Two years ago, Provo sold $39.5 million in bonds to construct the fiber-optic telecommunications network. Its first $3.2 million payment is due in August and, while revenues now match operating expenses, the loan is necessary to help make that payment because there isn't enough money to pay off the debt.

If the revenue to do that doesn't materialize, state law would require that the bonds be paid back with sales tax revenue, an event that would squeeze the city's budget.

An attorney representing Qwest objected to the loan two weeks ago, saying it is illegal for a city to cross-subsidize to make a bond payment on a project that competes with the private sector.

Provo city attorney Robert West, in a letter to Qwest last week, said one law cited by Qwest doesn't apply to Provo because it was passed after Provo issued its bonds. West also said the city is not in direct competition with Qwest because the services offered on iProvo are actually provided by Veracity and MStar, two private companies.

"The city owns the facilities," West wrote, "but does not provide cable television or telecommunications services."

West also noted that Qwest has had opportunities to become an iProvo service provider and share in any perceived advantages.

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