The debate over whether Internet broadband networks should be left to private enterprise or treated as a public utility is far from dead in the United States, but it is largely taking place on the margins, between interest groups or people connected to one side or the other. In the vast middle, the question is largely settled. Most Americans seem quite satisfied with the service they are getting, and most of them are getting it through private enterprise.
The consortium in Utah known as UTOPIA, for the Utah Telecommunication Open Infrastructure Agency, is an exception. The 11 municipalities that comprise its membership have committed large amounts of sales tax capacity to building a fiber-optics network that is supposed to act as a public utility of sorts. So far, the experiment has done poorly. Member cities have been forced to give tax money to keep the network going, and some have had to raise taxes in part to cover the cost. Subscriptions have remained well below initial expectations, and a recent legislative audit found that the network was fraught with managerial problems and had to use bond proceeds to fund ongoing operations. That has led to a bill in this year's legislative session, SB172, that would make such a thing illegal.
We're not surprised, then, that two of the member cities, Murray and Tremonton, recently voted to reject requests by UTOPIA for even more money to fund operations. In Murray's case, the request was for $168,000, and it was rejected by a 4-1 vote of the City Council.
UTOPIA's managers say they are turning things around and that the request was for a temporary bridge until the network becomes self-sufficient. While we all should hope that is true — the member cities have no easy way to remove themselves from their financial obligations to UTOPIA — Murray and Tremonton made the right decision. The rest of the member cities should draw a similar line. There must be a limit to the taxes spent to help UTOPIA succeed.
The consortium was formed as a repudiation of the private marketplace, which was believed (contrary to the laws of supply and demand and normal competitive impulses) to be failing Utahns. But a recent report, using 2010 figures, found Utah leading the nation in broadband access with 80 percent of households having such a service. While UTOPIA accounts for some of that, its subscription base of about 10,000 is a small portion.12 comments on this story
Meanwhile, a new report by the Information Technology & Innovation Foundation found that Americans overall are pleased with their access to high-speed broadband service. When residential and commercial connections are combined, the nation's average data rate was about 29.6 mps during the third quarter of 2012, the report said. That ranks eighth fastest in the world, In addition, the nation was found to rank third in terms of wired intermodal competition, with 89 percent of Americans having their choice from among at least five broadband providers, and 85 percent having a choice among two or more wireline broadband providers.
In light of that kind of competition and access, it's difficult to argue that the private sector is short-changing the public. Private enterprise is meeting market demands, and doing so by putting its own money at risk.
We agree with Murray City Councilman Dave Nicponski, who said after voting against UTOPIA's request that the city needs to spend its money in other places. Murray and other member cities may not be able to withdraw from their pledges, but they can draw the line on giving more.