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Provo lashes iProvo critics

City says report is 'fatally flawed,' lacks objectivity

Published: Friday, Dec. 29 2006 10:02 a.m. MST

PROVO — Provo officials fired back Thursday at the author of a report that called iProvo a perpetual black hole, saying the author had a conflict of interest because he did consulting work in 2003 for Qwest Communications, an iProvo competitor and critic.
Steven Titch said the 40 hours of work he did for Qwest didn't color his faultfinding analysis of iProvo, a fiber-optic telecommunications network that provides phone, Internet and digital cable TV services to Provo residents who subscribe.
Provo Mayor Lewis Billings vigorously attacked the report's objectivity on Thursday, when the city also released a 24-page "white paper" that called the report's research "fatally flawed" and based on "erroneous and unsubstantiated conclusions."
The white paper said the Reason Foundation's report was premature because it was based on financial numbers from June 2005, a year before construction of iProvo was completed. It also said Titch compared apples to oranges in the report's financial data.
The city's zealous response came three weeks after the Reason Foundation released Titch's 26-page critique of iProvo. Titch, a policy analyst at Reason, ripped iProvo, saying the city would never be able to pay off the project's $39.5 million bond.
"There is no conflict," Titch said. "Qwest had nothing to do with the report. I have not worked with Qwest since 2003. My work with Qwest predates any work I've done for Reason Foundation," where Titch started in late 2005.
Titch said a Chicago company called HLB Communications hired him to consult for Qwest "following a series of management and accounting scandals in 2000 and 2001." Titch reviewed materials for Qwest's Web site, customer letters, executive speeches and media and employee communications.
"In that job, I never worked with any Qwest officer or employee," Titch said.
Provo's white paper questioned Titch's objectivity after city employees read on a Web site that Titch's company worked "on a day-to-day basis with Qwest." Titch said the phrase was a mistake, and it was removed from the Web site Thursday afternoon.
Titch said the report was intended to take a side. Reason Foundation is a libertarian think tank that advocates privatization and smaller government.
"There's no denying we had a point of view and chose to highlight things so they'd stand out more than you'd get from someone who supports municipal broadband projects. My report stands out there as a part of the public policy debate."
That bothered Provo's chief administrative officer Wayne Parker.
"It is so fascinating to me this organization brags about objective, peer-reviewed research," Parker said. "This is the farthest thing from it that I've seen."
Billings and the white paper criticized Titch for not visiting Provo or contacting anyone in the city before issuing his report. Likewise, Titch said no one from Provo called to ask him about the allegation of a conflict of interest.
Both reports stuck to their sides. The Reason Foundation's report dwells on iProvo's losses — between $1.36 million and $1.52 million each of the past four years — but doesn't mention the swelling revenues. The Provo white paper only reports on the revenue, which jumped from $440,000 in 2004 to $2.1 million in 2006.
Fiber-optic lines are thin glass threads that carry data at the speed of light. Provo built a network to provide the lines to all 33,000 residences and 4,100 businesses in the city. Construction of the network was completed on time earlier this year, and more than 8,400 customers in Provo subscribe to iProvo services, up about 300 in the past three weeks and nearly 2,000 since June.
The city projected it would break even when it reached 10,000 subscribers, but subscriptions lagged after problems with original service provider HomeNet. The city projects current service providers Veracity and MStar will reach 10,000 subscribers by July, but the break-even point is now considered to be somewhere between 12,000 and 15,000 subscribers because fewer customers are buying "triple-play" packages — phone, Internet and video — than anticipated.
The City Council approved loans this year of $3.1 million from another city fund because, while the project is covering costs, it is unable to make its payments on the bonds.
"The project is on track, is growing and is now fully covering all of its operating costs and contributing significantly to its capital costs," the white paper said.
Titch called it a weak answer.
"This is essentially what they've said really for the past year and a half. It did get built on time, they do have subscriber numbers near what they wanted, but they still don't have the revenue numbers they need. Contributing significantly to capital costs? What does that mean? They don't say. They haven't answered with a lot of hard facts. They have not challenged the report's conclusion that they will have trouble covering costs as time goes by and the deficit will continue to widen."
The white paper provides a history of the iProvo project and much of the city's rationale in building it. It also provides a lengthy rebuttal of the Reason report's conclusions about price comparisons between iProvo providers Veracity and MStar and iProvo's competitors, Qwest and Comcast.
The two reports can be found at www.reason.org/ps353.pdf and www.provo.org/downloads/util/building_a_digital_community.pdf.


E-mail: twalch@desnews.com

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