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Utopia awaits moment of truth

Pressure is rising, as cities involved in the controversial fiber-optic network in Utah decide whether to commit funds to back the project.

Salt Lake City's city council will vote Tuesday evening on whether to allocate funds from tax revenues to back a controversial fiber-optic project called Utopia.

Short for the Utah Telecommunication Open Infrastructure Agency, Utopia is a government agency formed by 18 Utah cities to build a fiber-optic network that would provide Internet, telephone and TV access directly to households.

With a population of roughly 182,000, according to the 2000 census, Salt Lake City is the largest of the 18 cities that originally pledged participation in Utopia. The outcome of the vote could affect the overall success of the project, which is being watched as a model around the country.

Municipalities looking to build their own fiber networks have recently suffered other setbacks. In March, the U.S. Supreme Court ruled that states have the right to pass laws that prohibit cities and local governments from selling telecommunications services.

Qwest Communications International, the incumbent local telephone company in Utah, is turning up the heat in Salt Lake City. The carrier has pledged that if the council votes against Utopia, it will make DSL (digital subscriber line) service available to 90 percent of residents in Salt Lake City by the end of the year, greatly accelerating its existing plans for expansion. Currently, Qwest DSL is available to 60 percent of the population.

But if the city gives the green light to Utopia, Qwest will roll out DSL much more slowly, said Vince Hancock, a Qwest spokesman.

Roger Black, chief operating officer for Utopia, was skeptical of Qwest's plans. "For the citizens of Salt Lake, I hope that Qwest is sincere in their promise and that they have the wherewithal to complete the project," he said. "However, even if they do live up to their promise, they're still not delivering the big broadband capacity our network promises."

Utopia's backers have promised Internet access 35 times quicker than the DSL service currently available from Qwest. What's more, the agency has promised residents that service providers such as AT&T that lease capacity from the Utopia network will be able to provide these higher-speed services at prices comparable to Qwest's DSL offering, which sells for about $40 a month.

Originally, Utopia organizers said they wouldn't need additional funds to build the network. But to get a more favorable interest rate on the bonds needed to build the network, each city must back the project with its own funds. As a result, some of the original 18 cities have begun to have second thoughts about the project.

Last week, Salt Lake City Mayor Rocky Anderson recommended that the city council deny allocating taxpayer money to insure bonds that would pay for the cost of the network. Anderson, whose city would be required to set aside $4.1 million in tax revenue annually for 17 years, questioned whether a municipality should undertake such a project, stating that he felt that the risk is too great to tax payers.

Salt Lake City is the last city to decide whether it will participate. So far, 11 cities have said yes, and only one has withdrawn altogether. Five of the cities said they could not commit funds but that they will remain a part of the Utopia project. Construction on these networks will begin once alternative financing can be arranged, Black said.

Although Black said Utopia can survive without Salt Lake City, if the city council votes against the plan, it will be a major blow to the project.

"It would be a stronger project, if Salt Lake City chooses to participate," he said. "But it is not the secret to Utopia's success. The market research that has been done predicts that take rates in all cities still onboard are more than adequate to sustain the network."