IProvo debt to require city help

PROVO — There's both good and bad news about iProvo, the city's fiber-optic telecommunications network.

The good news is iProvo now has 5,000 subscribers and is adding 80 more each week. Construction of iProvo is more than 90 percent complete and should be done next month, four months ahead of schedule.

The bad news? The project is 5,000 subscribers behind original projections and can't afford the first payment on its $39.5 million bond.

Mayor Lewis Billings, through his telecommunications staff, asked the City Council Tuesday to approve a transfer of nearly $1 million from Provo's electric utility reserve fund to the iProvo project.

The council voted 6-1 to put the request on the agenda for its March 7 meeting. The vote, along with comments made by council members, was a strong sign the council will approve the request.

Billings was talking specifically about the construction side of the project last month when he said in his State of the City address, "We are within budget and within timeline."

But on the subscription side, iProvo is about a year behind initial projections provided to the City Council when it voted for the bond in January 2004, energy department director Kevin Garlick said. That timeline projected 10,000 subscribers by December 2005. The new projection has the city reaching that goal — the break-even point — in August 2007.

"We have a good recovery plan," Garlick said.

Staffers laid most of the blame for lagging revenues at the feet of HomeNet, the first company to provide triple-play services — cable TV, telephone and high-speed Internet — over the iProvo infrastructure.

"HomeNet was undercapitalized," telecommunications director Paul Venturella told the City Council. "Their management focused on fund-raising when they should have been focused on landing more subscribers."

The project also started six months later than planned, with the clock on debt payment already ticking, and residential customers, who provide a greater return, have been slower to sign up than apartment complexes, Garlick said.

HomeNet essentially ceased operations in Provo by July, when only 30 new subscribers signed up for services and the project had 1,644 subscribers.