I was wondering the same thing. I am guessing the cities are eating it.
-----Original Message-----
From: fiber...@mail.com
Sent: Friday, October 28, 2016 2:08 PM
To: af@afmug.com
Subject: Re: [AFMUG] Ammon City fiber
Thank you Roger for that detailed write up.
What happened to the first phase bond?
Jared
Sent: Friday, October 28, 2016 at 8:37 PM
From: "Roger Timmerman" <timmer...@gmail.com>
To: af@afmug.com
Subject: Re: [AFMUG] Ammon City fiber
Most of what Chuck says is true about the first phase of UTOPIA. It was a
disaster. Some of it was their fault, some of it wasn't.
For example, AT&T was actually the first service provider on UTOPIA and had
an initial exclusivity period. One day the higher-ups at AT&T decided to
abandon that part of the business without telling anyone. AT&T's services
on UTOPIA went dark and no one was there to answer the phones. Took a while
to recover from that one.
The next provider to go belly-up was Mstar which was a whole other financial
disaster for UTOPIA.
RUS loans that were approved and then later withdrawn caused UTOPIA to
invest heavily in rural areas rather than build in more strategic areas.
This was the topic of a lawsuit between UTOPIA and RUS for which there was a
recent $11M settlement after several years of fighting.
A lawsuit from Qwest tied up construction for a while and cost a fortune to
fight but eventually resulted in a settlement, was still a huge blow to the
project.
Bad management, bad state legislators, bad contractors, you name it. UTOPIA
has had tough times.
However, there was a restructuring about 8 years ago when I first came on
board. The management company was given the boot and we parted ways with
bad contractors and partners. We in-housed our operations, NOC, technicians,
network engineering, etc and recruited better service provider partners.
Costs dramatically decreased, reliability increased, and the project gained
some stability even though it was still costing a lot of money keep the
lights on. We used what money we had after a debt refinance of the original
bond to finish Tremonton City, and we partnered with Brigham City to build
their city with them doing their own bond. The revenues covered all of
Brigham City's new debt payments and the new revenue decreased the bleeding
for UTOPIA.
We knew that if we could replicate the success of Tremonton and Brigham City
we would not only build out more network, but also would further alleviate
the bleeding and maybe even break even. 9 of the original 11 UTOPIA cities
agreed to take down new debt to do this. One dropped out when it came time
to bond so only 8 proceeded with the bond. Because it had different city
membership, we had to create a new agency that acts only as a financing arm
for furthering the project, with the same purpose of UTOPIA, but without
investing in the cities that didn't financially support the new growth.
UTOPIA and UIA (the 8 city project) have taken down three additional
incremental bonds for building out the system. Now we cover a much larger
area and are covering all of costs and generating positive net revenues. All
of the debt service is also being paid for by UTOPIA and UIA except for the
first phase bond. Rather than spend the net revenues on partially
addressing the original bond, we are investing in finishing out the project.
We are currently building out at our fastest pace with a model that is
financially sustainable and actually profitable. Our service provider
partners are stable, growing, competitive, and well liked. If bonding
weren't so politically unpopular, you would see us or other similar projects
everywhere. However, bond is a four-letter word these days and it is still
an uphill battle to do these types of projects despite how well they do.
Roger
On Fri, Oct 28, 2016 at 10:46 AM, <ch...@wbmfg.com[mailto:ch...@wbmfg.com]>
wrote:It is all armchair quarterbacking at this point.
It went wrong at its inception.
A guy named Arthur Brady with Telecom Choices played the part of Harold Hill
in the Music Man.
He got paid for the band instruments and blew out of town.
So, the cities were sold a bill of goods in my opinion. But the largest
city was smart enough not to put its foot in the trap. Salt Lake City.
Then they had issues with contractors and quality of work.
They overpaid. They borrowed too much etc etc.
They honestly expected Qwest and Comcast to ride their network.
There was a point in time that Wireless Beehive was installing at a weekly
rate greater than UTOPIA and almost had as many customers. We were in the
hole perhaps $2-4M and they were in the hole more than $100M. I think it
was more like $216M. All backed by bonds that were tied to sales tax
revenue.
Originally they needed 120,000 customers they said to be viable. That was a
1/3rd take rate.
I am guessing they don't even have 25K at this point but that is just a
guess based on nothing.
So the debt service was more than they could ever cover it appeared at one
time. I fully expected bankruptcy. Then they attempted to do a deal with
an Australian company that would have forced personal debt on everyone
owning property in all the member cities.
It has been a cluster from the start. Sounds like Roger has turned it
around.
I personally am philosophically opposed to governments providing goods or
services that private companies can do. Obviously streets are better done
by government. Arguably water and sewer. I have lived in cities with two
power companies. But all the rest should be done by commercial providers.
More importantly government should never compete with businesses.
They have many unfair advantages.
-----Original Message----- From: fiber...@mail.com[mailto:fiber...@mail.com]
Sent: Friday, October 28, 2016 1:49 AM
To: af@afmug.com[mailto:af@afmug.com]
Subject: Re: [AFMUG] Ammon City fiber
Chuck McCown wrote:Utopia tried that method in Brigham City and it didn't
work so well (for a
variety of reasons).
Did UTOPIA have any option? Municipalities in Utah are barred from providing
retail services.
Where do you think they went wrong?
Jared