In the case of muni systems, which are not-for-profit enterprises, one measure of “success” is defined as the level of their “take rate” – that is, the percentage of potential subscribers who are offered the service that actually do subscribe. Nationwide, the take rates for retail municipal systems after one to four years of operation averages 54 percent. This is much higher than larger incumbent service provider take rates, and is also well above the typical FTTH business plan usually requiring a 30-40 percent take rate to “break even” with payback periods.
UTOPIA, For Better And Worse, Profiled
Since 2008, we have followed and reported on the peaks and valleys that is UTOPIA. Recently, the Salt Lake Tribune ran a series on the regional network. The coverage includes a sampling of the bitter and sweet of the complex relationship between the pioneering network, the state, and the customers it serves.
As many of our readers know, UTOPIA is mired in debt and endless political controversy as Comcast and CenturyLink fund "think tanks" to attack it. Tony Semerad from the Tribune talked to our own Chris Mitchell:
"When you build a network like this, it takes a minimum of several years of spending a lot of money before you start to get it back from your customers,’’ said Christopher Mitchell
As Christopher goes on to note, a large debt from the beginning to create an open access network is not a favorable situation. Additionally, past management made choices that still negatively impact the network. Constricting legislation at the state level prevents the network from expanding to a more profitable retail market, weakening it even further. Also from the article:
State law requires UTOPIA to operate as a wholesaler, a limitation conceived at UTOPIA’s inception when telecommunications giants such as CenturyLink and Comcast, now called Xfinity, grew wary of plans by Spanish Fork and Provo to get into the cable television business and lobbied state lawmakers for protections.
Some communities express derision at the situations they face regarding UTOPIA, having been left with debt and not yet received the ubiquitous access they anticipated. Some communities, who are still waiting for better subscriber numbers, already see improved economic development and remain patient. Connected communities vary in their satisfaction and level of support:
Layton » Mayor Steve Curtis believes UTOPIA fiber-optic lines already are luring business to his Davis County city and benefiting residents. The grid is built out to a small portion of Layton, one of eight municipalities that have signed on for a second round of UTOPIA bonds. "A lot of legislators don’t understand UTOPIA and haven’t taken the time to know it," Curtis said.
Payson » In spite of promising subscription rates among residents and a belief in UTOPIA’s value to the community, the Payson City Council chose not to back the newest round of borrowing. "It just came down to budget,’’ City Manager David Tuckett said. "We didn’t have the money."
While overall subscribership is lagging, customers share one common trait - they love what they get and the prices they pay. Another article in the series quotes current UTOPIA customers:
"It’s great,’’ Eric Eide of Murray said. "It’s very reliable. It’s high-speed. Whenever I check, I get the speed that is advertised."
"It’s pretty steady. I don’t notice any tail-off in the afternoons or evenings. It’s always the speed I pay for. We watch a lot of stuff on Netflix, and I don’t experience any stuttering," Phil Windley of Lindon said.
UTOPIA’s primary advantage is that it can deliver much higher download and upload speeds for lower prices than competitors, according to those who use it. For $35 per month, for example, a UTOPIA customer through the ISP XMission can get up to 50 megabits per second of both download and upload speeds. By comparison, Comcast charges $73 per month for 30 megabits-per-second download speed (the upload speed also is slower). UTOPIA also offers up to 1 gigabit (1,024 megabits) per second of download speed for $300 per month.
Getting more for less is always good, but the network and the state are at a crossroads. Some want to sell the network, others want to legislate tighter controls, still others want to give momentum a chance to build under present management (which has resolved many of the problems of previous management).
The idea of disbanding the network leaves us somewhat incredulous. No one would wish for the present situation, but abandoning UTOPIA would leave the municipalities still responsible for the debt while also removing any incentive for Comcast and CenturyLink to be competitive. In short, such action preserves all the negatives from the status quo while ending the benefits.