July 29, 2004 1:42 PM PDT

Construction for Utopia network set to begin

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The first phase of a project to build a fiber network in 11 cities in Utah is set to begin, as organizers secured the needed cash to break ground.

The Utah Telecommunication Open Infrastructure Agency, or Utopia, announced Thursday that is has closed $85 million in revenue bonds to finance the first phase of the project. Utopia, which plans to provide a fiber network to homes and businesses, is one of the largest fiber-to-the-premises projects in the country.


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Utopia has been closely watched since its inception, as communities throughout the country look to it as a case study. It is also among the first municipally owned networks to adopt a wholesale business model. This means that the cities participating in Utopia put up the cost to build the network and actually own the infrastructure. But the network is leased to different service providers, which offer advanced communications services at competitive prices. Tax dollars will not be used to build or operate the network, which will rely on revenue from service providers to repay the bonds.

Utopia follows closely on the heels of another fiber project in the state called iProvo. Earlier this month, iProvo, owned and operated by the city-owned power company in Provo, Utah, completed construction of its network and announced the first service provider that will use the network to deliver services.

Many communities, particularly in rural regions, have started building their own fiber networks, because incumbent service providers have been reluctant to introduce cutting-edge services like voice and video over broadband.

Now that Utopia has secured the necessary funds, construction will begin in August, according to project organizers. In the first phase, more than 50,000 homes and business in portions of six cities in Salt Lake County and Utah County will be connected with fiber, according to a press release issued by Utopia organizers. The specific location of the first areas to be built out is still to be determined.


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The first phase is expected to be completed within a year. The second phase will expand the network to the five other cities that have pledged funding. It will also provide connections to homes and businesses from the first group of cities that had not been connected. Additional financing will be required to complete the next phase of construction, according to Utopia.

Originally, 18 Utah cities were expected to participate in Utopia. Currently, 14 cities belong to the project, but only 11 have pledged to guarantee the bonds. Salt Lake City is among those that did not pledge guarantees toward the project. When Salt Lake City withdrew its support, many people feared the project would not be able to secure the bonds necessary to start construction.

"It has been a very long time coming, with a lot of twists and turns, but we are thrilled to get moving on this open, big broadband network that will assure all citizens and businesses have the opportunity to access high-speed services," said Utopia Chair Daniel C. Snarr, mayor of Murray, Utah, one of the cities participating in Utopia.

The pledges from each city may only be called on if the project is unsuccessful, say organizers. The financing plan has built-in safeguards that enable the board of directors to monitor the success of the project as it proceeds and take corrective actions to minimize city risks, according to Utopia.

Utopia has already selected contractors, vendors and service providers for the project. DynamicCity will design, implement and manage the network. Tetra Tech Construction Service will build it. Communications Technology Services will deploy gear on customer premises. And AT&T will be the first company to offer advanced voice, video and data services over the network.

 

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