Cities create high-speed UTOPIA

Utah Telecommunications Open Infrastructure Agency

By June, a consortium of 17 municipalities in Utah is hoping to break ground

for a high-speed fiber network and attract competitive service providers

to serve more than a half million people in a six-county region.

The Utah Telecommunications Open Infrastructure Agency, or UTOPIA, was

formed in April 2002 after the state legislature enacted a law the previous

year permitting municipalities to sell services on a wholesale level for

economic development reasons.

"It's a steering by our legislators to say, 'Cities if you want to be

involved in this, do it at the wholesale level," said Paul Morris, the group's

executive director and the city attorney for West Valley City, a participating

member. "Promote the private sector. Let the private sector come and compete

and ride on your system, but don't compete directly."

He likened the proposed network — which could cost $400 million or

more although a full feasibility study isn't completed yet — to the government

building a transportation infrastructure.

"We let UPS and Federal Express battle it out to see who can deliver

the packages, but the government doesn't deliver the packages," he said.

"But we require all the players on the street to meet certain rules and

then pay their gas taxes and registration fees, and that's used to fix the

potholes."

Morris said several participating cities have adequate services but

want to enhance them, while others are inadequately served. Banding together

makes sense to get economies of sale and clout with potential service providers.

"We've got 170,000 potential residential [household] subscribers and

about 20,000 business providers," he said, adding that the figure includes

local governments, schools and libraries. "We believe we've achieved critical

mass of size. In fact I've been told that our proposed fiber business build

is the largest in the United States and one of the largest in the world."

Provo-based DynamicCity MetroNet Advisors has an April deadline for

conducting a comprehensive feasibility assessment. It is mapping where the

fiber will be placed, calculating each city's approximate cost based on

geography and subscribers, developing wholesale cost models and overseeing

residential and business surveys, Morris said. He added that more cities

have expressed interest and will likely be admitted this summer, potentially

doubling the membership.

And while the sluggish economy could be seen as a hindrance, Morris

said it has actually helped the project.

"When you look at the vendors, their pricing has just dropped because

they are hungry," he said. "We're getting incredible pricing for the equipment,

the electronics, the fiber, all the things we need. Because the economy's

down, interest rates are down, so that's going to help us in our financing.

"And because they don't just have a free flow of cash in the telecom

world, we have companies that are very interested because they don't have

the capital in riding on somebody else's network. You take that all together

and our timing actually is pretty darn good."

Construction and maintenance of the network would be outsourced, creating

jobs in the area.

It appears that more municipalities are considering developing their

own networks rather than waiting for the private sector. In Oakland, Mich.,

an upscale suburb of Detroit, the county built a network and is providing

free Internet service to its 61 government entities. Last year, Virginia

passed a law allowing its municipalities to enter the telecom business similar

to the way Utah is doing it.

"As far as municipal involvement in this, the genie is out of the bottle

in my opinion," Morris said. "Municipalities across the country are either

going to do the retail or the wholesale, but they're going to do something.

And they're not satisfied to just sit and wait when an incumbent or some

private sector decides that they're big enough and [it's] worth their while

to come in to build the networks."