PROVO — Better to privatize iProvo now and end the bleeding than lose another estimated $2 million over the next year, a longtime critic of the city-owned fiber optic network said Wednesday.

Steven Titch of the Reason Foundation — a Los Angeles-based think tank that promotes libertarian principles — issued a eight-page policy brief that highlighted what he terms "iProvo's poor performance." Titch, a policy analyst specializing in telecommunications for the Reason Foundation, blasted the city's telecommunication network, saying municipal governments have no place in the high-tech infrastructure business.

"They don't do it well," he said. "And iProvo is an example of this."

Provo issued $39.5 million in bonds to finance the construction of iProvo. Since its inception, the network has experienced high churn rates among subscribers and relied heavily on subsidies to keep afloat. To date, the project has cost the city $8.4 million, Titch said, and there are projections iProvo will cost another $2 million. He sees only two options.

"Provo now faces the dilemma of continuing to fund iProvo with no break-even point in sight," Titch wrote. "Or sell the property and recoup as much of its investment as it can."

Provo spokeswoman Helen Anderson responded Wednesday saying the report is flawed throughout, and added the churn rates are not unusually high in comparison to other telecommunication companies. She said city officials had other problems with the report.

City Councilman George Stewart said he reviewed the report and found it a pretty accurate commentary on iProvo's current situation. Although the system provides the best broadband in the city, he's not sure it's worth subsidizing to the extent the city has gone.

"(Privatization) would be my preferred option because it would be a win-win," he said.

This report isn't the first iProvo critique offered by Titch and the Reason Foundation. The foundation issued another report by Titch in Dec. 5, 2006, that lambasted iProvo.

Among the findings in the 2006 report, Titch stated that iProvo was behind on its business plan and would continue to be forced to borrow money; iProvo's wholesale plan depended heavily on the performance of its retail partners; retail pricing for services using iProvo was not substantially different enough to prompt consumers to migrate away from service providers like Comcast and Qwest Communications; and iProvo was not contributing significantly to the growth of broadband in Provo.