Is a Google buyout the exit strategy?
One way or the other, it looks like Google is behind an impending bailout of Utopia, Utah’s multi-city muni fiber-to-the-home system. According to a story in the Ogden Standard-Examiner (and with a h/t to the Baller Herbst List)…
…officials gave only generic detail on what’s coming as a huge opportunity involving a major company mirroring Google’s involvement with Utah County.
They’re referring to Google’s take over of the municipal FTTH system in Provo, earlier this year. Talks regarding the possible buyout are cloaked in secrecy. That’s common – often legally required – practice in the private sector, but it’s raised a predictable storm of protests in a public sector context. There are 11 cities that are paying members of the Utopia project, and those officials were required to sign a non-disclosure agreement. Again, controversial for elected representatives but course of business for a corporation (Silicon Valley lore would have you believe that mutual NDAs are a romantic prelude to a first date).
A private sector rescue would take at least some of the burden off of local taxpayers, who are backing the money borrowed to pay for building and, so far, operating the system. Utopia’s business case is a wreck up to this point, with take rates apparently somewhere around 20% and an open access structure that makes it difficult for service providers to take advantage of economies of scale.
The suitor might or might not be Google. Those briefed on the bid would only say it involves an “Internet giant”. Which could be Google or one of its rivals, either a major player from the content and services side of the industry or an incumbent telecoms company that figures the best defence is a good offence.