Orem bows out of Macquarie UTOPIA proposal

City joins 4 others in rejecting plan to make Internet service a utility

Published: Thursday, June 26 2014 10:30 p.m. MDT

Updated: Thursday, June 26 2014 10:39 p.m. MDT

City leaders in Orem rejected a proposal by Macquarie Capital Group to offer high speed Internet service as a mandatory utility.

Scott G Winterton, Deseret News

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OREM — Orem on Thursday became the fifth UTOPIA member city to reject a controversial proposal to offer high-speed Internet connectivity as a mandatory utility.

Members of the Orem City Council voted 6-1 to reject an offer by Australia-based Macquarie Capital Group, which would see the firm assume management of the embattled UTOPIA fiber optic network for 30 years in exchange for a monthly fee of initially $18 to $20 levied against all residents.

City leaders had until June 27 to either reject Macquarie's proposal or agree to proceed to the second of several milestones, which would allow for greater exploration but would also require cities to incur exit costs if the deal is ultimately abandoned.

Some residents and individual members of the council suggested the city continue to Milestone 2 in order to make a more informed decision later on and maintain a presence in negotiations. But opponents argued that if the utility fee structure was unpalatable at this stage, there was little reason to move forward and subject the taxpayers to additional obligations.

"I’ve always felt I needed to be more careful with other people's money than I am with my own," Councilman Tom Macdonald said. "A Macquarie representative told us if we cannot get our heads around the utility fee we should not vote for Milestone 2."

Of the 11 UTOPIA member cities, city councils in Brigham City, Tremonton, Layton, Midvale and West Valley City elected to move forward to Milestone 2, while Orem joins Centerville, Lindon, Murray and Payson in rejecting the Macquarie offer.

As of press time Thursday, a vote had yet to be reached in Perry, Box Elder County.

The Utah Telecommunications Open Infrastructure Agency was originally envisioned as a multi-city partnership to provide ubiquitous high-speed Internet, phone and television services along the Wasatch Front. But after more than a decade since the creation of UTOPIA, low sign-ups and stalled construction have left the network incomplete, serving a small base of customers and languishing in debt.

As in other cities that rejected the proposal, the debate in Orem centered on a reticence to tie taxpayers to a 30-year reliance on fiber service in a rapidly evolving technology market and the opposition to forcing homeowners to pay for a service they may or may not use.

Orem resident David Hale said that even if the network was completed and a utility fee imposed, he would refuse to use UTOPIA services on moral grounds.

"It is stealing, it is legalized plunder," he said. "The proper role of government does not include Internet infrastructure."

But other residents argued that residents were already forced to pay for the incomplete network in the form of city tax revenue that is used to pay down bonds and operating shortfalls.

"I’m not allowed to sign up or benefit from the network, yet my tax dollars continue to pay for UTOPIA debt," Sam Lentz said.

Curtis Wood compared the fiber optic network to early Internet technologies that he purchased in the early 1990s. He said that today, a little more than 20 years later, that technology is obsolete to the point of being forgotten and there is no guarantee that fiber optic Internet will remain on the cutting edge of the industry through the 30-year commitment with Macquarie.

"To sit there and say that what they’re offering is something that is timeless is really a poor argument," he said. "It’s not. It’s a bunch of wires. We’re going to be able to do things over the airways."

The network was frequently described as the city infrastructure of the future during the meeting, with speakers comparing a fiber optic network to roads, indoor plumbing and electricity.

Victor Villa, executive director at Utah Open Source, said that in many countries the Internet is already viewed as a necessary utility and forward thinking leaders are investing in fiber optic development.

"We depend on technology as we depend on sewage," he said. "It’s true that we can go dig our own holes but most of us would rather not."

Councilwoman Margaret Black, who cast the sole vote against abandoning the Macquarie plan, said she had gained "several pounds from stress eating" during the ongoing UTOPIA debate. She suggested that the city move forward to Milestone 2, to keep options open for the city and to collect more information.

"I believe it’s a fairness issue that the entire city should have access to the infrastructure when the entire city must make these (debt) payments," she said.

Councilman Mark Seastrand also expressed some interest in looking for ways to make the utility fee palatable, such as exceptions for families in poverty, but he ultimately joined with his colleagues in rejecting Milestone 2.

"I am committed to finding a solution that can be supported conceptually and legally," he said.

The initial terms of the Macquarie proposal were made under the assumption that all 11 UTOPIA member cities would participate in the partnership. With the exit of roughly half of the member cities, it is unclear what changes, if any, will be necessary to maintain viability of the partnership.

Email: benwood@deseretnews.com, Twitter: bjaminwood

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