Critics question UTOPIA proposal

Corporate opponents of UTOPIA seriously question the motives behind an 11th-hour offer to get Salt Lake City to sign on with the proposed government-backed fiber-optic network.

Qwest and Comcast say Wexford Capital LLC, which is already heavily invested in the company that would supply equipment and run the network, is attempting to shore up its investment by doing everything it can to induce Salt Lake City to join.

The key element in the offer is a greatly reduced level of financial risk to Salt Lake taxpayers. Jerry Fenn, Qwest's Utah president, called the offer a "desperate attempt" to keep Salt Lake City. It is "the linchpin to the UTOPIA network" because it needs the city's customer base to make the plan work, Fenn said.

Comcast spokesman Steve Probert said Wexford's offer still does not change the fact that UTOPIA would pit his company and Qwest against government entities that regulate their franchise agreements.

Probert said many cities have franchise agreements with both companies that govern where they can put their lines. Probert said that fact could be used against Comcast and Qwest to limit competition against UTOPIA.

While the deal is still being fine-tuned, the company has verbally offered to cover 75 percent of Salt Lake City's annual tax pledge of $4.1 million over the next 10 years, although the city will be on the hook for that payment over a 17-year period.

The plan would cut the city's potential costs to $7.7 million from $28.7 million in the first 10 years. In exchange, Wexford is asking for 75 percent of the city's share of profits, if UTOPIA succeeds.

At least three City Council members have said the offer won't sway them to vote for UTOPIA. The council is to vote Tuesday after a public hearing.

UTOPIA is a $544 million project supported by 17 cities to build the most extensive fiber-optic data network seen in Utah. Planners say it would offer data speeds up to 100 times faster than current DSL service available — enough to offer telephone, television and Internet service in one connection.

The network would be funded through tax-dollar-backed bonds. Should UTOPIA fail, each city could be on the hook for millions in tax revenue to cover losses. On the up side, supporters say Utah stands to gain a lot in economic and educational benefits.

UTOPIA has hired Dynamic City to construct and manage the network; Wexford Capital is a heavy investor in Dynamic City.

Wexford Capital principal and general counsel Arthur Amron said there is no connection between his company's offer to Salt Lake City and its investment in Dynamic City. Amron said their decision to offer the city a deal stems from their confidence that UTOPIA will be a success. He said his company will make no profit, in fact lose millions, if UTOPIA fails.

UTOPIA director Paul Morris said the fact that a private venture capital company has expressed an interest in UTOPIA counters opponents' claims that it is a risky investment.

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