[1st-mile-nm] Utah Fiber Updates

[Richard Lowenberg]

Following are two news stories, focusing largely on the UTOPIA and iProvo
projects in Utah.   Like many news reports, they do not provide the 'whole
story'.   The 1st-Mile email list has provided previous update reports on
UTOPIA, and has links on the 1st-Mile web site Resource Links page, to the
project, as well as to the Baller Herbst law firm, cited in the articles.
iProvo information can be found at: http://provo.org/util.telcom_main.html
Stay tuned for more.
rl
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>From MuniWireless
www.muniwireless.com/article/articleview/6460/1/23/

Is fiber the solution for public broadband build-outs?

Posted by Carol Ellison at 6:03 AM Today

Now that the heady notion of free Wi-Fi is disappearing from municipal
agendas, the merits of publicly owned fiber networks are bubbling back
onto the scene. St. Paul, Minnesota, hopes to have fiber in its future.
But Utah, where two ambitious fiber projects are already underway,
believers in muni broadband are fighting to preserve the massive
investment the state has already made.

Knowing that the cost of a fiber-to-the-home (FTTH) network could run as
high as $200 million, the St. Paul city council nevertheless approved a
proposal to seek partners to build a city-owned fiber optic cable network.
It's a heartening example of the kind of foresight that Tim Wu argues is
necessary if governments are to preserve and expand critical
infrastructures in the U.S.

The council's move does not make the network a reality, however. This will
be a massive undertaking and the city cannot fund it alone. According to a
story in the St. Paul Pioneer Press, the city is seeking assistance from
the local school system, the county and the state.

Utah is at a crossroads and could end up as an example of what happens
when governments allow themselves to be led by private interests that
appeal to anti-tax groups to quash necessary, but expensive, investments
in broadband infrastructures. The state is presently conducting hearings
that could result in the abandonment of two ambitious fiber projects
there.

At risk are Utah's municipal broadband built-outs,iProvo and UTOPIA. Both
are behind schedule and are not meeting their projected targets for
subscribers. This week, Jim Baller, senior principal of the Baller-Herbst
Law Group which represents munis on broadband and telecommunications
issues, defended iProvo and UTOPIA, saying "Countries that have access to
broadband, particularly in the higher speeds, are going to be successful
and the ones who fall behind may have difficulty catching up for years or
even decades."

UTOPIA and iProvo have heavy opposition. Qwest, the incumbent telco in
Utah, has fought both projects from the start. The Reason Foundation and
the Heartland Institute, organizations that have known financial ties to
the telcos, have attacked both projects in reports and testimony to the
Utah legislature.

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And, from the Deseret Morning News:

Lawmakers hear broadband praise

By Jared Page
Contributing: Tad Walch
Published: September 27, 2007

The United States needs municipal-broadband ventures like UTOPIA and
iProvo, and it's much too soon to consider pulling the plug on them, an
attorney who represents local governments in such matters told state
legislators Wednesday.

Jim Baller, senior principal of the Washington, D.C.-based Baller Herbst
Law Group, touted the importance of viewing fiber-optic networks as
necessary infrastructure for communities to meet the high-tech demands of
residents and businesses.

"We are in a broadband world," Baller told the Government Competition and
Privatization Subcommittee. "Much of what we do going forward is going to
move toward a broadband platform. ... Countries that have access to
broadband, particularly in the higher speeds, are going to be successful,
and the ones who fall behind may have difficulty catching up for years or
even decades."

Baller's comments come less than a month after Steven Titch of the
Heartland Institute, a Chicago-based nonprofit research and education
organization, addressed the committee. Titch asserted that allowing
government entities to become key players in broadband is a bad idea
because it puts the public and private sectors in competition.

Titch argued that municipal-broadband systems fail because governments
underestimate costs and overinflate the number of customers they will
attract.

That's been the case with the Utah Telecommunication Open Infrastructure
Agency, a consortium of Utah cities creating a fiber-optic network to
every business and household in the 14 member cities.

UTOPIA originally projected 2006 as its operation break-even period but
has moved that back to 2008. Revenue was projected to start coming in by
2009; now UTOPIA officials are saying 2012, according to Leif G. Elder,
legislative policy analyst for the subcommittee.

Provo's fiber-optic network iProvo has had its financial problems, too.
The network has not generated enough income to completely cover the
payments on the $40 million bonds backed by sales-tax revenue.

To make the payments, the Provo City Council has loaned $3 million to
iProvo over the past two years. This year, instead of a loan, the council
authorized $1.2 million from an expected sales-tax surplus to cover
another expected shortfall in the iProvo budget.

Despite UTOPIA and iProvo falling short of early projections, Baller told
lawmakers there's "no credible evidence" that suggests municipal broadband
systems don't work.

"It's much too early in the life cycle to judge," he said. "In my view,
UTOPIA and iProvo are tremendous assets to Utah and for America as a
whole."

David Shaw, general counsel for UTOPIA, told legislators the agency has
experienced "externalities" since the project began - forces outside of
UTOPIA's control that have caused the business plan to "shift by
approximately two to three years."

Shaw cited the federal lawsuit filed against UTOPIA by Qwest in June 2005
that accused the agency of creating unfair competition because UTOPIA
contractors can sell communications services at below-market prices.

UTOPIA also had trouble getting pole-attachment agreements from owners to
add wires and equipment to power poles, and a federal loan for the project
was delayed, he said.

Royce Van Tassell, vice president of the Utah Taxpayers Association, said
he doesn't buy those excuses.

"(UTOPIA) suggested a rather artful term, 'externalities,' which sounded
suspiciously like 'competition happened,'" Van Tassell said. "This is a
competitive environment.... If their business model was based on
assumptions so lowly that they didn't account for the fact that
competitors would respond... it's hard for me to have a great deal of
confidence in their suggestion that they're just two years behind."


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Richard Lowenberg
P.O.Box 8001, Santa Fe, NM 87504
505-989-9110,  505-603-5200 cell

New Mexico Broadband Initiative
www.1st-mile.com/newmexico
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