Provo restructures payments for iProvo

PROVO — The Provo City Council has approved an agreement to restructure the payments for its iProvo fiber-optic network.

The agreement, which passed by a 4-2 vote, paves the way for the merger of Broadweave Networks, which bought iProvo from the city more than a year ago, and Veracity Communications.

Officials for the soon-to-be-merged company, to be named Veracity Networks, say the city's action will help buoy the troubled cable television, Internet and telephone service.

"This is win-win decision," said Broadweave Chief Executive Officer Dave Moon. "It will reduce risk for the city and allow us to move forward."

Under the agreement, Provo will restructure Broadweave's monthly payments to the iProvo bondholder by $82,000 a month for the next 18 months. Moon and Veracity CEO Drew Peterson say the break will give the new company breathing room to build infrastructure and shore up its subscriber base.

The city will back the agreement by paying the $82,000 from city funds.

In a separate action Tuesday, the council approved an $820,000 loan from the city's energy fund to its own Telecommunications Debt Service fund to make those payments through the end of the fiscal year.

Under the restructured payment schedule, the city's contribution, which will amount to $1.5 million over 18 months, will be paid back starting in 2013.

Council members who supported the agreement said they wanted to give Broadweave and the new Veracity Network a chance to succeed. The alternative, they said, would be for the city to assume control of iProvo and the bond payment.

"I'm not interested in putting that tax burden back on the shoulders of our (residents)," said Councilwoman Sherrie Hall Everett. "It would be great if they could do that with private money, but they are holding onto an asset that could come back to Provo city. I think this is a great opportunity to allow this company to succeed and keep the system functioning."

Council Chairwoman Cynthia Dayton said she had initially been concerned about the merger, which faltered when it was proposed more than a year ago. The reworked merger plans won her over, however.

"These entities have reworked their business model and found where they make a great synergy for a great company," Dayton said.

Council members Steve Turley and Cindy Richards voted against the deal, both expressing the opinion that private-sector funds rather than city money should be used to restructure the payment schedule.

"I wish this private company well. I hope they'll pay back all the money," Turley said. "Perhaps the money is needed, but I believe it can come from other sources."

Broadweave has 15,000 residential customers in Provo, while Veracity has 5,000 mostly business customers from Logan to St. George and across the state line to Mesquite, Nev.

e-mail: mhaddock@desnews.com