Utah Confirms Municipal Broadband is No Utopia

May 14, 2014 by AFP

By Kuper Jones

The internet has become an integral part of peoples’ everyday lives, and demand for better, faster internet connections has continuously risen with advancements in technology. While the internet market is booming with innovation and competition, it seems that some in the state of Utah think that citizens would be better served with an expensive, government-run network ironically known as the Utah Telecommunication Open Infrastructure Agency (UTOPIA) Go Fiber Utah project.  Cities across the country that have attempted municipal broadband projects have experienced widespread failure and only have mountains of debt and unsustainable networks to show for it. UTOPIA is no exception and further exemplifies why governments have no place in broadband markets.

Generally, a local government seeks to become an internet service provider (ISP) because their area is not serviced or “lacks competition”. Like so many others that have attempted municipal broadband, UTOPIA claims that their open access network will increase competition and choice in cities. However, a regulator is in no way a competitor as they create the rules that everyone else must abide by.

UTOPIA has been troubled from the get go. Since 2003, UTOPIA ran on operating losses for nine years straight. By the end of fiscal year 2011, UTOPIA found it had negative $120 million in net assets, according to a report issued by Utah’s Office of Legislative Auditor General. Moreover, local municipalities must come up with $13 million a year in sales tax revenues to keep UTOPIA a float. Today, UTOPIA has generated $500 million in debt for Utah taxpayers but still remains incomplete. Surely, this is no one’s idea of utopia.

Recognizing that there is no way for a government to successfully build a statewide internet infrastructure, UTOPIA and its 11 participating cities are contemplating being bought out by an Australian capital firm. The group claims it can finish the build out process and bring a sustainable network to Utah; however, the group’s plan would impose an $18-$20 monthly “utility” fee on all residents in participating cities–not just those subscribing to the service. Not only would taxpayers still be on the hook for the heap of outstanding debt, in some cases, they would help subsidize a service they may not even use.

If UTOPIA continues as a government-run project its doom is certain.  The 11 participating cities are left with three options in regards to the proposed buyout and the future of their networks: 1) they can enter into a public-private partnership that retains government ownership of the network and includes the previously mentioned “utility” fee; 2) they can sell the network to a private sector company, or 3) shut down and abandon the network.

The massive debt and incomplete network are further evidence that government shouldn’t be in the broadband business. If state and local officials are seriously concerned about their constituents’ well-being, they should spend less time impersonating a telecommunications network and trying to raise taxes, and more time reducing the massive amount of debt and long-term obligations incurred by taxpayers thanks to this broadband boondoggle.