Macquarie is the company looking to create a Public Private Partnership with UTOPIA–that would would require a utility fee of $18 to $20 every month added to our current utility bill, whether we use it or not.
Among many concerns with this deal are the following:
• The utility fee to be assessed to all businesses and residences in the City that have fiber available in the street – whether they desire to be hooked up to the service or not and whether they have existing internet service or not that is less expensive and a better connection.
• This fee does not cover any portion of the debt, nor can Macquarie tell the Cities how much of the revenue from the partnership will eventually cover existing debt.
• The fee is not usage based as water and electricity are, rendering it inequitable – homes pay one price, multi-unit dwellings pay a different price as do businesses, yet they all receive the same “free” connection speeds of 3 mbps per month.
• The Cities (read citizens via increasing taxes) will be both required to make up for any uncollected fees by either paying for the shortfall ( or residences or businesses that sit empty for example) and for non-payment of fees. A penalty mechanism will be required such as turning off the water to the business/residence until the “debt” is satisfied.
• This fee pays off the availability payment – the availability payment pays off the capital costs – the capital costs are defined as debt and equity raised by Macquarie to fund the construction of the project. WHO is paying for this deal? WE ARE! This makes us liable for more debt as the fee is a contract requirement for the life of the contract – 30 years. Any shortfalls must be made up by the City by payment from City funds or legal enforcement via shutting off water until payment is made.
Macquarie has a history of failed Public Private Partnerships, as well as PPP’s which have increased costs to consumers such as higher than promised toll rates on a toll road in CA.
UTOPIA fiber is currently laid in front of 10,000 addresses in Orem. Of those, only 3,000 are currently hooked up. Within the entire UTOPIA network, 28,000 addresses have availability but are not hooked up. With a better business model, the opening up of the network and some incentives to the internet service providers (ISPs) connections could be made to the existing UTOPIA network. If 1/3 of those were to hook up, we could double the revenue to UTOPIA, which money could be used to pay off network Cities debt!
The existing problem is not an infrastructure problem, rather one of a poor business model and a lack of marketing strategy and implementation. This is something that can and should be fixed without penalizing citizens via a 30 year contracted utility fee.
Mayor Brunst is against this deal and has been working to find solutions. He has pushed for the City to be allowed to explore other options (Macquarie required a non-disclosure agreement so they could not pursue other options – the Mayor changed this!
There are other options being explored that will not require a mandatory utility fee – and will allow citizens the right to continue to be participants in the marketplace for an optional service. Please express your concerns. PLEASE EMAIL ALL COUNCIL MEMBERS WITH YOUR CONCERNS AND TELL THEM NO!