Provo's experiment in socialized telecom, iProvo, continues to bleed money while city leaders keep playing with numbers.
Earlier this week, the city decided to hire two consultants to tell it how to stop the hemorrhaging. If current trends continue, the city would lose more than $2 million on the project during the current fiscal year. That would be about $850,000 more than the anticipated loss the city already included in its budget.
This comes despite the city having surpassed the 10,000-subscriber mark it originally said it needed in order to break even on the network, which provides the fiber-optic backbone to provide Internet, digital television and telephone service.
A report in this newspaper on Tuesday said city leaders are leaning toward having city departments pay more for the services they get from iProvo. But this would be little more than a shell game. City departments get their money from taxpayers or from utility rate payers. Making them pay more would simply spread the cost of the system to those Provo residents who choose not to pay for the digital services iProvo provides. The city already has borrowed from the Energy Department to keep iProvo afloat.
The irony is that the city has done nothing to disprove the stinging criticism published last year by the Reason Foundation in California. The free-market think tank said the venture would continue to lose money indefinitely. It also said iProvo competes unfairly with the private sector, which also provides Internet and telecom services using its own infrastructure; that it franchises and licenses telecommunications companies and, therefore, has a conflict of interest; and that the city can do something no private business can it can move money around within other city funds and go to taxpayers for more.
In its rebuttal, the city chose to focus on perceived conflicts of interest on the part of the study's author, ignoring these larger philosophical questions.
By now it should be obvious that private businesses, faced with such losses, would consider abandoning ship. Provo is treading where only private business ought to go, and doing so badly. Telecommunications is a market demanding the nimble feet of private investors. Trends and technologies are constantly shifting.
We doubt the consultants will tell Provo what it really needs to do, sell iProvo and go back to simply being a city.
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