What’s the Latest on UTOPIA?
Since the inception of UTOPIA nearly a decade ago, I have managed XMission’s services on the 11 city municipal network. As such, I have earned a unique insider persective and understanding of not only UTOPIA’s current situation but also its long term challenges and successes. In recent months, I have attended a figurative magnitude of city council meetings, private presentations, public inquiry sessions and open houses in which the proposal by Macquarie Capital has been discussed.
At these events, a number of thoughtful questions inevitably arise again and again. I thought I would take a few minutes to address some of the ones I hear repeatedly asked by concerned citizens and city leaders, while bringing everyone up to speed on the current status of the Macquarie proposal and its traction with the member cities.
What is the status of UTOPIA today? Is it operating?
UTOPIA is fully operational today and provides service to thousands of subscribers. However, it is not profitable, and the city agencies are currently subsidizing operations to keep it afloat. The newest bonding entity known as the Utah Infrastructure Agency (UIA) has proved successful in adding new last mile connections in many areas. Despite the fact that it is covering its own costs, however, the political will to expand UIA no longer exists. Past expansion campaigns are still under water. UTOPIA itself is operating on a shoestring budget, and the network is stagnant at one third of its intended capacity.
Who is UTOPIA? Can we fire them?
Because UTOPIA is actually the cites themselves, no, they cannot be fired. This is also a common misunderstanding. UTOPIA is simply a municipal interlocal agreement between the member cities. UTOPIA is not a separate entity that can be removed.
Why is UTOPIA such a mess?
This is a complicated matter. Many people accuse UTOPIA of simply being mismanaged. Maybe there is truth to that claim. I would suggest that this is an oversimplified conclusion drawn by the opposition that fails to consider the other significant hurdles that were placed before UTOPIA following its launch: crippling anti-UTOPIA legislation, after-the-fact loss of a massive federal government stimulus grant, well-funded corporate opposition, and a breadth of legal obstruction from incumbents that surpassed even the most conservative expectations. In truth, UTOPIA wasn’t its own worst enemy as so many suggest. It has suffered a withering series of political attacks since day one, mostly from opponents that would prefer to see it go lights out, regardless of the cost to the member cities and their citizens.
My city agreed to move to Milestone 2. What exactly is that?
It is common practice for major municipal projects to be planned in a series of closed, sequential milestone proposals. Each member city of UTOPIA is being asked to vote on each milestone. So far, 6 of the 11 cities have agreed to progress into the details of Milestone 2, in which the rest of the proposal will largely flesh out. Participation in each milestone carries a price to the cities, but only if they choose not to accept the final proposal. This is essentially a good faith reimbursement campaign for the work Macquarie has done for those cities and for the data they generate that will likely be put to use elsewhere by those cities at a later date.
Milestone 2 is expected to be presented to the cities in September. There will be a total of four milestones before the project launches, if successful.
Why are you calling basic service “free” when I pay a $20/month utility fee?
This is one of the most common misunderstandings about the Macquarie proposal (see also: http://url.xmission.com/jbij). Macquarie is not a service provider. They will not be a service provider. The role of Macquarie in this endeavor is essentially one of financing and organization. Their job, so to speak, is to put a fiber connection on the outside of every residence and business within the city footprints. But this is just a fiber line. What Macquarie delivers to the citizens isn’t a service, it’s the underlying infrastructure. (Think of it as the phone line without a dial tone, or a coax cable with no active cable TV signal.) It is then up to the service providers like XMission to provide you a working Internet connection. We have agreed to provide free basic service on that UTOPIA connection, which means simply that you will not pay us for it. (And your utility fee will not decrease if you choose not to take that service.) We will do this at our own expense, in the expectation that enough of you will want to upgrade to paid services. But the basic service will be a free Internet connection from XMission, or another service provider of your choice. XMission will not receive a penny of the utility fee assessed to each address.
Why is Macquarie the only proposal being considered? Shouldn’t there be an RFP?
The short answer is that UTOPIA has always been for sale, but no one with the actual abilities to own or operate it as designed has been interested. But further, Macquarie is not the only offer being considered right now. It is, however, by the judgment of most of the council members and the UTOPIA board members that I have spoken with, the only reasonable offer on the table.
If Macquarie is so great, why have half the cities already refused?
Another short answer: the utility fee. I have discussed the question with city leaders directly and sat in on the meetings, and the feeling is almost universal—they do not have the political will to follow through with a utility fee, nor interest in the multiple alternatives at their discretion to absorb the fee to other means. And sadly, the “opt-out” clause that is under development that should release citizens unable to pay the fee is not enough of a solution for them. Behind closed doors, they tell me that the Macquarie option is clearly the best one available and possibly the only reasonable, workable option they will receive. Instead, they find it easier to stay the course and hope something better comes along down the road.
My city voted against. What happens if the Macquarie deal passes in the other cities?
We will have a better idea in future milestones. The current expectation is that cities that have already opted out will continue to provide UTOPIA access only to existing users via Macquarie management, but will see no further development and get no portion of the utility fees (note: these shared revenues may ultimately subsidize the Macquarie cities’ bond burden). Those cities will continue to pay off their bond commitments, and presumably continue to subsidize operations of the UTOPIA agency as they are today.
Who is Macquarie, anyway?
Anyone who loves free enterprise will love Macquarie Capital:
30 Years is an eternity in tech. Isn’t it silly to bet on one technology for that long?
XMission President Pete Ashdown addressed this well in his own blog: