PROVO Broadweave Networks announced Friday they will buy up incumbent iProvo service providers' customers in a move they say will ameliorate the network's profuse financial bleeding.
But some City Council members say they haven't seen enough information, or had enough questions answered, to give their blessing to the pending $40.6 million sale of the city-owned fiber optic network, which provides Internet, phone and video services to Provo residents.
"I'm not ready to vote for it or against it," City Councilwoman Sherrie Hall Everett said.
In a highly anticipated announcement, Broadweave executives said Friday they've reached agreements with Mstar Metro and Nuvont Communication to acquire and service the companies' Provo-based customers. The company will also acquire Veracity Communications in a cash and stock transaction. Steve Christensen, CEO of Broadweave, said the strategy will cut down on inefficiencies inherent in the wholesale model and bind up a network that's cost the city millions of dollars over the years.
"It's bleeding," Christensen said. "It's bleeding profusely."
Under the terms of the agreement, Broadweave and Veracity will merge operations. Two of Veracity's owners will join the executive ranks at Broadweave. Kevin Mayberry will become a member of Broadweave's board of directors and Veracity President Drew Peterson will become Broadweave chief of sales officer.
Mstar will continue to provide services on UTOPIA, Christensen said. Nuvont CEO Brandon Grover will become a long-term customer of Broadweave when he launches Viapath, a new company selling VoIP services across the country.
Christensen said they came across Veracity, which provides voice and data services to 3,000 customers over iProvo and Qwest, and they were impressed with the company. Veracity is the only service provider on iProvo that turned a 200 percent positive cash flow while the network struggled.
Initially, Veracity executives Drew Peterson and Kevin Mayberry hoped to continue to be providers on the iProvo network, but said they were surprised when Broadweave made them an offer they couldn't refuse.
"Sometimes, when you're not looking, the best opportunities present themselves," Peterson said.
Broadweave and Veracity executives declined to discuss the exact amount of the transaction in cash and stock. Christensen said there will be no layoffs for any of Veracity's 45 employees.
Frazer Bullock, one member of Broadweave's board of directors, said this business transaction will allow iProvo to cut the inefficiencies to increase competition with Comcast and Qwest.
"It provides another network that is viable in the long-term," he said.
But not everyone is content with the news they received at the announcement.
City Councilwoman Sherrie Hall Everett said she's eagerly waited to learn what pricing packages would be available to current subscribers or how the transition from being.
"I was thinking there was going to be a few more Christmas presents," she said. "There's still a lot left to find out."
After the announcement, Christensen said they promise iProvo subscribers a smooth transition as they move from Mstar to Broadweave. He said they will make sure customers don't endure any outages or a decline in customer service. But he was mum on what new pricing deals iProvo subscribers could expect.
"We intend to announce that very soon," he said.
Everett said she's heard that line multiple times at meetings with Broadweave executives earlier this week, and many of those questions still haven't been answered.
City Councilman Steve Turley said he worries the City Council is about to make their decision to sell iProvo on limited information. The council is less than two weeks out from a public hearing, and possible vote, on the iProvo sale, he said, but they've yet to receive the sales contract complete with exhibits and addendum.
"We're dealing with snippets of the contract," he said.
Everett and Turley also said they wanted to see companies' responses to the city's April 2007 request for proposals to provide telecommunications services and business opportunities on iProvo.
Everett said the responses to the RFP would give them a view of the larger picture.
City Councilman George Stewart said he doesn't think it's necessary to review the other RFP responses. Executives for Mstar which has been reported to owe the city $950,000 in past dues showed him a copy of their proposal to buy iProvo, and he said he thinks Broadweave is in a better position to assume control of the network.
"Not that Mstar was a bad company in any way," Stewart said. "It's just that Broadweave has more financial backing."
But Everett isn't so certain Provo picked the best suitor for the dance.
"I've heard rumblings of people saying, 'Hey, we didn't even know there was a dance,'" she said.
Turley said they requested the RFP responses, but they were denied. Provo spokeswoman Helen Anderson said the city is in the process of compiling the RFP responses and determining how much they can disclose. She said the city is contractually obligated to protect trade secrets and commercial information of companies that responded to the RPF.
"We have to keep our contractual obligations," she said. "But it is our intent to release as much as we can."
Turley said he's also uneasy to hear that the developer of Traverse Mountain a 8,000 home master planned community where Broadweave provides services to Lehi residents is Christensen's father. He fears the company had an unfair advantage in bidding for that contract.
Christensen said the claim his company achieved the contract through nepotism is ridiculous. He said they competed fairly for the contract. "It's getting a little fact and extrapolating a lot," he said.
Mayor Lewis Billings said he thinks the merger is a good move because "Veracity has proven to be a very capable player in delivering technology." He also said the past due amount Mstar owes the city will be transferred to Broadweave as an asset, and it will be their responsibility to collect it.
Billings said he understands the iProvo sale is an important decision so he hopes the public will take the time to be informed and express their views on the issue. Ultimately, the decision is in the City Council's hands.
"They have the final say," he said. "They get to pull the trigger."
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