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Archive of posts published in the tag: Orem Utah UTOPIA Internet debt taxes limited government

I Thought UTOPIA was bad, but I was wrong.

I was just reading the latest newsletter from the Utah Taxpayers Association. I thought UTOPIA was bad. Now I’m sure it’s horrible.

I was under the impression that Orem City’s UTOPIA debt was $50 million, which is more than $50 per person. The newsletter points out the debt is $77 million, or closer to $800 for every woman, man and child in the city.

I also assumed that this debt would be paid off with the mandatory fees of $20 per household and $40 per business (adjusted for inflation). Not true. According to the June 2014 Utah Taxpayer Association newsletter, these fees would only go to pay for the costs going forward. Only if there is a substantial upsell in premium services would there be a chance that money would be available to pay off the existing debt.

It’s hard to believe anyone could continue to support something so poorly planned and mismanaged.

A Public-Private Partnership in Orem

A utopia is a community or society with near perfect qualities. In Utah, UTOPIA, which stands for Utah Telecommunication Open Infrastructure Agency, is a clearly imperfect Internet connection agency. The original idea was for UTOPIA to run fiber to every home and business and then let Internet providers compete for customers attached to the fiber. The cities which partnered with UTOPIA would put up the money and then make the money back through fees from the Internet providers.

In my city of Orem, Utah, we went $50 million in debt (that’s more than $500 for every man, woman, and child in the city) to build the fiber network. Unfortunately for us, the money is spent and the fiber reaches only one-third of the residents. The fees from those lucky enough to use the Internet service are not enough to cover the interest on the debt and continue the build out. We are in a very fine mess, a deep, deep debt hole.

You might think the city is ready to give up and get out of the Internet business, but, no. The city is proposing a Public-Private Partnership. Our city government would partner with a private company to provide every residence and every business a fiber-based 3 Mbps Internet connection. 3 Mbps is a rather slow connection, a DSL-like speed. Faster speeds would be available for an additional charge.

What is the catch? How will we finish the build out? Our city government will force every residence owner to pay $18-20 dollars per month (adjusted annually for inflation) for up to 30 years. Businesses will also pay $36-40 per month (adjusted for inflation) for up to 30 years. Even if someone doesn’t want the service, and even if someone never uses the service, he or she will still be obligated to pay the monthly fee for up to 30 years. It’s not like electricity or gas, where you can stop paying and lose the service. It’s like the water, sewer, and garbage services you must pay every month your house is occupied.

Utah is one of the most conservative states. Orem is probably one of the most conservative cities in Utah. I have to wonder how our city government could have decided to get into the Internet networking business. As much as we all like to think we believe in a government with limits, we still manage to venture into areas better served by private, competing companies. We manage to prove over and over again that governments do not run businesses well.