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West Valley City adds a UTOPIA incentive: free phone service

Published June 11, 2014 2:44 pm

High tech • Deal with California-based firm "highlights potential" of fiber network, city officials say.
This is an archived article that was published on sltrib.com in 2014, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

West Valley City has announced a deal to offer its residents free telephone service, upon the completion of a controversial fiber network intended to deliver broadband Internet access to all the city's homes and businesses.

Utah's second most-populous city unveiled its partnership with Ooma, a Palo Alto-based telecommunications company, on Wednesday as the city and 10 other municipalities along the Wasatch Front are reviewing a proposal from Australian investment firm Macquarie Capital Group to finish and operate the troubled broadband grid known as UTOPIA.

News of the Internet phone deal also comes amid a campaign by the business-backed Utah Taxpayers Association urging UTOPIA cities to kill the Macquarie bid and shut down the open-access fiber network.

West Valley City Manager Wayne Pyle said the city's partnership with Ooma, a private company providing voice-over-Internet services, was a step toward maximizing use of a high-speed city network, while also offering residents a chance to save cash.

"Wiring our entire community with world-class fiber to the home ensures that our residents will have unmatched access to all of the services that the network can provide," said Pyle, who called the Ooma deal a way "to provide maximum value and benefit to our residents."

Ooma CEO Eric Stang said West Valley City's "unparalleled initiative" would not only save residents money, but also would "allow them to stay connected in ways they cannot yet imagine."

With download and upload speeds of one gigabit per second, UTOPIA fiber offers Internet access as much as 200 times faster than what is commonly available from private providers such as Comcast and CenturyLink.

Proposed more than a decade ago by a consortium of Utah cities to deliver next-generation data, voice and video services to residents and business owners, the UTOPIA network remains incomplete, with a relatively small customer base and its member cities mired in more than $500 million in debt.

A global company specializing in public-private infrastructure projects, Sydney-based Macquarie is proposing taking over the patchwork system, connecting all homes and businesses in member cities and running the network at a modest profit for 30 years under city supervision.

Midvale, West Valley City and Layton have already voted to let Macquarie go ahead with its detailed business study of UTOPIA and report back by year's end. Orem, Centerville, Murray, Tremonton, Brigham City, Lindon, Perry and Payson face a June 27 deadline on whether to give Macquarie their blessing to analyze the deal further.

Macquarie's initial business proposal includes an $18 to $20 monthly utility fee to be charged on all households and businesses in member cities, whether or not they use the network's services. The fee wouldn't be levied until fiber connections became available to customers.

The charge, which Macquarie has dubbed an "availability fee," is the primary target of criticism from the Utah Taxpayers Association, which has labeled Macquarie's proposal an "$1.8 billion bailout'' funded by increased taxes. Under the moniker of "uNOpia," the association, with support from private utility companies, is seeking to rally residents in UTOPIA cities to oppose Macquarie's plan.

"Rather than weighing taxpayers down with new debt, city councils in UTOPIA member cities should vote against this boondoggle," said Royce Van Tassell, the association's vice president.

The group points to findings from a recent economic study of Macquarie's proposal by the Salt Lake City consulting firm Econowest Associates. That review, Van Tassell said, highlights "the risk and uncertainty of this very expensive proposal."

Among other critiques, the Econowest study alleges that Macquarie's projections for usage of the finished network are unrealistically high, when compared with UTOPIA's history of customer interest.

"It's hard to justify such a high-cost venture that has such a low probability of success,'' said Econowest President Doug Macdonald.

Macquarie executives say their plan is based on a relatively modest and defensible range of projections of customer sign-ups. They maintain that past usage of UTOPIA has been hampered by its limited availability in many neighborhoods throughout member cities, a problem they contend the company's network-completion plan will solve.

West Valley City's arrangement with Ooma adds phone service to the basic Internet access that would be available under Macquarie's proposal. City officials estimated that households could save at least $540 per year using both services, amounting to potential citywide savings of more than $20 million yearly.

Pyle, who also serves as chairman of UTOPIA's governing board, said he hoped the Ooma partnership underscored the promise of broadband access to cities still undecided on the Macquarie deal, which he argued "makes the most sense of anything we've seen."

While the savings to residents from Ooma's offerings are notable, he said, "it's not really about phone service. It's about the possibilities of this kind of network."

tsemerad@sltrib.com

Twitter: @Tony_Semerad —

Upcoming debates on UTOPIA/Macquarie plan

Lindon: Tuesday, June 17, 7 p.m., City Center, 100 N. State St.

Centerville: Tuesday, June 17, 7:30 p.m., City Hall, 250 N Main St.

Orem: Thursday,June 19, 6 p.m., Orem Senior Friendship Center, 93 N. 400 East.

Murray: Tuesday, June 24, 6:30 p.m., City Hall, 5025 S. State St.

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