Second company shows interest in Utopia

Wednesday , August 20, 2014 - 1:22 PM

Standard-Eaminer correspondent

SALT LAKE CITY -- A second telecommunications company is expressing interest in a possible takeover of UTOPIA.

FirstDigital, a communications carrier based in Salt Lake City touting quality broadband connections for voice, video and data services, has expressed interest in the financially troubled Utah Telecommunications Open Infrastructure Agency.

Details of the company’s interest were made public Tuesday night during a work session of the Centerville City Council by Mayor Paul Cutler, a member of the UTOPIA board. The company has been pursuing discussions of a UTOPIA bid for over two months, however. FirstDigital representatives have already met with city councils in both Orem and Brigham City.

Specifics of what the takeover bid would include have not been made public. Wesley Mcdougal, CEO of FirstDigital, told the Standard-Examiner Wednesday his company would not require a utility fee to finish the buildout of the fiber network. He said FirstDigital would also eliminate UTOPIA’s operating losses and help defray some of the long-term expenses communities have from existing bond commitments.

Pressed on what financial commitment the takeover would have for residents in the 11 UTOPIA cities, Mcdougal simply said the costs would be competitive with the marketplace.

The interest comes even as six of UTOPIA’s 11 city members continue to pursue a possible takeover from Australian-based Macquarie, an investment company that is exploring a possible deal with the fiber-to-the home network. Macquarie’s deal would allow final buildout of UTOPIA, but would come with a projected $18-$20 monthly utility fee to citizens in the participating communities. Final details on Macquarie’s next proposal are due by Aug. 27.

Centerville, which is almost completely built out, was one of five cities that opted out of further discussions with Macquarie earlier this year.

News of a possible second suitor has not necessarily been well-received in some circles. The UTOPIA board voted Wednesday morning to deny resolutions to open negotiations with FirstDigital or use of staff resources and time to pursue that bid, for the time being. It is the second time in a month’s time a resolution to consider competitive offers at the board level at the same time has been denied.

The exchanges between representatives of cities that have opted to move forward with Macquarie and those that have not were spirited at times. Orem Mayor Richard Brunst, whose city voted not to pursue further talks with Macquarie, took the lead in pushing discussions with FirstDigital, while representatives from Layton and West Valley opposed the resolution.

Layton and West Valley want to pursue the details with Macquarie before other possibilities are explored. Brigham City representatives also voted against the resolutions.

Both sides expressed frustration following the votes.

Layton City Manager Alex Jensen described interest from FirstDigital as a distraction for the time being.

“We cannot look at solutions holistically until we have information from Macquarie. Let’s not assign that delay in the process to bad motives,” Jensen said.

Orem City Manager Jamie Davidson pressed Jensen for specifics in the Macquarie negotiations. “Until you get your answers, we don’t seem to be able to move forward with any answers,” Davidson complained. He said Orem and other opt-out cities were still tethered to Macquarie, even though they chose not to move ahead with negotiations with the Australian company.

Other specifics to emerge from the UTOPIA board meeting include:

● Several cities, including Lindon and Payson, are not helping with financing to address operational losses by the agency. A number of communities, including Centerville, have committed to help with operational expenses through December only.

● UTOPIA continues to pursue legal action against the government’s Rural Utilities Service for $80 million in damages, following efforts to secure RUS funding early in the network’s development process. A trial date in federal court in July was postponed, pending the possibility of an out-of-court settlement, according to David Shaw, legal counsel for UTOPIA.

● Several communities are expected to entertain talks with FirstDigital privately, even though nothing would be binding without a vote of the UTOPIA board. Centerville officials hope to set up a Sept. 9 work session to privately explore the FirstDigital option, according to Cutler.

● With legal concerns being raised about the possibility of putting the UTOPIA utility fee on the ballot by the Lieutenant Governor’s office, opt-in cities are expected to consider ways of surveying residents on the proposal before the November election. Layton officials are expected to address the issue in its meeting Thursday night.

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