Tue 6 May 2008
Looks like iProvo is going on the chopping block with a flurry of questions as to if it will even happen. Broadweave Networks of South Jordan has been announced as the buyer and will assume all wholesale and retail operations for $40.6M and they will assume the bond debt from the network. This means that MSTAR and Veracity are going to be cut out of the picture and Provo will have yet another vertically-integrated monopoly, one that apparently can't even deliver speeds close to iProvo's current speeds over its own network in Lehi.
Most disturbing is the lack of an open and transparent RFP process, something that makes the whole deal reek of a back-room deal. Mayor Billings just two weeks ago said a sale would be premature, then he pulls out this deal that was obviously in the works for some time. According to the Deseret News, the city had RFPs to buy the network from April of 2007 yet there was little-to-no public discussion about it. There's also the question as to if Provo can sell off the fiber rings that were paid for largely by federal grants as part of an air quality project to monitor traffic flows. While the city will still be able to use the network for municipal functions, eliminating the competitive marketplace for retailers is anathema to one of the original purposes of the network.
I'm left wondering if Veracity, Nuvont and MSTAR can survive having thousands of customers pulled out from underneath them like this and if this means that all three will no longer be viable options for UTOPIA. An implosion of all but XMission could have serious repercussions if new providers are not added soon, especially since CCG doubted that either company could escape bankruptcy for long.
I'm very disappointed in Mayor Billings and his lack of vision. I hope voters won't forget having the rug pulled out from under them like this.
May 6th, 2008 at 9:15 pm
“The City of Provo, Utah is seeking qualified companies to submit proposals to provide telecommunications services and business opportunities on the iProvo Network”
http://www.provo.org/downloads/finance/75028.pdf
Whaddya think? Does that sound like a network for sale?
I imagine they point to the specification of “business opportunities”, but that its followed directly with “on the iProvo Network” largely nullifies that reading of the language.
Its rather clear to me they are trying to reinterpret language written for another meaning to hide the sale behind NDA.
Question is, does anyone care enough to launch a legal battle over it? I doubt it.
May 6th, 2008 at 9:42 pm
Open networks don’t work. Provo proved it, Utopia is proving it. The business model is slightly different than hooking a linksys router to your dsl connection and allowing people to connect for free….you people need to understand the economics of business prior to touting your own opinion in a short sided view of “we should get it all for cheap and free”..it doesn’t work like that. You can hate Comcast and Qwest, but they are still in business and not begging for taxpayers money!
May 7th, 2008 at 2:53 am
not begging for taxpayers money? what do you think FUSF(federal univeral service fund) tax’s do? A fund that UTOPIA and IPROVO have been barred from. A lot of tax payer money was spent in the original building of the telephone network to say nothing of the public easements qwest pays 0$ for.
connecting for free? no Utopia charges providers a connection fee and a usage fee this is no “free” ride.
The problem with most municipal networks is that more offen then not the costs of the backbone and distrubtion system makes a single city running service unprofitable, you need a group of city’s working togeather to handle the initial costs to spread them out enough that such as endevor can work, which is why utopia’s model will work where as iprovo’s has not.
Qwest and Comcast continue to invest in a decaying archaic copper system that is at its limits, they both refuse to lay out the fiber optic systems needed to bring out the services needed to maintain them country’s productivity to stay competitive with the rest of the world, why should they when they can charge the same for DSL as fiber because they are the only option out their in most places and comcast’s bandwidth problems will prevent them from ever servicing enough customers broadband connections to create much competition.
May 7th, 2008 at 8:08 am
I was wondering the same thing, luminous. The telcos have taken over $200B from us under the Telecommunications Act of 1996, quite a feeding frenzy from the trough of public funds. Somehow, though, this doesn’t incite anyone. Nor does the de jure monopoly status afforded to Ma Bell and the Baby Bells from 1917 to 1996. Somehow, trying to create a competitive environment for telecommunications is an unnecessary risk for taxpayers yet continuing to plow billions of dollars a year of our money into the incumbents is A-okay. Color me confused.
May 7th, 2008 at 9:18 am
Big loss for Provo!! Broadweave’s base fiber package is 5 Mbps down, 1 Mbps up. Why even bother with fiber if you offer cable-like speeds. People will be upset when their connections drop down to those speeds. Broadweave is not required to keep people at their current service levels and pricing. They only have to be comparable to the incumbant providers (excluding signup discounts). This means that instead of more competition, there will just be one additional price fixing partner out there.
Even at the 40m price, this is actually a bad deal for Provo. The recent decrease in installs is actually good thing because the most expensive part of the project is the installation work. Now that they expensive and hard part of building the network is done, and should start becoming profitable, they’re going to sell it. Broadweave knows what they’re doing from a business perspective. This is a great deal for them.
May 7th, 2008 at 11:49 am
“Open networks don’t work.” Neither did the light bulb the first several times it was tried. Edison should have given up after his first failure, right? The fact is that open networks do work when the correct business model is found. That model has been found in Europe and it is the model UTOPIA is migrating toward. My evidence? Malarenergi Stadsnat in Vasteras, Sweden - 30 service providers, 110 services, a 53% take rate, with about a $4,000 connection fee (unfinanced). Or Eindhoven, the Netherlands - OnsNet has a 60% take rate and requires a 50% neighborhood commitment before fiber is installed. In Neunen, an adjacent village of 8,000 OnsNet’s take rate is 80%. In Almere, the Netherlands, the Dutch incumbent KPN, which opposes municipal networks elsewhere with the same passion as Qwest does here, has seen the writing on the wall and is a service provider on the city’s open network. There are other examples. Open networks do work. That is the fear of the incumbents and the reason they are trying so hard to make UTOPIA fail.
May 7th, 2008 at 5:09 pm
Selling IProvo is a big mistake. The super rich who are buying it must be beside themselves with joy. As the US dollar declines in value (read inflation); Provo could have more easily paid off the debt in future years. The place to have your money in these times is in something solid like infrastucture, that will hold real value.
I am concerned about the hidden backers of Broadweave. I think the monet trail will lead to bad places.
As for Mayor Billings not having vision, that’s not the problem. What got him was lack of nerve and faith under intense political pressure.
It isn’t over until it’s over. Fight this “short sale”.
May 8th, 2008 at 4:50 pm
In order to fight this “short sale”, we need to show up at the city council meeting next week and make our voices heard. I don’t accept this seemingly underhanded and possibly illegal dealing at my personal expense.
Show up! Be heard!