Google Fiber adds value to Provo network, but taxpayer debt remains, mayor says

Published: Thursday, April 18 2013 1:20 p.m. MDT

Provo Mayor John Curtis makes the announcement Wednesday, April 17, 2013, that Google Fiber will be brought to Provo.

Ravell Call, Deseret News

PROVO — With Wednesday's announcement that Google Fiber is expected to purchase the city's antiquated and embattled iProvo fiber-optic network, city leaders envision a future community where high-speed Internet service is as ubiquitous as electricity and running water.

Pending approval next week by the City Council, Provo would be the third U.S. city to get the Google Fiber treatment — which includes standard Internet service at no cost to residents with the option of upgrading to ultra high-speed one-gigabit Internet — after Kansas City, Mo., and Austin, Texas.

But while the agreement represents a significant investment on behalf of Google, its face value does little to mitigate the city's bond obligation created 10 years ago to create the iProvo fiber-optic network.

On Thursday, Mayor John Curtis said city leaders had initially hoped to sell the iProvo network for cash that could then be used to pay off the city's debt. But finding a buyer willing to make that agreement proved difficult.

"It became evident to us through a number of suitors that nobody was going to pay us cash for this network," Curtis said. "We pulled in every conceivable buyer that we could. One by one, they came and they looked at our network and said, 'It's not worth anything.'"

That led to a paradigm shift, he said, where the question was either to limp along with iProvo — meeting annual bond obligations for the next 10 years and shutting off the network after the debt was paid — or to find a way to give taxpayers a higher quality product for the money they were already spending.

"That doesn’t go away," Curtis said of the city's iProvo debt. "The difference is before this deal they were paying that and getting very little in return. With this deal, they’re paying it and they’re going to actually see substantial value for that."

Curtis said there will be a series of public meetings through Tuesday when the City Council meets to address any questions and concerns from residents. He also said council members were made aware of the negotiations with Google at an early stage to avoid any surprises and give them time to study the issue.

"I’m confident that as we go to our public and explain the details that there will be resounding support, as I am confident that the City Council will feel very strongly that this is easy to support," the mayor said.

Under the terms of the agreement with Google Fiber, the cost of connecting roughly 20,000 Provo homes that have not yet been attached to the fiber-optic network will be shouldered by Google, with homeowners being asked to pay a one-time activation fee of $30 to enjoy free basic Internet service for seven years.

According to initial estimates by the Utah Valley Chamber of Commerce, the cost of completing the remaining home connections represents a roughly $18 million investment by Google. Val Hale, president of the Utah Valley Chamber, wrote in a blog post that connecting all of Provo's homes, not including the cost of regular upgrades to the network, would likely be an impossible feat for the city.

The chamber also estimated that the free Internet service would save the average household $360 per year for a combined savings of $50 million for Provo residents over the seven-year agreement.

Matt Dunne, Google's head of community relations, said the ubiquitous nature of the service brings exciting possibilities to the city. He specifically mentioned education, saying that teachers could utilize technology to a greater degree and use their class time more efficiently, confident that their students have as much access to the Internet at home as they do tap water.

"When we complete this buildout, this will be probably the largest broadband-covered community in the country, if not the world." Dunne said.

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