News Column

UTOPIA board votes to move forward with Macquarie

July 1, 2014

Benjamin Wood

WEST VALLEY CITY - The UTOPIA board of directors voted Monday to move forward with a proposal to cede control and management of the embattled fiber-optic network to an Australia-based investment group.

The board's decision follows separate city council votes in each of the 11 UTOPIA member cities, which resulted in a 6-5 split on whether to proceed to the second of several milestones established by Macquarie Capital Group.

Wayne Pyle, West Valley city manager and UTOPIA board chairman, said Monday's board vote reflected that division of cities. While the majority of the board voted to proceed to Milestone 2, there is no obligation for dissenting cities to participate in the controversial utility fee model of the Macquarie deal, Pyle said.

"We knew all along that it was likely that not all 11 cities would adopt," he said. "At no time were we contemplating a situation where we would force any city in."

The Utah Telecommunications Open Infrastructure Agency began 12 years ago as a means to bring high-speed Internet, phone and television services to individuals and businesses along the Wasatch Front. But low sign-ups and stalled construction have left the network incomplete, serving a small base of customers and languishing in debt.

Under the Macquarie proposal, the investment group would finish construction of the network and provide basic Internet service to all residents for 30 years in exchange for a monthly utility fee of initially $18 to $20.

Pyle said the participating cities - Brigham City, West Valley City, Layton, Midvale, Perry and Tremonton - account for roughly 60 percent of the total addresses in the UTOPIA service area.

Milestone 2 is expected to be completed in the next three months, he said. During that time, Macquarie will finalize the terms of the proposal, including an updated cost structure based on the number of participating cities.

"We assume that there is enough participation to be able to move forward," Pyle said. "It really is just a question of how are the numbers affected, and I believe they will be affected to some degree. We just don't know what that is."

For those cities that opt out of the Macquarie proposal - which Centerville, Lindon, Murray, Orem and Payson appear poised to do following recent city council votes - Pyle said the status quo of current UTOPIA service will be effectively preserved.

Current customers in opt-out cities can expect a similar level of service and accessibility under Macquarie, Pyle said, but those cities will not benefit from an increased customer base as the network is fully built out.

"It's probably safe to assume that as long as the system is here, whether it's under Macquarie or under the original setup, the services for them will largely remain the same," Pyle said.

Monday's vote does not commit UTOPIA to accepting Macquarie's proposal, he said, but instead allows for cities to proceed with more information. But cities participating in Milestone 2 are also subject to greater exit costs if the deal with Macquarie is ultimately abandoned.

Email: benwood@deseretnews.com

Twitter: bjaminwood


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Source: Deseret News (UT)


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