPIA?

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I received word from a reliable source at a service provider that Broadweave may be considering joining UTOPIA. This information was passed along from a company that both of them do business with. According to this company, Broadweave has stepped up its outsourced call center operations in preparation for adding new customers on UTOPIA’s network.

UTOPIA and Broadweave have had an acrimonious working relationship in the past stemming from the entanglement between UTOPIA and iProvo regarding the head-end assets. This was no doubt hurt further by ex-CEO Steve Christensen’s forceful and demanding management style. The question is if the upending of upper management is enough to mend the relationship to the point where this rumor becomes fact.

If true, this would be a really good (and smart) move for Broadweave. They’ve hit a brick wall with adding customers on iProvo and are under a “do or die” deadline of February when the reserve runs out of cash. The rumors that they will soon be booted from Traverse Mountain also persist, though nothing new has developed. Getting access to the tens of thousands of UTOPIA homes passed and preserving some of their Traverse Mountain customers could give them the revenue needed to pay off the iProvo bonds and better leverage their head-end and NOC facilities.

Of course, we should also ask if Broadweave would be good for UTOPIA. Customer service complaints still persist and the company may not have the cash available to market to new customers unless EsNet makes additional investments. Broadweave has also failed to deliver video to Traverse Mountain despite the acquisition of a head-end, something I understand to be one of the main reasons for that development’s discontent. There’s also the matter of going from a geographically condense market to one spread over a 120-mile stretch, something that could drive their install costs up.

We should also wonder if Broadweave joining an open network like UTOPIA would signal that they’re ready to give the wholesale model another shot in Provo. Apparently closing the network wasn’t enough to staunch the flow of red ink as they claimed it would. Outside providers have money to spend on snapping up new accounts while Broadweave is charging around $600 for installs (and, I should note, not offering a discount on monthly service as a result). It’s entirely possible that a reciprocity agreement with UTOPIA providers to give them access to the network could result in higher overall revenues even at the expense of retail customers. Research from The Yankee Group suggests that an open provider model generates more revenue than adding lots of extra services, revenue that Broadweave needs.

So what do you think? If this happens, will it be good for Broadweave, UTOPIA, both, or neither?

FUD Alert: Utah Taxpayers Association Continues to Bend and Cherry-Pick the Truth

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It shouldn’t be any surprise that the Utah “Taxpayers” Association can’t quite bring themselves to stick to facts, instead resorting to the time-tested tools of fear, uncertainty, and doubt to prop up their weak cases. In the July newsletter, the UTA decides once again to lay into UTOPIA and directly address some of my points on defining UTOPIA’s success. Unsurprisingly, they very much missed the mark yet again.

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