April 14, 2004 10:41 AM PDT

Utopia in jeopardy

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Utah's plans for a large-scale municipally owned fiber-optic network called Utopia is officially on the ropes, after the Salt Lake City council voted not to support financial backing for the project.

On Tuesday evening, Salt Lake City's city council voted 4-2 against allocating future tax revenue to back the network. To get a better interest rate on the bonds needed to fund the project, Utopia organizers proposed that all of the 18 cities expected to participate in the project set aside some cash to pay off the debt if the network's business plan fails. Salt Lake City was asked to set aside $4.1 million a year for the next 17 years.

"I think asking cities to back the project with city funds is a scam on taxpayers," Rocky Anderson, Salt Lake City's mayor, said in a phone interview Tuesday. "To think that anybody can predict what the subscription rates of a telecommunications network will be over 20 years is ridiculous. To leave taxpayers at risk like that is unconscionable."

The city's mayor had already publicly expressed his opposition to the plan. Four of the six city council members who voted last night shared his views.

Eleven of the 18 cities originally involved in the project have agreed to the funding terms. Roger Black, chief operating officer for Utopia, said previously that with or without Salt Lake City, construction would begin as planned in the participating cities.

But without Salt Lake City onboard, some experts say the project could fail to reach its annual subscription goals, jeopardizing the entire project.

Utopia President Paul Morris was not immediately available for comment. A staff member said he was meeting with a team of financial experts to determine how to move forward now that Salt Lake City has officially refused to back the project.

Utopia is being closely watched by other communities around the country that are trying to build their own networks. The success or failure of the project will likely have an effect on how these other municipalities fund, build and operate their networks, said Jim Baller, a principal attorney for the Baller Herbst Law Group and a leading expert on municipally owned networks.

"The ultimate success or failure of the entire project will have a great impact on these communities," he said. "But I don't think they are as concerned with the daily events."

 

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