Revenues for iProvo lag

Officials say the project needs about 10,000 subscribers — roughly one-third of city households — to succeed. Success is critical because the City Council approved a $40 million bond to finance the ambitious fiber-optic system.

Provo leases space on its iProvo network to private companies it certifies to provide cable TV, high-speed Internet connections and Internet telephone services. The companies pay Provo through fees for subscribers to each of the services.

The transition over the past two months from HomeNet, which decided to concentrate on other ventures, to Veracity and MStar has been rocky, with phone customers experiencing problems with service. A break in the network caused outages and MStar has struggled in its debut as a phone provider.

"It didn't go charmingly well," Provo energy director Kevin Garlick said of the transition, "but we did weather the storm."

He said MStar is still testing its phone service in trials with some customers.

Provo benefited from more than half a million dollars in unexpected revenue, more than making up for the customer revenue shortfall. Most came in the form of the extra interest income. That money was generated by rising interest rates and slower-than-anticipated spending of bond proceeds, Provo budget director John Borget said.

UTOPIA provided $48,000 of the unexpected revenue. UTOPIA, another government-owned telecommunications provider, is leasing its cable feed from iProvo.

Billings admitted the project is behind schedule but remained optimistic.

"I hope this isn't a rainy-day, dark-and-gloomy article," he said. "You get behind. We are five or six weeks behind schedule on construction. That's not bad when you're halfway through. We're probably several months behind on subscriptions, but the (HomeNet) was unable to maintain the pace and ultimately we had to replace them."

HomeNet owes Provo an undisclosed amount of money; Provo declined to reveal the amount despite a GRAMA request. HomeNet has agreed to pay all of its outstanding debts, but city officials said they won't comment further until negotiations are completed in mid-October.

"They stopped paying their bills," Garlick said. "However, as part of the settling, they have agreed to make the city whole. They are making payments."

HomeNet released a statement to the Deseret Morning News saying it remained committed to the success of iProvo.

---

E-mail: twalch@desnews.com