There can be UTOPIA without Salt Lake City — at least, according to UTOPIA officials.
In its first meeting since the Salt Lake City Council voted in April not to commit tax dollars to the planned fiber-optic network, representatives from the remaining 11 member cities of the Utah Telecommunication Open Infrastructure Agency voted to take the next step toward closing a deal to bond for the network.
Although there was some doubt whether UTOPIA would thrive without Utah's capital city, it is now clear that it can, said UTOPIA director Paul Morris.
With an atrophied customer base and a network that shrank from $540 million to $340 million, Morris had said earlier that further study was needed.
On Friday, Morris presented to the UTOPIA board of directors the findings of a new analysis of UTOPIA's business model using the remaining 11 cities. According to the Dean & Co. study, which was commissioned by UTOPIA, although the group acknowledges that with a smaller customer base there is an increase in risk, the business plan is still "robust."
Although there was some initial concern that cities may have to put up more sales tax revenue as collateral for bond funding, Morris said Friday that their business model does not require any additional sales tax pledge than what city councils have already voted on.
"We've arrived at this day because a lot of people have been committed to this cause," said Murray Mayor Dan Snarr, also chairman of the UTOPIA board, who added UTOPIA's expected success will allow participating cities to be "vindicated" in the eyes of opponents, such as Qwest and Comcast.
The board, which also includes several representatives from cities who did not vote to back bonds with sales tax dollars, voted unanimously to take UTOPIA's financial plan to their respective councils. Non-pledging cities will be asked to vote on an interlocal agreement, while pledging cities will need to vote on the interlocal agreement plus sign off on the financial plan.
Morris said recent legislation passed in reaction to UTOPIA's efforts requires each city to hold public hearings on the financial plan, but only after a 30-day consideration period. This means cities will have to hold public hearings anywhere between June 14 and June 25.
The recent legislation does not require that cities publicly announce the hearings in advance, only that interested parties who ask for the hearing date in writing be informed, Morris said.
If all 11 cities approve the financial plan, Morris said UTOPIA will then submit the plan for bond funding, with construction of UTOPIA expected to start in late July or August.
Deputy director Roger Black said all UTOPIA cities must take some form of action by June 25. Taking no action, according to the law, will mean that city will be excluded from UTOPIA membership and their interlocal agreement will be nullified. "Doing nothing is the same as withdrawing," Black told board members.
UTOPIA, like any newborn, will take small steps at the beginning, officials said. The first phase of the all-fiber-optic network will be built with the first $25 million, accommodating roughly 2,000 to 3,000 customers. Black said the first part of the network, although a location has not been announced, will be a test to determine if the network will function and to deal with technical issues. Once the $25 million network is established, a $65 million network will be built in another UTOPIA city by December of this year, designed to handle approximately 50,000 customers. At that point, Morris said the network should be financially self-sustaining.
After that, Morris said UTOPIA will then evaluate if the network will be expanded to full capacity. No dates have been set for full network expansion.
There are risks, however. If UTOPIA fails to get enough customers, or if it simply falls flat, cities stand to lose millions in tax dollars to back up financial losses.
Responding to some critics who say UTOPIA is making covert decisions, Morris said UTOPIA will be posting all of its business contracts on its Web site within a week or so, available to the public.
The UTOPIA project, as it is currently planned, will be a municipally backed high-speed data network in which private service providers will lease network space to compete for business. The network promises to offer telephone, Internet and television service in one single connection at speeds several times faster than current residential data services.
Black said the UTOPIA project has caught some worldwide attention.
Recently an invitation was sent to UTOPIA to join an elite group known as the Smart Communities International Network. The group, which was founded by the Dutch government, includes cities across the world that have helped to built high-speed data networks. Current members include cities from the Netherlands, Sweden and Malaysia. Invitations have been offered to cities in the United Arab Emirates, France and Utah, representing North America.
Black said membership would mean sharing technology and business deals between private providers, but membership is not cheap. Dues for the Smart Communities International Network come in at $22,000.