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Australian investment group steps in to complete UTOPIA

Published: Wednesday, April 30 2014 5:50 p.m. MDT

Technicians Josh Kester, front left, and Chris Adams, back left, work Wednesday, Aug. 1, 2012 in the Network Operations Center of Utopia.

Scott G Winterton, Deseret News

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SALT LAKE CITY — After more than a decade, the original vision for Utah’s fiber-optic network project UTOPIA may finally be realized, thanks to an Australian investment group.

Sydney-based Macquarie Capital Group wants to finish building the network that has been plagued by inconsistent financing and construction.

The idea for the Utah Telecommunications Open Infrastructure Agency began 12 years ago to bring high Internet speeds — as fast as 1 gigabit per second — to individuals and businesses.

The 11 cities that originally signed on with UTOPIA and now will decide whether to opt in to Macquarie's proposal are Brigham City, Centerville, Layton, Lindon, Midvale, Murray, Orem, Payson, Perry, Tremonton and West Valley City.

“One of the big potential advantages to this proposal is it would build up a whole system, and the system would finally have the scale of connections, and therefore customers, that would be able to fulfill the vision that it was originally started with,” said Wayne Pyle, West Valley city manager and chairman of the UTOPIA board of trustees.

Macquarie officials are meeting this week with city councils in the 11 UTOPIA member cities to report on what work has been done, what it would take to finish and operate the project, and how it would be financed. Representatives from Macquarie weren't able to be interviewed Wednesday because of Australian regulations surrounding earnings announcements.

The 11 cities spanning from Tremonton to Payson have 155,000 addresses that would all be connected by the network, which is still slowly being built. Only about 16,000 of those addresses are connected now, and about 11,000 are current customers.

“Through this public-private partnership, where we would have access to a private builder and operator, and through (Macquarie), their financing, you’d be able to overcome that financing hurdle and build the whole network in a very small time period,” Pyle said.

The cities have until June 27 to decide if they will opt in and continue exploring a partnership with Macquarie, which seems like a good option, said Steven Downs, assistant to the Orem city manager.

Macquarie gave a "solid" proposal, backed with years of experience and expertise, for the large infrastructure project, Downs said.

All city residents would have access to the network, which would include a basic level of Internet service with speeds of 3 megabits per second. Downs said about 30 percent to 50 percent of customers would subscribe to higher levels of service, and a majority of that revenue would go to the cities to help pay off the existing $185 million of debt incurred for the UTOPIA network.

"The citizenry of Orem can benefit directly from the revenue that’s generated by the network," Downs said.

Internet service providers would keep the rest of the revenue. Some large players in the Internet industry are "very interested" in competing on the network if it is built, according to Downs. He said Macquarie has a nondisclosure agreement and isn't releasing the specific providers.

Macquarie's proposal estimates it will take 30 months to build the system, and then the company would operate it for 30 years. Ultimately, the cities would own the network.

The network would be an open system, unlike Google Fiber's closed system in Provo. It would be open to other service providers, including the 15 users that provide service on the part of the network that is already built.

The investment firm's proposal to the cities includes a utility fee, estimated to be $18 to $20, for opted-in city residents — even if they don't want the service. Downs said the utility fee would replace existing Internet bills for many customers.

"What people are paying for isn’t the service, although they’ll be provided a service, but what they’re paying for is a utility fee that connects them to the network. Now within that utility fee, they will get a basic Internet service for free," Pyle said.

Regardless of the specific provider, costs of Internet and phone service are likely to decrease when they come through the UTOPIA network, Pyle said. Service providers won't charge as much, he said, because they won't have to build or operate systems and will pay only a minimal transport fee to ride the network.

Downs said some city council members feel like residents need more of a say before additional utilities are charged, while others feel they've been chosen to represent their city and make good decisions after studying the issue.

Downs asked residents to reach out to their city council members or to attend city council meetings. He also said Orem is planning some town hall meetings.

"We would just encourage people on both sides of the fence to come out," Downs said. "We want to know how people feel about it. … We want their input."

Email: madbrown@deseretnews.com

Twitter: Madeleine6

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