iProvo losses mounting

PROVO — In June, the Provo City Council budgeted $1.2 million — or $100,000 a month — to cover the losses it expected iProvo to suffer during the coming year.

That won't be enough to do the job if the deficits in July and August are a signpost.

The city's ambitious fiber-optic telecommunications network delivers the fastest residential cable Internet speeds in Utah and has 10,000 subscribers, but iProvo operated at a $112,403 deficit for July and August, according to a report on iProvo's performance for the first two months of the new fiscal year.

Several council members have expressed concern that if the added deficits continue, it could mean iProvo would need another half-million dollars from the city before the fiscal year ends next June.

"If we take $112,000 times six, is it realistic to assume iProvo will need another $700,000?" council member Steve Turley said.

City and iProvo project leaders aren't sure, but they expressed optimism.

Bruce Riddle said the network's service providers, MStar and Veracity, offer a new promotion that adds subscribers but so far provides no new revenue. Under the offer, new subscribers receive the first three months free if they sign up for triple-play services — digital cable TV, phone and Internet.

When those new subscribers reach their fourth month, revenues should rise and help the project's bottom line, Riddle said.

Also, iProvo project manager Kevin Garlick announced that the city wants to add three new service providers that could bring more subscribers to the network — Emery Telcom, Fibernet and XMission.

XMission was Utah's first independent Internet service provider, and Fibernet was among the first. XMission signed a deal with Ogden in April to build a Wi-Fi network for the city that eventually will span 28 square miles and provide free or low-cost wireless Internet access.

Eight companies responded to Provo's request for new service providers to join iProvo, Garlick said.

"I'm not ready to say these three will be automatically added," he said. "They have been sent a letter saying we're interested, based on their abilities and financials."

Garlick said the companies were split between focusing on triple-play residential service and focusing on businesses.

The city wants iProvo service providers to market the fiber-optic cable network to more commercial businesses. So far, 428 businesses are subscribers in a city with a few thousand companies.

In comparison, iProvo has 5,068 apartment subscribers, 52 percent of potential subscribers, and 4,388 residential subscribers for a "take rate" of 22 percent as of Aug. 30.