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November 16, 2009 10:30 AM

UTOPIA Trailblazing New Opportunity For User-Owned Fiber

An exciting development has occurred recently in the world of fiber deployment. A new model is emerging in Brigham City, a city of less than 20,000 in northern Utah, for how user-owned open fiber networks can be financed and deployed.

It used to be that the only way you could get fiber was if you were lucky enough to have a private provider lay it or to live in a city that did it itself. Today in Brigham City, for $3,000 you can buy your own fiber. And in fact more than 1,600 local residents have already bought in to this new opportunity.

With that fiber they'll get access to UTOPIA's competitive and growing ecosystem of service providers, where they get to choose what services from what providers they want running on their pipe.

While this may sound radically different from how fiber has been traditionally deployed in the US to date, user-owned open fiber networks have already been a big success in Sweden, helping them wire remote mountainous communities with world-class broadband infrastructure.

We also need to realize how potentially brilliant the open fiber concept is for rural America because of how it allows for competition to happen between service providers on a single pipe. With open fiber you can make sure that everyone benefits from having access to a competitive marketplace of communications services.

But I'm even more excited about what UTOPIA's new model could mean for the future of fiber deployment.

The biggest problem with the economics of deploying fiber is that you have to carry a massive debt load and begin paying it off before much revenue starts coming in. Plus you have to invest a lot of money into neighborhoods without any real idea of how many people are going to sign up for service.

The user-owned model totally changes these dynamics. First off, by having users pay for their own pipes you disaggregate most of the debt. Just look at Brigham City. They're building a $5.5 million network and the city's only putting up less than $700,000. So no massive debt load for the city (or a private provider for that matter) to carry.

The second major piece of this is that UTOPIA's going to have built-in take-rates when they build out neighborhoods. Plus churn should fall to zero since people own their pipes.

Basically the way I see this is as the possible beginnings of a new third model for fiber deployment in the US. You no longer have to wait for a private provider to make the investment, or for your city to figure out how it can overcome all the roadblocks and then actually execute effectively. Instead users who want service can band together and find a way to get it now rather than waiting twenty years for someone else to figure out how to do it.

I have to catch myself, though, as the reality of the situation is that this is the first time this has ever been attempted in the US. There are still a lot of questions to be answered and hurdles to overcome.

For example, the current model in Brigham City is that if you don't buy in then you can't get service. So they've completely abandoned the old model, which may prevent some from being willing to take the leap, especially as Brigham City does have Comcast and Qwest offering service in town.

They have developed a special assessment area model, though, that allows homeowners to commit to a $25 a month payment over 20 years to spread out the cost over time.

Another potential trouble spot is how to deal with renters who want service but landlords who don't want to pay to have it installed.

But while there are questions still to be answered, the keys for right now is that this model has worked elsewhere, and now at long last we have someone willing to step out and see if it can work here in the US.

So I say to UTOPIA: best of luck as you continue on these endeavors! The rest of the country is watching, and we're all hoping you succeed as there are millions of us that wish we could get our fiber now but can't.

And to Brigham City: Kudos to you all! We are all cheering you on, inspired by your commitment to getting yourselves wired with the most important infrastructure of the 21st century.

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» User owned fiber in Utah from Communications
Here's some wonderful news via Geoff Daily's excellent Broadband blog, Apprising. Brigham City Utah is offering its citizens the chance to own their own fiber connection from their premises to the Utopia network where they can pick and choose among a g... [Read More]

Comments (3)

This is exciting - glad you could report on it.

I want to sound a cautionary note though - if we are not careful, this could be a recipe for broadening the broadband divide. Those who can afford it will get it and the rest will get crap from Qwest, falling further behind.

While I think it may make sense to prioritize in neighborhoods with a willingness to pay upfront, I also hope cities continue to require universal buildout (over a period of x years) in return for access to the rights of way.

Posted by Christopher Mitchell on November 16, 2009 3:22 PM

Exciting stuff Geoff.

Chris raises a good point about possible expanding of the digital divide. But, in general, I'd say that the more FTTH funding models that getting proven out, the better.

This user-owned model has some similarities to ownership by customer cooperatives, which is something I've been focused on lately, in the form of helping rural electric co-ops deploy FTTH networks, an approach that takes advantage of their existing rights of way and utility poles, their expertise managing wired networks, their close relationship with customers (which own them) and existing management systems based on customer-driven decision-making.

The special assessment element is intriguing, but wouldn't that put the upfront financial burden back onto the city? But I suppose that getting the homeowners upfront commitment to the assessment would take some of the penetration-related uncertainty out of the payback equation for the city and make it easier for them to attract lower-priced financing and successfully manage its payback.

Am I correct in guessing that the $25/mo. would cover only the cost of the FTTH network itself (maybe up to an Internet POP or local hub), not the extra cost of Internet service delivered by one of the network's retail ISPs?

Your point about renters raises the question of whether having FTTH connectivity will allow property owners to charge higher rents that can pay for their upfront fees and/or monthly assessments. I'd think so. And this variation in the rental market would provide some good market-driven feedback on the value of fiber connectivity.

Posted by Mitch Shapiro on November 16, 2009 4:00 PM

The headline is wrong—"user-owned" fiber, uh, no...that's a mischaracterization.

The city will own the infrastructure, not the individuals involved. "Customer-financed" might be a better description.

Brigham has approved a "voluntary" Special Assessment District to extend Utopia's current very small footprint in Brigham. If you want fiber you have to pay a voluntary tax...you can pay up front or pay over 20 years...3,000 dollars per individual and 50,000 per business. This is a way to finance the build without the city borrowing money. From the users' point of view it is an installation fee—and an expensive one.

Some background--the city of Brigham is among the cities in Utah's UTOPIA project that are _obligated_ to help repay a share Utopia's bonds should the project not have the revenue to cover it. Brigham is looking at some cash layout in 2010 if current projections are accurate. The voluntary fee will, in part, defray the city's part. This shifts costs/risks to the end-users and away from the city.

While _not_ user-owned it _is_ a different way of financing the muni model—and considering that they've got about 29% commitment from the city's citizens it was pretty impressively successful for Brigham. (I'd love to know how it was promoted.)

The best description of the way this actually works that I've seen is at:


see also:


Posted by John on November 17, 2009 9:31 PM

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