A Performance Audit of the Utah Telecommunication Open ...

completed in a timely fashion and had subscribers been signed up forservice, UTOPIA would instead be generating income to offset thatinterest expense. Since Perry did not join UIA, UTOPIAadministrators have no current plans to complete the network inPerry.Some footprintscurrently in operationstill contain areas ofstranded investment.Some Footprints Already in Production Also ContainStranded Investments. In addition to the stranded investment in 21partially completed footprints, we have identified other footprints inproduction that also contain stranded infrastructure. Although wewere unable to identify the exact amount, 78 footprints in production(see Figure 2.9) contain at least some of the stranded investment. Forexample, UTOPIA staff were able to identify many footprints whereservice is provided to some neighborhoods but not others even thoughthey contain network conduit, main lines, and even electronicscabinets. Those footprints appear to contain millions of dollars inpartially completed infrastructure that has not been put into use.In summary, UTOPIA has invested over $117 million ininfrastructure that is currently underused or unused. The annualinterest expense on that investment is a major financial drain on theagency. For the $10.8 million in stranded investments that we couldidentify, UTOPIA’s interest expense is roughly $756,000 each year.The underutilized and stranded investments are one reason UTOPIAhas spent a large portion of its bond proceeds on interest expense.Instead of generating revenue for UTOPIA, those areas are placing afinancial burden on the agency.Efforts Are Being Made to Put Stranded Investment intoProduction. UTOPIA officials report that since 2008 the agency hasworked to connect stranded sections of the network. For example,when UTOPIA’s RUS funding was suspended in 2008, UTOPIA hadcompleted 74 percent of the infrastructure in Tremonton. However,UTOPIA could connect no customers in that city because it had notyet installed any fiber. Since that time, UTOPIA raised the additionalfunds needed to complete the network in Tremonton and has beenable to provide service to that community.UTOPIA officials report that between 2008 and 2010, they wereable to make additional investment in cities with strandedinfrastructure. In all, they report that $11.6 million in previouslystranded investment has been connected to the network since 2010- 18 -A Performance Audit of the Utah Telecommunication Open Infrastructure Agency (August 2012)