iProvo, Broadweave nearly close deal

Published: Tuesday, July 1 2008 12:17 a.m. MDT

PROVO — Late into Monday night, city officials scrambled to bring the city's municipally owned telecommunications venture to a close.

Mayor Lewis Billings and Broadweave officials were slated to sign contracts Monday to officially turn iProvo — which provides citywide phone, Internet and video services — over to South Jordan-based Broadweave Networks. But as of print time Monday night, Provo spokeswoman Helen Anderson said they're still working out the details.

"We're moving forward and we're trying to get it all done," she said.

Broadweave representatives did not return multiple requests for comment Monday. But a message on their Web site, anticipating the closing of the sale, welcomed iProvo customers to their system, stating "you can expect Broadweave's highest commitment to service satisfaction and prompt service."

Under the terms of the agreement, the city would receive a $40.6 million payment for the network by taking out a loan. Broadweave will then make monthly payments of $277,000 for the next 19 years to pay off Provo's bonds, plus interest, for a total of about $63.2 million.

Provo would also pay Broadweave $300,000 annually for dedicated capacity on the system to connect government agencies such as city, school and county facilities — a service valued around $1.5 million to $2.5 million.

City Councilman Steve Turley said he had mixed emotions Monday. On one hand, he was glad someone was taking iProvo off the public's shoulders. But he said he thinks the public shouldn't have had to carry the burden in the first place.

"Time has proven that Provo should not have dabbled in that business," he said. "I wish we would have never been there."

Since the city launched the first line of its venture into the municipally owned telecommunications network, the project registered sluggish subscriber growth and consistent financial losses. Initially, the city expected to have 10,000 subscribers — the financial break-even point — on iProvo by January 2004, but that mark was later pushed back to August 2007. Later, city officials said the system would need a take rate of 16,000 to 18,000, more than 50 percent of the city's residences, to break even.

Between 2001 and 2005, the city transferred $12.3 million from the city energy fund to keep iProvo afloat. The City Council also approved a $1.2 million transfer from general fund sales tax receipts, bring total iProvo transfers to about $13.5 million. City Councilman George Stewart said iProvo was on track to cost the city another $15.6 million over the next five years if it wasn't sold.

Stewart also said he had many happy thoughts running through his head Monday as the sale was being worked out.

"It's gonna make a big difference financially for the city," he said.

While Turley said he's also glad to see the system go to the private sector, he's disappointed the sales transaction wasn't handled in a more professional way. Specifically, the City Council had little time to review sales documents before they discussed and voted on the sale June 3.

Still, Turley said he wishes Broadweave the best of luck.

"If they don't succeed, we'll once again have to relive this nightmare," he said.


E-mail: jdana@desnews.com

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