Cable World: Competition Report: Orem, Utah Gets a Taste of Utopia

By Mavis Scanlon

Utah is Comcast country, but the dominant video provider is about to face triple-play competition, at least in one small swath of the state. In May, residents of Orem, near Salt Lake City, will be able to purchase a voice, video and data bundle from Internet service provider MSTAR.net.

One of the largest regional ISPs in Utah, MSTAR is the first company to launch services over the fiber-to-the-home network owned by the Utah Telecommunications Open Infrastructure Agency (UTOPIA). The agency acts as a wholesaler, while other service providers sell telecommunications services to consumers (see "Here Come Two More Bullets for Cable to Dodge," Nov. 8 issue).

Priced at $99.95, MSTAR's bundle will include a basic video package of 80 channels, VoIP phone service and a broadband service that features speeds of 10 Mbps upstream and downstream. MSTAR introduced its broadband service, MSTARmetro in March. The Internet service includes a built-in filter that blocks pornography, gambling, hate group and illegal-drug-related sites.

Jon Hansen, MSTAR's CEO, says the company probably won't sell stand-alone video, but will try to give consumers the ability to configure their own channel lineups. "We're not going to push consumers into 200-channel packages" just so they can get the channels they want, he says. A member of the National Cable Television Cooperative, MSTAR has licensing agreements with big network groups and is cutting studio deals for VOD, says Hansen, who declined to provide details.

UTOPIA's 14 member cities, which also control the area's cable franchises, expect the fiber network to pass 150,000 homes. As of mid-March, the network had passed 6,000 homes; a target to pass 50,000 homes by August has been pushed to year-end, according to a spokesperson for DynamicCity, the company that is designing and building the network.

"Just as we would with any other competitor, we're closely tracking the progress of UTOPIA," says Steve Proper, director of government affairs for Comcast Utah. Proper says it's unfair that Comcast's franchising authorities are also competitors. "We still feel very strongly that competition is best served when everyone is on the same level playing field," he says.

UTOPIA Subscriber Projections*                Year 1  Year 2
Market (construction totals of homes passed)  47,472  99,421
Take Rate                                     20%     39%
Residential Total                             8,216   32,767
Business Total                                1,451   5,731

UTOPIA Subscriber Projections*                Year 3   Year 4
Market (construction totals of homes passed)  140,963  141,822
Take Rate                                     46%      52%
Residential Total                             55,553   64,002
Business Total                                8,981    10,153

UTOPIA Subscriber Projections*                Year 5
Market (construction totals of homes passed)  141,822
Take Rate                                     54%
Residential Total                             66,059
Business Total                                10,392

*Each UTOPIA city surveyed residents to determine take rates for services
deployed over UTOPIA's fiber-to-the-home network.
Source: UTOPIA