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UTOPIA reduces monthly cost to customers by 78 percent

Published: Thursday, Aug. 27 2015 6:23 p.m. MDT

Network Operations Center Technicians work in the NOC, Network Operations Center at Utopia, a fiber optic company Thursday, Oct. 20, 2011. (Scott G Winterton, Deseret News) Network Operations Center Technicians work in the NOC, Network Operations Center at Utopia, a fiber optic company Thursday, Oct. 20, 2011. (Scott G Winterton, Deseret News)

SALT LAKE CITY — Subscribers of the Utah Telecommunication Open Infrastructure Agency, more commonly known as UTOPIA, will be getting a lot better connectivity for a lot less money under a new pricing structure.

On Monday, UTOPIA — the open-access, fiber-optic network formed by a group of Utah cities to provide advanced communications infrastructure — announced a 78 percent price reduction.

Seven Utah-based Internet service providers on the UTOPIA network are offering 1-gigabit service for as low as $64.95 per month, down drastically from the launch price of $299 in June 2012.

In addition to the exceptional speeds, residential subscribers on the network will also be able to choose their provider based on the services and pricing that best meets their individual needs, explained Gary Jones, UTOPIA chief operating officer.

“More residents in Utah have access and the ability to connect to the digital world at the speed of light than anywhere else in the country, and the prices and services being offered by our ISPs make it affordable for many more customers,” Jones said. “This new price is … not much more than most phone and cable companies charge for their basic 8 megabits per second service.”

UTOPIA customers get speeds that are more than 100 times faster, he said.

Currently, UTOPIA customers can choose from Beehive Broadband, Brigham.net, InfoWest, SumoFiber, Veracity Networks, WebWave and XMission, depending upon availability in their area, Jones said.

“Gigabit speeds are quickly becoming a necessity for residential users,” said Drew Peterson, CEO of Veracity Networks. “With so many connected devices in every home, the average speed of 8 megabits just won’t get the job done anymore. We’re excited to bring gigabit speeds to more of our subscribers.”

Ultra high-speed broadband connections are fast becoming the standard for Internet communications such as streaming video, social media, telecommuting, distance learning, video conferencing and voice over Internet protocol, Jones explained.

UTOPIA’s capacity makes everything done on the Internet even faster, including uploading and downloading photos, music and video, or working from home with greater telecommuting and data transfer capabilities, he said.

"As the Internet becomes an essential conduit for work, school and entertainment, gigabit availability is essential,” said Pete Ashdown, CEO of XMission. “Only fiber allows this kind of bandwidth and speed."

In addition to the monthly provider fee, UTOPIA subscribers pay an infrastructure fee for the fiber connection.

Launched more than a decade ago, UTOPIA was initially conceived to build infrastructure for a fiber-optic network for residential consumers.

Plagued by cost overruns and controversy since its inception, UTOPIA was formed in 2002 with a coalition of cities that planned to build the broadband network in three years, with projections that the agency would be making money in five years, according to an audit conducted by the Office of the Utah Legislative Auditor General at the request of state lawmakers.

Initially, the plan was to build the network in three phases — making the network available to 52,000 residents by 2004, 115,000 by 2006 and 141,000 addresses within the 11-member cities by 2007. The member cities are Brigham City, Centerville, Layton, Lindon, Midvale, Murray, Orem, Payson, Perry, Tremonton and West Valley City.

What was seen as a conservative subscription rate of 35 percent estimated UTOPIA would have 49,000 subscribers by 2007. As of April 2012, UTOPIA was available to 58,000 residents, with just 9,300 subscribers. Jones said today the agency has more than 11,000 subscribers.

UTOPIA member cities collectively continue to make annual payments of nearly $13 million for debt service on the bonds issued to fund the network’s development. The cities pledged a portion of their sales tax revenues as security for the bonds, the audit stated.

UTOPIA spent nearly all of its $185 million in bond proceeds, though only 59 percent of that has gone toward building infrastructure for the network, the audit found. Since then, the agency has added approximately $40 million in new debt, according to the audit.

Released in August 2012, the audit blasted the agency for poor construction planning, costly mismanagement and unwise use of bond funds.

"Slow progress in building the network and a general lack of subscribers have forced UTOPIA to use a large portion of its bond proceeds to cover operating deficits and debt service costs," the audit stated. "The use of debt to cover the cost of operations and debt service is symptomatic of an organization facing serious financial challenges."

In addition to identifying reasons for UTOPIA's financial challenges, the audit makes several recommendations to strengthen the agency's oversight and hold its staff and business partners accountable for results.

Jones said the agency is now covering all of its new debt, though its monthly operational expenses are still falling about $250,000 short.

“The $40 million is being completely covered,” he said. “We hope at some point to start making payments out of revenues directly toward the initial $185 million.”

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