State audit of UTOPIA fuels questions about its viability

An audit by the Utah Legislative Auditor General has added more questions about the viability of the Utah Telecommunications Open Infrastructure Agency (UTOPIA), which has led The Salt Lake Tribune to question whether the 11 cities paying the bills for the agency should just "pull the plug."

An article in the Aug. 6 edition of the newspaper pointed out that the audit "retills old ground about mistakes in UTOPIA's past" and doesn't reveal anything particularly new or more damaging than what was previously known about the agency, while recommending that it "implement better fiscal controls" and "follow the financial standards for local governments more closely and be more transparent in its dealings."

This, the newspaper said, might not be enough to save a project that is "bleeding the budgets of 11 Utah cities to pay its bonds" and that lost $18.8 million in 2011 with a business that "continues to show a negative cash flow."

Founded in 2002 to provide fast broadband connections to homes and businesses in cities that believed they were being ignored by incumbent telecommunications providers, UTOPIA might even be considered the predecessor of  Google's (Nasdaq: GOOG) fiber effort in Kansas City and might provide some clues as to where that project will go.

For UTOPIA, the newspaper said, "The audit suggests providing broadband infrastructure at wholesale to independent content providers may never work, but it stops short of drawing a final conclusion. It does say that the question may be answered in places like Centerville, where the agency is making a new push to market itself."

If that doesn't work, the newspaper suggests that the sponsoring communities might consider refusing to underwrite more debt and just quit the whole project. Currently the 11 participating cities—Tremonton, Perry, Brigham City, Layton, Centerville, West Valley City, Murray, Midvale, Lindon, Orem and Payson—are on the hook to pay nearly $13 million next year to service the agency's bonds. Some cities, it noted, "have begun to raise property taxes to keep their municipal services whole while making UTOPIA payments."

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