Utah Telecommunication Open Infrastructure Agency

The Utah Telecommunication Open Infrastructure Agency (UTOPIA) is a consortium of 16 Utah cities engaged in deploying and operating a fiber to the premises network to every business and household (about 160,000) within its footprint. Using an active Ethernet infrastructure and operating at the wholesale level, it supports open access and promotes competition in all telecommunications services.

UTOPIA operates as a wholesale fiber optic network and is prohibited by law from providing retail services. There are currently 17 service providers on the UTOPIA network and the network is open to additional service providers that meet certain qualifications. Though UTOPIA has extended an open invitation to Comcast, CenturyLink (formerly Qwest), and Frontier Communications, the incumbent service providers, all have declined to join the network.

UTOPIA bonds for construction costs using sales tax pledges as collateral to secure the bond. Revenues to cover the bonds are then set aside by pledging cities in an interest-bearing account and will only be used should subscriber revenues fail to cover the debt service. Because UTOPIA cities all bond at the same time and use their collective bond ratings and taxing authority, financing is generally seen as low-risk and secures a low interest rate.

UTOPIA encountered financial problems in late 2007 and halted all new construction. They have applied for and been approved for loans from the US Department of Agriculture's Rural Utilities Service (RUS) program. These loans required UTOPIA to submit a construction plan for approval and, once approved, apply for reimbursement. UTOPIA reportedly ran into multiple delays in seeking reimbursement before being outright refused any further reimbursement from RUS without explanation. At the time, UTOPIA had $11M in outstanding construction costs that had not been reimbursed by RUS. UTOPIA has since sued RUS for damages.

Because of these problems, UTOPIA asked its pledging member cities to extend the bonding period from 20 to 30 years and bond for additional to connect additional customers, complete unfinished sections of the network, and provide two years of capitalized interest payments. The new bond is for $185M with a total cost including interest of $500M. The network has over 11,000 subscribers.

A new proposal in 2014 has surfaced from an Australian investment company called Macquarie Group. By June 27, 2014 eleven of the cities will need to decide to move forward with a proposed plan to incorporate the expense of construction costs as a mandatory utility fee or not. The proposed fees would range from about $18-25 more per month for everyone in those cities. Regardless, the cities still retain this debt, and if the plan was voted down, then each of those cities would have to raise city taxes/fees in order to pay off the loans.

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