Is the bottom line the fact that there isn't an actual person or persons
that will lose a whole lot of money if it doesn't work out? Seems like
people are real ambitious when playing with other peoples money.
Sterling Jacobson wrote:
I agree with that.
The numbers never added up. iProvo never added up, Utopia never added up,
Amercian Fork system numbers never made any sense.
I was a network provider on iProvo and AF networks for a while and sold them
off since they were always substandard and profit was driven to minimum.
-----Original Message-----
From: Af [mailto:[email protected]] On Behalf Of [email protected]
Sent: Sunday, August 6, 2017 10:46 AM
To: [email protected]
Subject: [AFMUG] OT Municipally funded ISPs
Here is an editorial in the Deseret News today. It is just an opinion.
And I know Roger has been a reader of this list (Roger runs UTOPIA).
But I have always been against municipal ISPs on principle. Some things the
government is good at, some things they are not good at.
Roads and Streets == OK
Police and Fire == OK
EMS = OK but there are private providers that are OK too.
Water and Sewer = OK but there are many private systems Power and Gas = Meh -
I work in a city that has sold off their power and gas to private because it
was not a revenue center and they had lots of power distribution problems.
Telecommunications != OK
They almost always seem to be problematic. And they compete with all of you
(us) folks that can do a better job. (Sorry Roger, but that is my
opinion).
BY BILLY HESTERMAN
FOR THE DESERET NEWS
A longstanding principle of the Utah Taxpayers Association is if a service can
be found in the yellow pages, then government shouldn’t be providing it.
We have seen far too many times where government attempts to compete with the
private sector and ends up wasting taxpayer money. One prime example of this is
the failed UTOPIA boondoggle that continues to plague the 11 cities that
created the entity.
On Aug. 14, the Utah Infrastructure Agency, which was created in 2011 to give
UTOPIA more borrowing capacity, will vote on taking out a $13 million bond to
further build out the UTOPIA network in hopes of making the whole effort
profitable. The vote will likely pass but the effort to make UTOPIA and UIA a
success for taxpayers will never be realized.
This attempt to continue to send money after a bad idea has to stop.
The private sector is already providing the same service that can be obtained
through UTOPIA and it is past time that the local governments that created this
mess find a way out.
Recently, the University of Pennsylvania released a study that examined 20
municipally owned fiber networks from across the nation; UTOPIA was included in
the study.
The report found that a majority of these networks struggle to recover the
costs that were incurred to build them. It went on to show that of the 20
projects, only nine have had a positive revenue stream but that of those nine,
five are generating returns so small that it would take more than 100 years for
the project costs to be recovered. Only two of the 20 networks are expected to
earn enough to cover their project costs during the useful life of the networks.
The Penn report went on to state that these government-owned ventures struggle
to ever make a profit and put taxpayers in danger of seeing their local
government increase debt, lose bond rating status and elected officials
becoming distracted from other important issues because they are solely focused
on the government’s fiber business. The report found that if UTOPIA continues
in its current state, that the project will likely never turn a profit. It
observed in a five-year span from 2010-2014 that the network only obtained
11,000 subscribers and that with a low subscription take the network was
realizing less than $30 in revenue per household in the cities that make up
UTOPIA. That is well below the $446 per household benchmark achieved by other
projects that the report looked at.
I am often asked why the Utah Taxpayers Association cares so deeply about the
UTOPIA issue. One statement from the Penn report sums up why we have taken the
position we have as the report states, “Many cities managing these projects
have faced defaults, reductions in bond ratings, and ongoing liability, not to
mention the toll that troubled municipal broadband ventures can take on city
leaders in terms of personal turmoil and distraction from other matters
important to citizens. City leaders should carefully assess all of these costs
and risks before permitting a municipal fiber program to go forward.”
The risks and consequences are too much for taxpayers to shoulder.
UTOPIA and UIA officials should vote against the upcoming $13 million bond and
start looking for new directions to take the network that will be beneficial
for taxpayers instead of continually investing money into a sinking ship that
will never be sea-worthy.
Billy Hesterman is the vice president of the Utah Taxpayers Association.
---
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