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Bill Could Kill Utopia Fiber Optic Project

Bill Could Kill Utopia Fiber Optic Project

Posted - Feb. 2, 2004 at 8:07 a.m.



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SALT LAKE CITY (AP) -- Backers of the UTOPIA fiber-optic network project say a bill supported by Qwest and other telecommunications companies is intended to undermine the project being advanced by 19 municipal governments.

SB66, sponsored by Sen. Bill Hickman, R-St. George, would allow telecommunication projects to be funded only through a revenue-stream bond. That would require a vote of the public and would mean much higher interest rates on the bond.

The bill also has the support of the business-backed Utah Taxpayers Association.

Paul Morris, executive director of UTOPIA, said that it is an attempt to kill the project and eliminate competition.

It also backsteps from an agreement made two years ago in the Legislature that allowed cities to build projects they would then wholesale to private companies, he said.

"When it's actually become real, Qwest has decided that they don't want us to do it," Morris said. "They don't want us to have choices on local phone service or extremely fast Internet."

Hickman and Qwest representatives could not be reached for comment, but Sen. Howard Stephenson, president of the taxpayers association, said the bill clarifies that government's role does not include competing with private companies, and protects taxpayers from being exposed to a "very risky venture."

"It's essentially attempting to ensure that government doesn't get into the business of business," he said. "There is no place for government to crowd out the private sector."

UTOPIA -- the Utah Telecommunication Open Infrastructure Agency -- is a quasi-governmental agency created by 18 cities, each pledging a year's worth of sales tax revenue.

The plan is to build the most advanced fiber-optic network int Utah. The $540 million network would provide homes and businesses with data, video and telephone services at 10 times the fastest rate offered currently in Utah's market.

A recent financial study concluded that it was a feasible plan.

Richard Christner, vice president of Dean & Company of Washington, D.C., said, "They are sufficiently attractive and sufficiently profitable models."

However, UTOPIA could spark a rate war with existing broadband providers Qwest and Comcast, which could drive service rates below what UTOPIA can compete with. Another risk is that customers simply may not log on with UTOPIA.

Roger Black, assistant director of UTOPIA, said that for it to break even, one out of every three homes needs to join within a seven-year period.

Opponents fear UTOPIA could drive Qwest and Comcast out of the broadband business in the project's areas.

During a West Valley City Council meeting last week, several Qwest and Comcast employees voiced their opposition to the plan.

Donetta Mitchell, president of U.S. West Retirees, said public officials also need to know that many former telecommunications workers' pensions are still tied to Qwest's existence in Utah.

West Valley City Manager Wayne Pyle said those companies' objection to competing against a tax-funded system is "not an entirely pure position." Pyle said those companies shut out much of their competition in their markets by securing franchise agreements with cities.

Some consumers believe that companies such as Qwest and Comcast have failed to invest in their systems in order to keep up with consumer demands.

"We do need competition, there's no doubt about that," said West Valley resident Terry Worth, noting he has had several negative experiences dealing with Qwest service.

Pete Ashdown, founder and president of the XMission internet service provider, said his company would flourish in UTOPIA's system.

Ashdown said although he is grateful that Qwest, unlike Comcast, allows XMission to compete on its network, he feels his company is at the mercy of Qwest.

"The business plan for UTOPIA is solid ... XMission looks forward to being a participant and putting Utah on the forefront of digital networks worldwide," Ashdown said.

(Copyright 2004 by The Associated Press. All Rights Reserved.)

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