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Utah cities are being asked to re-commit to a faltering muni fiber project

Municipalities participating in Utah's 11-city wholesale fiber-to-the-premises project, Utopia, are being asked to “double down” on that investment in the face of its current financial shortfalls.

Needing more capital to finish network construction that began three years ago, Utopia's leaders asked those cities last week to increase their contribution from $202 million in bonds over 20 years to $504 million over 33 years, at a lower interest rate.

Over time the network's construction is meant to be funded by revenue from service providers that pay to use it on a wholesale basis. But if that model fails, the cities would owe the half-billion in bonds they pledged.

And Utopia has fallen far short of its projections for subscriber growth and revenue, connecting 7200 houses so far instead of the projected 24,200. (Its ultimate goal is 140,000.)

Utopia hopes to have decisions on the new bond proposal from all cities by the end of the month. If they agree, the transaction is expected to yield the $11 million needed for Utopia to finish construction of its network.

Meanwhile, the project's leaders are overhauling its business model as well. For starters, they are considering a compromise on the initial goal of connecting all homes in the member cities, instead focusing first on areas with high demand. But critics say one of the early justifications for Utopia — a publicly owned, open-access network — was the fear that Qwest, as a profit-driven private company, would take the same uneven approach. Utopia also is considering charging customers an initial connection fee of $1000, which it admits could eventually double or triple. Utopia is negotiating with banks to establish financing plans that would let customers spread those upfront charges out over time.

Utopia's overhaul comes as Qwest has vowed to deploy fiber to the node in parts of Utah. And it comes shortly after another Utah city was forced to revamp its own muni fiber plans in the face of financial hurdles. Last week, Lewis Billings, mayor of Provo and a longtime proponent of muni fiber, softened his stance, conceding that he has considered some private offers to buy the city's muni FTTP network. “After due diligence, we determined we are not at that point,” he told The Salt Lake Tribune, a comment some took to mean “not yet.”

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© 2014 Penton Media Inc.

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