From Deseret News archives:

Gambling on UTOPIA

Published: Wednesday, April 2, 2008 12:59 a.m. MDT
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Wasatch Front residents are getting used to this refrain from government-backed telecom providers: Subscriptions are below projections. More money is needed.

It's happened with iProvo, the Provo city owned fiber-optic network that has had to borrow from other city departments and may be on the verge of being sold. It's happening now with UTOPIA, the fiber-optic system that is supposed to link 11 cities, providing a fast-paced delivery system any Internet service provider could pay to use.

UTOPIA's 11 cities are set to decide soon whether to extend their commitments to this system. While UTOPIA has not used any public money for its construction, it has borrowed money using pledges from those cities — pledges that taxes would be used to pay back the debt should the system default.

Those cities already pledged $202 million to guarantee 20-year bonds. Now UTOPIA wants more money, and it wants to extend the life of the bonds to 33 years.

Before they decide, the leaders in these cities need to take two things into account. The first is that, while UTOPIA claims it is merely providing infrastructure, it is in fact competing with the private sector in a volatile and fast-changing industry. The fiber-optic network under construction may be useful today, but it's doubtful any private business would gamble on it remaining state-of-the-art 33 years from now, let alone 20 years.

That's an easy concept to understand. Just think back 20 years and ask yourself whether folks back then could predict the technology of today. UTOPIA is competing against private companies that are using their own infrastructure to deliver high-speed Internet along the Wasatch Front. Typically, those companies won't carry debt for more than a few short years. That's because they're risking their own funds, and stockholders' money, rather than taxes.

The second consideration is the economy. No one can predict accurately how long and deep the current slowdown will reach. This doesn't seem like a good time to pledge taxpayer funds for 33 years on a risky venture — one that already has fallen below its own projections. Even if it is only a pledge, it inhibits a city's ability to borrow money for other, legitimate needs. The same tax funds cannot be used as collateral twice.

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