Utopia’s first triple-play provider gets temporary monopoly

The leaders of the Utopia project, an ambitious 18-city municipal fiber-to-the-premises initiative in Utah, are currently in negotiations with a telecom carrier to become the project’s initial provider of "triple-play" services, a deal that will give the provider exclusive rights to the network for a limited time.

Though Utopia was conceived as a decidedly open network (the name is a rough acronym for Utah Telecommunication Open Infrastructure Agency) to ensure competition and separate service providers from infrastructure owners, the project’s chief operating officer, Roger Black, said the guarantee of limited exclusivity was a necessary step toward an open, competitive system.

"It’s primarily for our own convenience, to make sure we have the handoff between wholesaler and retailer hammered down.," Black said. "[Utopia and its first triple-play provider] are both going to be in an intense learning period, and I guess as consideration for their willingness to engage in that learning period as well as our own convenience in minimizing the number of places we can foul up that handoff until we get our systems embedded, it just seemed like the right thing to do."

However, a white paper issued by Utopia on Nov. 26 added, "This primary service provider must be of national prominence to satisfy potential investors that the project is real." In recent months, Utopia’s leaders have struggled to secure bonds to cover the project’s estimated $470-million price tag.

The period of exclusivity is still being negotiated, and Black said Utopia’s leaders are aiming to keep the period as brief as possible. Black predicts it will be less than two years, based on the assumption that it will take Utopia 12 to 18 months to reach an undisclosed number of homes that Utopia promises to deliver to its first service provider.

"Once we’ve reached the agreed-upon number of homes passed, then the clock starts ticking to end the period of exclusivity," said Black.

Utopia’s leaders expect the entire build out, which will ultimately pass nearly 250,000 homes and 35,000 businesses—a third of Utah’s population—to take two and a half to three years. So the exclusivity period will end before the entire network is complete, Black said. "We’re guessing [the initial provider] will have first bite at the apple for approximately 50% to 60% of the addresses."

Though the project’s first triple-play provider (delivering voice, video and data services) would have exclusive rights to triple-play service for a while, Black said, other niche providers could offer other types of service, even during the exclusivity period.

Utopia is still negotiating with an unnamed candidate to become its first triple-play provider and should name the initial service provider in "a month or two," Black said. Black would only describe the candidate as "a national player with extensive experience in the telecommunications industry."

Utopia’s Nov. 26 white paper said an initial provider must exhibit financial strength; a proven record of delivering consumer and business services including voice, video and data; a measurable high customer satisfaction rate and a commitment to competing with other providers within Utopia’s open network.

Though that provider will have a head start, Black said it won’t interfere with Utopia’s vision of an open, competitive network. "It’s a competitive environment," Black said. "If [the initial provider] trips and stumbles in its delivery of the service, there are other players here ready to exploit that failure."