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News and comments on community broadband networks, the communities deploying them and the technologies that support them. Published by Denise Frey and Al Bonnyman.

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Monday, December 15, 2003

 

Utah: "Cities dream of high-speed digital link called Utopia"

The Salt Lake Tribune is carrying another article on the proposed 18-city UTOPIA FTTH (fiber to the home) project.

The article quotes a University of Denver academic, Ron Rizutto, who criticizes such systems on several grounds. The article, however, does not note his employment as senior fellow with the cable television industry's Cable Center.

One Rizutto criticism is that municipal systems duplicate existing private investments. This is not exactly true -- usually substantially exceed existing private investments. That's because they usually only get built in areas where the existing cable TV and telecommunication providers have done a poor job serving local customers and failed to invest in the plant upgrades necessary to offer affordable broadband.

A second criticism is that these systems "are not making money in the conventional sense" and just breaking even -- but isn't that the point of municipal ownership?

Rizutto also notes that some municipal systems are losing money but the article does not go into details. All broadband systems -- public or private -- lose money initially as they are being built. From my own experience, I would expect that most municipal systems in the U.S. are breaking even after the first three or four years.

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