Hoping For My Own Private Utopia
I lived in the DC Metro area when I first heard about UTOPIA, a public residential fiber optic utility backed and garanteed by several Utah municipalities. I was skeptical and blogged about it back in 2003. This Deseret News editorial did a great job putting into words the concerns I had about the project:
Yes, fiber optic is far superior to anything currently available. Yes, it is inherently superior to wireless communications. But 20 years is an eternity in the telecommunications realm, and private markets tend to have minds of their own. It would be dangerous to leave taxpayers vulnerable to an industry that is best wrestled with by men and women who want to risk their own cash.
…When the market is ready, private companies will build fiber optic networks, or perhaps something even better. The good thing about that approach is that taxpayers will benefit, rather than having to pay.
They were right…and oh how I hate them for it! Now that I live in Layton, UT (a UTOPIA city) I check the UTOPIA website nearly every month to find out if they have more information on when my city is going to get hooked up to the fiber optic goodness we have been promised. I just hope they’ll get to my house before Layton’s government picks up on what a bad idea this is and backs out of the project.
Utah Taxpayers Association is sounding the alarm today in a post about what a failure UTOPIA’s sister project iProvo has turned out to be. Even though I agree with them about how bad an idea these projects are I almost wish they’d wait a year or so until my house is wired before they ratchet up public opinion against it!
UPDATE 4/25/07 10:24AM
Jesse Harris, one of the excellent Utah bloggers on my blogroll to the right, has a blog dedicated to the support of UTOPIA and municipal fiber optic networks that is worth checking out if you are interested in this topic. I’m not completely sold on the idea that government should make a run at a market that private entities aren’t willing to try investing in but he makes some great arguments. I definitely agree with his disgust with Qwest and Comcast and their pathetic nearly non-existent efforts at providing a viable second generation network in Utah.
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I’ve had it for over a year now. I don’t know how I lived without it. I have a better internet connection at home now than I do at work. Fiber optic internet plus telephone for less than $50 a month.
Comment by Part of the Plan — April 25, 2007 @ 8:13 am
UTOPIA is the natural reaction to the rampant abuse of monopoly power that the telcos and cablecos have saddled us with. Since the industry-backed 1996 Telecommunications Act, we’ve experienced a decrease in the number of telecommunications providers, rises in rates (over 50% for cable TV), stagnant broadband speeds and low adoption rates. None of the industry promises materialized despite giving them over $200B in increased fees and tax breaks over a decade. These abuses are intolerable, yet nobody is prosecuting and jailing the scoundrels.
Because of their government-granted monopoly positions and the stranglehold that they have on the legislative process, it seems the only solution left is to have the city build the infrastructure (much as they would water, sewer or roads) and lease it out to competitors. Comcast and Qwest were both invited to participate in the network but declined, much more satisfied with being monopolists than having to actually compete. I know it fights against some of our ingrained “let the market decide” impulses, but the government has catered to monopolies dedicated to anything but the market deciding. I can’t feel sorry for Qwest or Comcast getting their “just desserts” for decades of abuse and gouging. Tough noogies!
iProvo has had more trouble by striking out on its own instead of pooling resources a la UTOPIA. (American Fork’s system is failing for the same reasons: too much overhead!) UTOPIA alleviates this though economies of scale to be significantly more efficient than other systems. I still don’t get why AF and Provo don’t try and get their systems into UTOPIA to save themselves money and better their systems.
When you do a more refined breakdown of the iProvo losses, it comes out to around $100 per year per subscriber. What I don’t get is why they don’t increase the rates slightly (they are, after all, offering a better service) to compensate. $10 a month would make the system break even and wouldn’t result in a lot of people taking off.
(As a side note, I run a site, FreeUTOPIA.org, promoting UTOPIA and muni fiber, so you know where I firmly stand.)
Comment by Jesse Harris — April 25, 2007 @ 9:06 am
All interesting arguements…
The only thing worse than a market monopoly is a badly run government monopoly. It would be nice if this UTOPIA concept came to a good end. That could only happen if government and marketplace interests are put together in such a way to balance the market needs and pricing, while running it like a business, with minimized overhead, instead of creating a taxpayer gouging monster.
Comment by cody — April 26, 2007 @ 6:52 am
The beauty of the UTOPIA project is that government has no say in the retail operations. Instead, four private companies (including AT&T and Utah’s own Xmission) provide the actual service by leasing the lines from UTOPIA. It’s the airport model in action no matter how detractors may try to claim otherwise. The new freeways don’t move cars; they move bytes.
Comment by Jesse Harris — April 26, 2007 @ 7:14 am
Jesse, it’s important to understand why Comcast and Qwest are monopolies–because they convinced states, cities, and towns that they should be given a monopoly in exchange for regulation. I’m not supporting Comcast or Qwest, by we can’t complain about the fact that they are monopolies without complaining about the governments that created the monopolies.
I wish Utopia would work, but I don’t see why the experience of Utopia will be any different than Provo or AF. It’s possible there’s a reason that Qwest isn’t laying fiber all of the place, it may be too expensive for what people are willing to pay right now. Also, what are the killer apps that need fiber bandwidth? And when will places like Provo provide real bandwidth, and not just bandwidth you can get with cable?
When I moved in DC in 1998, fiber was all the rage. Streets in DC were ripped up to put fiber everywhere. But a lot of the fiber hasn’t been used because there still isn’t the demand. People promised applications that would require tons of bandwidth, but they haven’t materialized, even for business.
I wish I had fiber with at least 100 mbps up and down, but what would I do with it? Host my own site? Probably, but what else? I could host some torrents, but the only legitimate torrents I can think of hosting are Linux ISOs. P2P uses a ton of bandwidth, but most P2P file sharing isn’t legal.
Fiber to the curb may happen some day. I hope that Jeremy gets fiber soon. I wish I could get fiber in my building, but I can’t. The biggest problems are cost and demand for the product. Cost will come down over time, but what is the killer app that people need that requires fiber? Until we can answer that question, I fear that fiber adoption will be low.
Comment by Daniel — April 27, 2007 @ 9:30 pm
I believe the monopoly thing is the problem when coupled with Wall Street.
For instance, about ten years ago, Viacom our cable company (franchise for next 30 years) actually began to lay fiber optic underground in Petaluma (telecom valley), then AT&T bought (Wall Street)them out, and figured you provide what you can with what you have (Rumsfield) and abandoned the fiber optic approach, more profit for less (oil companies). Comcast soon bought AT&T and we have them currently.
Absolutely poor service, no tech support and rate increases every six months.
Japan made it a national priority to extend fiber optic to 80% of the population in 10 years and succeeded.
So what if they have excess capacity someone along the line is able to use it, and at a paltry $22 per month?
As it stands now in the US, we are on par with third world countries because of the need to profit before function.
I applaud IProvo and UTOPIA and know that the future profiteers are sabotaging the progress as best they can: Vulturistic!
It reminds me of early elecctricity distribution: AC or DC? The least efficient won out because: Wall Steet………….
Bob in Petaluma
Comment by Paintmequick — April 28, 2007 @ 1:39 pm
Bob,
I can’t follow your associations. What does this mean, “and figured you provide what you can with what you have (Rumsfield)?”
On DC versus AC, you are just plain wrong. In 1882 when Thomas Edison built the Pearl Street station in New York, DC current could only be transported a few miles. That’s why Edison’s favorite, DC power, lost out to Tesla’s AC. AC could be transported for miles, which meant they could build large centrally located power plants.
Edison wasn’t exactly a nobody that wasn’t backed by Wall Street. Edison and AC current lost because it wasn’t a good technological solution for the time. I hope that fiber is a good technological solution for our time, but it may not be and governments should be wary of spending taxpayers dollars on questionable projects. As I noted before, there are no killer apps for the kind of bandwidth you can get through fiber. Until there is, there won’t be widespread adoption of the technology in the United States.
Comment by Daniel — April 30, 2007 @ 8:05 am
Daniel,
Rumsfield’s quote is his excuse for the poor condition of equipment in Iraq. The same applies to waiting for a need for fiber, if a killer app did appear, it would not function on the current state of the art in the US but would in Japan.
JP Morgan didn’t care what kind of electricity was used, as long as he was in control of it-and he controlled Edison’s patents-Wall Street.
Charles Coffin proudly boasted of his tacctics….He described raising the price of Edison-built street lights from $6 to $8, spedifically to raise $2 per street light to pay off local politicians-JP Morgan manager.
An example of suppression of technology is the Pacific DC Intertie: The idea of shipping hydroelectric power to South California had been proposed as early as the 1930’s, but was opposed and scrapped. By 1961 JFK authorized a large public works project, using new high voltage direct current technology from Sweden.The project was undertaken as a close collaboration between GE and ASEA of Sweden. Private California power companies opposed the project but their technical objections were rebutted by Uno Lamm of ASEA at the IEEE meeting in New York in 1963. When completed in 1970 the combined AC and DC transmission system estimated to save consumers in LA approximately $600,000 per day.
Leaving that savings to Wall Street when the next killer app is sprung, is too little too late with only increased cost.
Japan can use the killer app when it is sprung the US cannot, thus third world status because of Wall Street. And they can do it for $22 per month today!
Bob in Petaluma
Comment by Paintmequick — April 30, 2007 @ 12:01 pm
Bob, what evidence do you have to support this statement, “Leaving that savings to Wall Street when the next killer app is sprung, is too little too late with only increased cost.” The time value money tells us that $1 today is worth more than $1 today or $1 in 10 years. Therefore, if you can postpone costs to the future, all things being equal, they are less expensive. Since there is no pressing applications of the bandwidth available through fiber, why should cities take the financial risk? iProvo hasn’t been a financial success.
What percentage of people today want (and are willing to pay for) internet speeds faster than 8 mbps? With 6-8 mpbs, you can easily use VOIP, IPTV (though no in HD), download movies, and use P2P file sharing program with decent upload and download speeds.
Japan could use a new killer application for fiber broadband, but they aren’t using it. That should tell us something. And while Japan could do it for $22 a month, urban areas on Japan and urban areas in America a very different.
Fiber is a great technology, but currently it isn’t cost-effective technology. We should postpone those costs until they make economic sense. The internet has transformed our lives in many ways, but so far, even when fiber-type bandwidth is available it hasn’t transformed people’s lives beyond what is available today in the United States.
If the California project was approved by the feds, why didn’t the California Public Utilities Commission require power companies to use DC technology? The normal test for such things is a “least cost” test. If DC is so much cheaper the CA PUC should have required it.
Comment by Daniel — May 1, 2007 @ 11:42 am
Daniel: There’s plenty of demand for faster connections. Verizon grew its FIOS user base by 117K subscribers in the first quarter of this year, pushing the take rate to 13% of available users. FIOS broadband users now comprise about 12% of all Verizon wired broadband users. That sounds like demand to me.
And why the demand? Because we want more speed. The wimpy 768Kbps upload speeds of my cable modem get slapped silly by the full 15Mbps uploads provided by UTOPIA. That kind of speed is critical for content creators, telecommuters and gamers. When it takes upwards of 4-5 minutes for me to upload an album of around 60 pictures, something is very, very wrong; the same upload would take around 15 seconds on a UTOPIA pipe.
FTTH is the only long-term way to accomplish these speeds. AT&T’s U-Verse uses FTTN and fails to deliver speeds greater than what a traditional copper network can due to the bottlenecks. They’re learning that trying to play it cheap by only using fiber on the backhaul doesn’t yield much in the way of performance gains.
Is it expensive to lay out a new network? Of course it is, but most of that lies in digging trenches and stringing wire, not the cost of the wire itself. Once you take a look at the long-term longevity of copper (or lack thereof), it only makes sense to go with a brand new fiber network instead of working out unreliable kludges to force the 50-year-old copper to do the same tricks. Both cable modems and DSL are the Rube Goldberg devices of Internet access. Over time, a new fiber network will smoke the existing copper network in terms of capacity and ease of maintaining. Investing in copper right now would be like trying to corner the market on Atari 2600s.
The reason we don’t have “killer apps” is because we don’t have the infrastructure to support them. It’s the same reason we don’t have hyper-efficient ethanol-burning cars: there’s not a sufficient network of production and distribution. Most folks couldn’t figure out what to do with a 512Kbps Internet connection when broadband was brand new, then Napster and YouTube completely changed things up. Now we depend on high-speed connections to work from home as if we were sitting right there in the office, play real-time games (not exactly productive, but certainly a profitable industry) and exchange our own user-generated media.
Comment by Jesse Harris — May 1, 2007 @ 1:31 pm
Daniel,I’ll try to answer your questions knowing that I’m ignorant in the inner workings of anything but my mind and body.
Leaving that savings…My thoughts are that Wall Street reacts to things rather than creates things, maybe that is wrong when you think about Enron.
I know what I buy for a dollar today will cost many times more in ten years, that is my limited experience. Maybe you know how to build something cheaper by waiting ten years, or is that a trade secret.
Broadband telecommunications weight measure of deployment of residential and business broadband, Utah ranks 28th, the first 5 are Mass, NJ, Maryland, Wa and Ca, I live in Ca and we have the broadband that I would like it is just too expensive but available. The US ranks 12th globally.
The more important issue is whether Americans internet users are being sold short. This from BBC dtd 19Nov03: Yahoo BB signed up its three millionth customer for services running at eight and 12 mbps. Now with the latest tranche of upgrades taking the max download speed to a blazing 26 mpbs over standard telephone wires. That is not being wishful and languishing, now is it? The most important factor relates to network construction. In Japan, fibre has been pushed much deeper into the network and the copper loop lengths are much shorter. According to the IEEE you could get over 50 mpbs if your loop is one kilometer or less.
Continues
Comment by Paintmequick — May 1, 2007 @ 2:36 pm
Japanese surfers clearly have a good deal. Yahoo BB’s 26mpbs package cost just 3,838 yen or about forty dollars per month, which is around 20 cheaper than the new BT (English) deal @ 1 mbps. The Japanese package includes modem rental, the service provicer fee and subscription to the company’s IP phone service, BB Phone, offering dirt cheap phone calls,
The overriding impression was that net acccess is no longer the domain of geeks it was five years ago. Rather, it is seen as a utility like gas or water that is simply there. So, it seems clear that speed or the lack of it-is a restraining factor is but a dim memory, and rather it is what you can do that matters. In terms of where this wired nation goes now, it is only full speed ahead, Japan that is.
I think the question of percentage that want is oxymoron in the US, rather what percentage can afford Wall Street financed internet.
Your wrong, Japan can use the bandwidth for anything that pops up and we can’t, we would be isolated from that killer thing.
The reason for the feds approval is that the electricity is generated from the Bonneville dams in the Northwest. The state PUC was going along with the 11% profit the private utilities were guaranteed on top of all costs of generatio, transmission, ceo etc, the higher the cost the higher the profits. Deregulation brought Enron and we still have not recovered. Even in Utah’s IPP vision it will finally be forced to either clean-up or forget it. The longer you wait the more expensive it gets.
Bob in Petaluma
Comment by Paintmequick — May 1, 2007 @ 2:45 pm
Here it’s iprovo. Hubby was ecstatic when we finally got ours– he’s been waiting for years, ever since they announced they’re doing it.
Comment by nosurfgirl — May 3, 2007 @ 8:27 pm
Thanks Jeremy. Because of this post my bro checked out if Utopia was availabe in their part of Murray. Now he’s signing up. 15 mbps for $40 a month, not bad.
Comment by Daniel — May 22, 2007 @ 11:38 am