When UTOPIA was launched in 2003 - it stands for Utah Telecommunication Open Infrastructure Agency - we worried that it might not meet its business projections and that the Utah cities that put themselves on the hook to underwrite a substantial share of its debt might come to regret that decision.
We believed then, and still believe today, that taking on the risk to build fiber optic networks was a job better suited to private capital, especially when private companies like Qwest and Comcast already were doing it. We also believed that it was unfair for UTOPIA to compete with those private companies' investments, especially with taxpayer backing.
Nevertheless, we take no delight in UTOPIA's problems, because we do not wish to see the 11 cities' finances take a hit from a bad investment.
And who knows? Maybe UTOPIA's management will pull its bacon out of the fire yet. The telecommunications business is notoriously volatile, which is another reason why we were leery of the whole UTOPIA business plan.
UTOPIA is a public agency that provides a fiber optic network capable of carrying ultra-broadband Internet access, high definition TV, video on demand, community information and education, video conferencing and Internet-based telephone.
The agency only supplies the fiber optic network. Private companies provide the content and services, and pay fees to the network to make their products available.
The Tribune reported Monday that so far the system has not met its business goals. By the third year of construction, it was supposed to have 22,000 customers and be generating about $5 million in revenue. Instead, it has about 6,500 customers and about $1.75 million in revenue.
If business doesn't pick up, the cities eventually could be called upon to kick in portions of the $202 million they pledged over 20 years to back construction bonds. The largest UTOPIA cities include West Valley City, Orem and Murray.
This sort of high-stakes, high-tech gamble is the right place for venture capitalists, not cities, which are finding out this was no utopia after all.
