News Column

Australian company pitches UTOPIA future

May 1, 2014

By Tim Gurrister, Standard-Examiner, Ogden, Utah

May 01--LAYTON -- In a scenario likely to be repeated at numerous cities over the next two months, Macquarie Capital Wednesday night trotted out its billion-dollar plan to save UTOPIA.

The ambitious proposal promises to finish in 30 months the decades-delayed "build out" of the fiber-optic network in the 11 Utah cities that own it.

The plan would lay, or string, 1,608 miles of fiber-optic cable to connect 160,000 Utah consumers to the Internet via UTOPIA, which stands for Utah Telecommunications Open Infrastructure Agency. It's expected Macquarie will change the name.

Roughly half of the lines will be strung above ground, the rest buried, the plan says, available in its entirety on the network's website..

The project has been subjected to delays and controversy since its 1990s inception, while the member cities continued pouring millions into the uncompleted network.

Macquarie came forward in December as the expected savior with deep pockets, immediately announcing it was prepared to invest $300 million or more at no cost to the cities.

In a packed city council chamber in Layton, Duncan Ramage, a Macquarie vice president, calmly spent 45 minutes Wednesday night outlining Macquarie's 96-page feasibility report on completing UTOPIA. The Australian company has billions of dollars worth of properties under management, per its vita, in 29 countries.

The UTOPIA proposal was released Tuesday, the same day Macquarie held the first of three meetings with UTOPIA's member cities. Tuesday's meeting was in Orem with another scheduled for Thursday night in West Valley City.

Ramage promised Wednesday night that the fully realized fiber optic network would trigger competitors Comcast and CenturyLink "to cut their rates (charged consumers) and increase their speeds."

Revenues would reach a billion dollars in 30 years, he said, more than enough to pay off the fiber network's debt born by the bonding of the member cities. Member cities are paying off the 25-year notes out of taxes instead of subscriber fees, Brigham City currently to the tune of $430,000 a year, and Layton, $2 million.

UTOPIA agnostics Brigham Mayor Tyler Vincent and City Manager Bruce Leonard asked for specifics on subscribers.

The city recently appointed a task force to evaluate its future with UTOPIA.

Their questions centered on how citizens could "opt out" of membership in UTOPIA, and the treatment of residents currently paying $40 a month for the service in Brigham when new subscriber fees are added in the future.

To be negotiated as part of the Macquarie contract with the cities, and discounts, were the answers, respectively, from Ramage.

Some who have UTOPIA liens on their property tied to connection fees will see those lifted, Ramage said, and the plan expects no more connection fees.

Ramage said cities would control the project in that, "If we don't perfom like we say we will, you kick us out and we lose our investment." The crowd numbered some 75-plus, largely made up of city officials from UTOPIA-owning cities Layton, Brigham City, Tremonton, Perry and Centerville.

Ramage's presentation and the questions that followed made for a highly technical and complex discussion lasting approximately two hours.

Member cities now have 60 days to review the proposal before taking it to respective city councils for a vote. The plan calls for utility fees currently projected at $19-20 a month to be charged subscribers once the projected 30-month build-out is completed.

Perry Mayor Karen Cronin asked how the contracted increases in the monthly utility fee would be plotted and Ramage said they would be tied to the Consumer Price Index, therefore, adjusted for inflation.

He said yes when Cronin asked if that was negotiable.

To questions about the possibility fiber-optics might become obsolete within a few years in the fast-changing information technology world, leaving UTOPIA a multimillion-dollar white elephant, Ramage said "fiber-optics are future-proof."

He then invited to the podium Mike Lee, one of Macquarie's lead technology consultants, to explain further.

Lee assured that fiber-optics will remain valid and that its light-wave transmission technology has been in use in oceanic cables for 50 years or more with no plans to replace the lines.

Ramage said the technology will be "refreshed" throughout the 30-year-term of the coming UTOPIA contract.

Contact reporter Tim Gurrister at 801-625-4238, Follow him on Twitter at @tgurrister


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Source: Standard-Examiner (Ogden, UT)

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