Cut losses and sell iProvo

The Reason Foundation may have its biases, but those are in favor of a free-market agenda. That ought to put the think tank on the side of reason, especially in a place like Provo.

But Provo's leaders seem to abandon reason when it comes to the city's ill-fated fiber-optic network, iProvo.

A new Reason Foundation brief this week notes that iProvo's losses now total $8 million and will grow to an expected $10 million by the end of this fiscal year. Those losses are in addition to the $39.5 million the city borrowed to start the project. Most of that money still has to be repaid.

iProvo is doomed, just as is its much larger sister, UTOPIA, the broadband network that spans a consortium of 11 Wasatch Front cities and is desperately trying to refinance in order to stay afloat. Provo's leaders would be wise to seek a buyer for iProvo, getting what it can in order to lessen its losses.

That's doubtful, however. City officials remain defiant. Mayor Lewis K. Billings reacted to an earlier Reason Foundation report by attacking its author's credibility, relying on a tenuous relationship the author once had with Qwest as a consultant.

Neither Billings nor anyone else associated with iProvo or UTOPIA has attempted to answer three fundamental questions contained in that first report. They are:

• Is the city competing fairly with the private sector? Unlike a private business, the city can cross-subsidize iProvo by borrowing from other city departments to cover shortfalls.

• Does the city have a conflict of interest? It competes directly with broadband companies that obtain franchises and pay license fees and taxes to the city. The city has many ways in which to squash competition.

• Has Provo ruined incentives to keep broadband prices low? Any company that uses iProvo will know the city can continue to subsidize its costs through taxpayer resources.

iProvo and UTOPIA like to tout their incredible broadband speeds, up to 100 megabits per second. But as the brief notes, iProvo has yet to monetize that speed. The companies that use iProvo offer connection speeds similar to the network's competitors. Simply put, the market isn't there for 100 mbs Internet. When it is, a lot of companies will provide it.

We frankly don't understand Provo's antipathy toward the private sector, nor its attitude that government can deliver Internet, phone and cable TV better than a free market. History strongly argues otherwise, just as it is likely one day to show that iProvo was a sad chapter at the dawn of the Information Age.