Last week, the Utah Telecommunications Open Infrastructure Agency announced 800 more houses in Orem have the ability to connect to its fiber optic network.
“We are building faster than we ever have,” said Roger Timmerman, executive director.
Orem is on track to be completely built-out by 2022. Other cities in the 11 city consortium have already reached their goals, according to Timmerman.
West Valley City, the largest city in the consortium, is half way done, while Murray is about 60% built-out, according to Timmerman.
Tremonton, Brigham City, Perry, Centerville and Lindon are built-out. However, Timmerman says that build-out continues as growth comes to the cities. If developments have open trenches, fiber optic cables will go in them as well as other utilities.
Timmerman said the good news is that as Orem resident’s have access to UTOPIA, many are choosing to connect to the service.
“Orem is exceeding expectation with take rates of 30%,” Timmerman said. “Lindon was built out about 10 years ago and has 55% residential takes.”
Timmerman said those take numbers will go up as residents get informed about the availability of UTOPIA.
Having Orem and other consortium cities connected to UTOPIA has been a long time in the making. It was first discussed and approved by the Orem City Council in 2002. The first rounds of bonds were issued in 2004 and refinanced in 2008.
To help with financing, the Utah Infrastructure Agency or UIA was created as a funding mechanism to finance new builds in the consortium.
On rumors that UTOPIA was being financially mishandled, Rep. Brad Daw, R-Orem, went to the Legislature and called for a complete audit in 2012. They concluded that it was being handled properly but set performance benchmarks as they moved forward.
“There is $185 million plus interest (bond debt) over the entire consortium,” Timmerman said.
Orem has 20 years left on its UTOPIA bond payments. Timmerman said when Orem is built-out that it will see a decrease in what it pays out.
Over the past few years, UIA has operated in the black and has been able to pay back to Orem and other consortium cities the compounding interest each year. Orem capped out a few years ago. That interest is going to pay off the UTOPIA Bond.
“UIA is the most successful (fiber optic network) project in the U.S.,” Timmerman said. “We are the largest open access network in the country and considered a success. Ten years ago we were a failure.”
So much has changed since UTOPIA first came on the scene, according to Timmerman. YouTube, Facebook and Netflix didn’t exist.
Financially, Timmerman said there are two things that make UTOPIA/UIA so successful.
“We are in a financial position to finance projects with no backstop,” Timmerman said. “Number one, we took out our last $40 million bond last year and no city had to pay for it. Number two, city obligations have been capped and are expected to go down.”
Timmerman said for a time in 2008 there was discussion in Orem and elsewhere that cities might cut their losses and look for something else.
“If we’d cut out losses in ’08 we’d be on the hook for all of it (the bond) without service,” Timmerman said. “At a certain point, Orem will not be paying anything and the goal for UIA is to pay back the city anything paid previously.”
The customers will be paying, Timmerman concluded.
Timmerman added, “It’s a really good team effort. A lot of people have suffered and fought for this over the years. The Board directs us. The Board has made us successful.”
Both boards at UTOPIA and UIA are made up of representatives from the consortium cities. Jamie Davidson, Orem city manager sits on the UIA board and Councilwoman Debby Lauret sits on the UTOPIA board.
“Roger has given a lot of guidance,” said Kim McKinley, chief marketing officer.
McKinley said the number one argument she hears is that Wi-Fi is the future.
“But wireless plugs into fiber. Most wireless companies in the state use UTOPIA,” McKinley said. “A lot of people in other states come and look at UTOPIA.”
Timmerman said that demand is so good it’s paying for itself.
McKinley said the consortium now has more than 27,00 users with about 500 being added each month.
“It’s a win-win,” Timmerman said. “We can avoid pitfalls and build-out at lower cost and we make money. We see ourselves as the go-to solution for fiber optics.”