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DSL News
Western Business: Utah plots publicly sponsored digital network
Article #: 9
| Date: | | | Written By: | MARK THIESSEN | | Article: | Eighteen Utah cities are plotting a $470 million government-backed fiber-optic network that promises a superfast pipeline for Internet, telephone and television access, despite complaints that government shouldn't be competing with private business.
Called "Utopia" - or Utah Telecommunication Open Infrastructure Agency - the network would give nearly 725,000 residents Internet access at speeds far beyond what current high-speed customers enjoy nationwide, at a potentially far lower price.
But some large and small telecommunications companies are protesting.
"It's wrong. We don't feel like government should be messing with technical things that the private sector can do and much better," said Nancy Gibbs with the Utah Rural Telecom Association, a group that represents 14 small telephone companies.
Paul Morris, the West Valley City attorney who was tapped to lead Utopia, said the 18 cities are stepping in where the private sector hasn't.
"There's a gap," he said, that leave some Utah residents on the dark side of the digital divide.
"We wanted a network that would pass every address and every business in every city that joins so we wouldn't have the haves and the have-nots, and we wouldn't just cherry pick the rich neighborhoods," he said.
What Utopia is proposing would blow past ordinary connections, from dial-up to T1, with a fiber that can carry digital data a million times faster than copper wire, coaxial cable or wireless systems.
Utopia officials say basic Internet service on the network would likely run far less than what most households now pay for relatively pokey high-speed cable or DSL connections.
But fiber holds more promise than just surfing the Web at breakneck speed. The fiber network could not only bring the Internet into people's homes, it also could offer telephone service and high-definition television, even movies on demand.
There are practical applications, too.
Foremost among them is offering economic development along this new road, promising to be what interstates and waterways did years before. The phone capabilities could allow telemarketing firms to locate in small Utah towns or it could allow people to work from home, attending meetings via teleconference and e-mailing their work back to the job site.
The fiber network could also mean quality-of-life enhancements, Morris said.
A patient could go to a doctor's office in Tremonton to see and talk to a specialist 70 miles to the south in Salt Lake City - all because of real time videoconferencing capabilities offered by the fiber network.
That also opens up distance learning opportunities for those in rural areas.
The network could hold enough space for 15 triple-play providers - Internet, television and telephone, all providing service side-by-side. However he said the more realistic number is two or three. So far, only one national provider is close to signing on, an agreement that Morris said is required to secure financing from bonding companies. Morris wouldn't name the provider.
"We are not anti-incumbent," Morris said of current providers in each town. "But they have a monopoly and this brings competition. We don't apologize for bringing competition."
The network even has room for things that haven't even been invented yet. Morris said they chose a fiber network because it's the most "future proof."
And that's partly why some large companies appear to be taking a pass, at least for now. Utopia's envisioned network, they say, overshoots the market at a large cost to cities which are being asked to pass sales-tax increases to develop the network.
In order to get the best interest rate available on the bonds, it's asking that the 18 cities back a portion of their prorated share of the debt with sales tax.
Utopia will issue about a half billion dollars in bonds to build the network, and the bonds will be paid off by proceeds the providers will pay to be part of the network.
Getting all the cities on board will be no small feat in tax-resistant Utah, where many communities routinely reject school bonds and other basic infrastructure ballot measures.
Even if a few of the cities take a pass, it could put the project in jeopardy. While there's no magic number, Morris said if only 12 to 14 cities agree to back the plan with sales tax, then the project might have to be rethought.
And the timetable is short. All 18 cities will be asked to hold public hearings and vote in January so construction can start in the spring. If things fall into place, Morris expects the fiber network to be fully functional in about three or four years.
If the project ultimately fails, after bonds have been issued, the cities will be liable to pay their portion of what losses aren't covered by the project's insurance.
But right now, companies contend, all the speed a customer needs is available for a reasonable price. And those companies have spent millions rolling out their own networks and services.
"We have invested an enormous amount," said Jerry Fenn, Utah president for Qwest Communications, which provides phone service and Internet access through digital subscriber lines (or DSL) in 14 states. "Why would we want to be to a provider?
"It seems a risky venture for municipalities to build a network when broadband is already available," said Fenn, who has a meeting planned with Utopia officials to seek more information about the plan.
Also nagging at the project is growing criticism of government involvement and the potential for public expense.
"It seems to me to be questionable as to whether government should get involved in a highly technical business that is outside its core competence," said Fenn.
Gibbs was more to the point. "Have you ever seen the government do anything better?"
Morris said the fiber network will not be unlike other services - like roads or airports - local governments now provide its residents.
"Salt Lake built the airport, but doesn't try to fly an airplane," he said.
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