UTOPIA full of promise

UTOPIA could be a technological Utopia, according to an investment consulting firm based in Washington, D.C.

But the proposed Utah Telecommunication Open Infrastructure Agency (UTOPIA) could also just be government ganging up on the private sector, or the city-supported computer network could be a fairly sound but a bit risky investment that could yield great benefits to Utah's economy.

What UTOPIA is now 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 — and expansive — fiber-optic network Utah has ever seen. The $540 million network would provide homes and businesses with data, video and telephone services at a searing 100 megabits per second or 10 times the fastest rate offered currently in Utah's market.

Such speeds would enable households to stream television programming off the Internet, allow students in rural areas to take more advanced Internet courses and allow doctors to conduct virtual reality exercises regardless of distance.

UTOPIA officials say with city backing they will be able to get an interest rate as low as 6 percent. For example, a Salt Lake City year's worth of sales tax revenue is $7.1 million. Although Salt Lake City keeps its $7.1 million, it must commit to holding that amount for the life of the loan. West Valley City has pledged a $2.8 million backstop.

If the expectation that people are always looking for more, better, faster information isn't realized, or if UTOPIA fails to deliver on its service, cities like Salt Lake and West Valley may lose that money to pay for operation costs. On the up side, cities will only be held financially responsible up to the backstop amount if UTOPIA goes under.

In theory, however, cities won't have to spend a dime if UTOPIA succeeds, said UTOPIA assistant director Roger Black. If it fails, insurance on the bond will kick in and the lenders would take control of the network to regain as much of their money as they can.

"I believe that the project has the potential to dramatically transform, in a positive way, how we relate to each other," Black said.

Black and other UTOPIA officials point to the results of a recent financial study of the proposed network.

"Our view on this is that this is a feasible plan," Richard Christner, vice president of Dean & Company of Washington, D.C., said. "They are sufficiently attractive and sufficiently profitable models."

Risks exist