EXCLUSIVE: Veracity Pulls Out of Broadweave Merger, Sorenson Possibly Backing Out, iProvo Sale on Verge of Failure

High placed sources, speaking on condition of anonymity, have confirmed that Veracity has pulled out of the merger with Broadweave and that Sorenson Capital may have withdrawn financial backing as a result. The 60-day delay cited by Broadweave in the papers is rumored to be buying time to find new backers. The loss of Veracity combined with the iProvo NOC employees who have left means that video experience is almost non-existent and staff resources will be stretched dangerously thin. This may account for anonymous commenters who have reported issues reaching customer service over the last several days. When asked about these details, Provo City employees involved in the deal were unaware of the failure of the merger.

This puts Provo in a terrible situation. Broadweave purchased Mstar's customer list using the debt they were to assume from the city. If the purchase fails and they no longer have that debt, they may find themselves in a sticky sitation, having a customer list that they didn't really pay for. Veracity also has a year and a half left on their contract and has no intention of selling their customer list to Broadweave at this point.

Provo is also looking at a greatly decreased sell price since the customer base has been thrashed and they have proven so eager and willing to sell. We're also left with a lot of unanswered questions. If Broadweave has to pull out of the deal, will Mstar resume operations and take back their customers? Will Broadweave continue to provide services to the Nuvont customers they bought? More importantly, can the network rebound after throwing the existing providers under the bus?

I submit that it can, but it requires one thing: join UTOPIA. In addition to getting back Mstar, they would add XMission and up to 17 new providers. Rumor has it that 8, not 4 as previously reported, are within months or weeks of offering services on the network. One of the key points that both Franklin Court and CCG made was that adding new providers was critical to the success of the network. Provo could attempt to find service providers on its own, but its trashed reputation would impede negotiations even starting. Joining UTOPIA would immediately bring on new providers and regain those 4 lost NOC employees. (C'mon, who didn't guess that the iProvo NOC employees had moved to UTOPIA?)

I honestly expected that this deal would fail, but certainly not before the ink dried on the paper. The spectacular nature of this collapse could prove very damaging to Mayor Billings and Kevin Garlick, Energy Director for Provo. The Mayor negotiated this deal and Garlick was instrumental in pushing it. The City Council could also see some serious problems for members who voted to approve the deal. All three who voted against it cited feeling rushed and it appears that their hesitancy was well-founded.

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184 Responses to EXCLUSIVE: Veracity Pulls Out of Broadweave Merger, Sorenson Possibly Backing Out, iProvo Sale on Verge of Failure

  1. Mr. T says:

    As Gomer Pyle would always say, “Surprise, Surprise, Surprise.”

  2. Whether it fails now, as you’ve reported, or in a year or two, it will fail. Broadweave has never swam in competitive waters. It was silly of Mayor Billings to do his we’re-absolutely-not-for-sale-oh-wait-we’ve been-for-sale-for-a-year-and-a-bunch-of-Mormon-demi-celebrities-bought-us. So, as Mr. T said above, they ended up w/ an incompetent purchaser.

    Not meaning to divert too much from the point of your post, Jesse, but this is a real problem w/ municipal broadband. Once problems surface, rather than deal w/ them straight up, politicians (as they’ve been known to do) spin.

    Anyway, thanks for the info.

  3. Anon says:

    What happened to all the UTOPIA NOC People if the iProvo guys jumped to UTOPIA? Didn’t they have their own staff?

  4. Jesse says:

    Steve: Very true. The political implications of municipal broadband can cripple such initiatives when there’s not enough oversight. We’ve watched Provo get itself in deep by spending a year trying to find a way out instead of digging in to do some hard work. UTOPIA also experienced it when they did the walk of shame back to the cities to ask for a second chance. The gag with municipal networks is that residents own them and have to act like it, something that hasn’t been done all that well in the past.

    Anon: I believe that DynamicCity/PacketFront has been providing the NOC services to date and UTOPIA is trying to bring more of that management in-house.

  5. Clarification says:

    Ok, just for clarification, not all four were NOC techs. While they worked in the Network Operations Center building, the people that went to UTOPIA were the NOC Supervisor, a NOC tech, a Network Engineer, and the Field Services Supervisor. These losses to the iProvo/Broadweave team are significant.

    As for UTOPIA, it is apparent that they are bringing in-house what has previously been outsourced. The relationship with the DynamicCity/Packetfront is either changing or ending. I believe some of those guys are probably moving over to UTOPIA as well. Certainly, it will be interesting to watch as UTOPIA restructures, adds new service providers, and moves aggressively forward with new management and an experienced team.

  6. Anonymous says:

    I am not sure it would be in Utopia’s best interest to have iprovo join them at this point.

    The iprovo network has a 40 million dollar debt has shown zero reguard for their providers and is going though a process in which it has lost a substantial number of customers. iprovo has been terriably mismanaged and the only thing of value as far as Utopia is concerned is the video head end.

  7. kg says:

    So, for those of us who are Mstar customers, what is the alternatives if this fails and we refuse to go back to Comcast? Where do we go from here?

  8. kg says:

    So, for those of us who are Mstar customers, what are the alternatives if this fails and we refuse to go back to Comcast? Where do we go from here?

  9. Jesse says:

    Anonymous: I’m sure that UTOPIA would ask them to consider a refinancing package similar to what they did with a two-year “grace period” on bond payments. Certainly a lot of other negotiations would have to go into it, but they are certainly not in a position to improve operations after what’s gone down recently.

    kg: Well… that’s a great question. Broadweave bought the Mstar customer list using the debt that Mstar owed iProvo. If Broadweave doesn’t get the debt to use as payment, they could either pay Mstar for the customer list and become a provider on the network OR give the customer list back.

    If Mstar gets it back, we have to wonder if they would consider being a provider given their seriously strained relationship with the city. Mayor Billings was just shy of openly hostile towards Mstar in one of the city council meetings I attended and I can’t imagine that Mstar has much love left for Provo either. I think we’re going to have to wait and see what happens over the next few weeks.

  10. Jaren says:

    Looking forward to the “spin” from Mayor Billings and Mr. Stewart. I hope for the customer’s sake iProvo can live on. Hopefully, this episode will re-entrench the ideals of open access.

  11. JeremyN says:

    Wow, that really backfired didn’t it.

    As I told the mayor and Mr. Stewart in person (nice guys both of them), they should have just stayed the course, added some new providers and dealt with the political ramifications, but they weren’t willing to stand up to the backwards thinking citizens who were too dense to understand the long term value of a fiber to the home network. Now the politicians are in even hotter political waters. Sad!

    I re-iterate what I said at the beginning of this fiasco, they should have just told the public that this is a long term infrastructure investment, it wont turn a direct profit for many years, if ever, but that’s besides the point. It adds extreme value to the future of the city. It’s nothing more complicated than a change in perspective. After all, when was the last time a sewer system or road turned a profit directly? Never. But imagine how it would devalue a city if it didn’t have those. Well fiber is the road of the future, and iProvo was national leader in this important future infrastructure, now they are just in a mess.

    That being said, the fiber is still in the ground, and attached to nearly every home and business in the city. Pretty much no other city in the entire country can say that, though most would love to. The city just needs to sit down, back away from all the current disastrous decisions, strained relationships and re-think how to take advantage of this powerful virtually future proof foundation they’ve built.

  12. Capt. Video says:

    Sadly, it looks like we may need to wait 60 days to see what will happen? So far the deal appears to still be a go, even with these bumps in the road.

    I believe the iProvo network (a completely built network covering a full city) is more valuable that the UTOPIA network currently is, with significantly less debt.

    I’m betting Provo will seek one of those other buyers if this sale fails. The guys that cried over the sale not being fair?

    There is no question that a failed sale to Broadweave would be a disaster for Provo City and lower the value of the network.

  13. JeremyN says:

    A follow up on my thoughts, after reading the articles linked above.

    Broadweave: “We only started focusing on due diligence the day after the Provo Municipal Council approved the deal.” Wha?? Maybe you should have been doing this back in THE YEAR you had before this was announced.

    At this point, I encourage Sorenson to back out. And I suspect if they do their due diligence over the next 60 days well, they will probably realize that’s the best option.

    It would accomplish two things, it would save Sorenson from throwing money down a black hole (don’t forget the symbolism of the shiny new gas guzzling trucks from Airswitch… er ah… Homenet… er ah… Broadweave, I get those so easily confused). And second it would kick in the clause that gives ownership of the network back to the people should own it… us, the tax paying citizens of Provo City, who agreed to pay for the installation of a city owned, open network, not fund yet another private one. This would also allow Provo to do the right thing and join or cooperate in some way with UTOPIA.

  14. Jesse says:

    A primary reason why I believe the rumor that Sorenson will pull out is that Broadweave by themselves doesn’t meet their investment profile. They’re looking for companies with annual revenues between $20M and $200M and annual earnings between $3M and $25M. (Source) Broadweave + Veracity fits that profile, Broadweave alone does not. I’d be surprised if Sorenson follows through after this failed merger.

  15. kg says:

    As a tax paying citizen of Provo, I’m very unhappy with the decision to take the open network and create another private one. I also don’t like the way the Mayor went about it. It was obviously too rushed and leaves the customers caught in the middle. How in the world can they hope to compete with the “big” guys when it seems they have little to no business sense or ethics?????

  16. Jesse says:

    Capt Video: I think UTOPIA is turning that around with some of their new management. Todd Mariott has worked in telecom for 15 years and Chris Hogan was VP of Marketing for Packetfront, another telecom company. Provo, on the other hand, left their telecom manager position vacant for over a year. While they may have both made similar errors in the past, they are taking radically different steps to correct course.

  17. iLikediProvo says:

    “There is no Plan B.”
    State Senate Majority Leader Curt Bramble stole my line.


    That’s the real trouble with this situation. Long before the council approved the deal, the proponents of the deal made sure the council couldn’t turn it down because the whole system would implode if they did, with no other alternatives. Now we’re even farther past the point of no return.

  18. Capt. Video says:

    While the losses are real and definitely a serious concern for Provo. I suspect the situation was made to look even worse (very worse case scenario presented?) in order to push the council for a quick decision.

    Given that the sale is now delayed 60 days (and I suspect Provo is still paying the bond payment until the close, likely recovered upon close?) perhaps they could have taken a little more time to allow everyone to do their due diligence?

  19. Jarrod says:

    It is funny that Sorenson is now saying the same thing Sherrie Hall Everett and Cindy Clark were saying.

  20. Capt. Video says:

    I stand corrected!

    The Daily Herald reports that Broadweave took over the bond payment and the network July 1st.

  21. Jeremy says:

    Well it happened. My internet is now being routed through Broadweave and my speeds have dropped from 40+ Mb/s to around 12, it’s not the end of the world, and is closer to what I’m paying for, but still not what I want. I’ll have to look into a faster plan I guess. Also, in a strange coincidence, my router stopped working. I can ping it, but can’t log into it, or get any internet through it. Odd that they happened at the same time…

  22. to Jeremy says:

    LOL…That is a strange coincidence that you cant log into “YOUR” router at your house…..*where did i put that dang password again…” The network-voodoo-bandwidth-configuration gods went out and changed your router…lmao…Your riding the same infrastructure!!..your change..your Internet goes out a different router in the Provo NOC out XO instead of Center7 (who is going to drop MSTAR like a rock because they havnt paid them over 900K).

  23. Capt. Video says:

    I think Jeremy was careful NOT to blame Broadweave for the router problem and did say it was a strange “coincidence”.

    I surprised that a company that would allow a small monthly bill to grow to almost a million dollars. Provo did the same and were foolish to do so. If Center 7 allowed Mstar to get that far behind (how many months is that?)they might need to review their bad debt policies?

  24. Jarrod says:

    Capt. Video it sounds like you’re trying to blame MStar’s huge unpaid debts on the creditors! The same thing apparently happened to just about every company that MStar bought services from. Isn’t this why NGT was shutting off phone service to iProvo customers a week or so ago?

  25. Capt. Video says:

    Not at all. The bad debt is totally Mstars problem and I am well aware of some of the internal management decisions that contributed to the problem.

    But good fiscal responsibility is not shown by companies like iProvo when they fail to take appropriate action when customers don’t pay.

    So Mstar owing money is not Center7 or iProvo’s fault, however if they let the debt grow to huge amounts ($1,000,000.00?) and then lose that money, if Mstar fails to pay and goes bankrupt. If I were a member of the board or stockholder I would hold someone in my company responsible for the loss if they failed to follow good bad debt policy and procedure.

    There is a reason companies like Comcast and Qwest disconnect customers after only 60 days (or less?). By taking action when the amount of money owed is smaller, they are much more likely to collect quickly and get back on track.

    Do you find iProvo or Center7 allowing the Mstar debt to reach $1,000,000.00 to be responsible?

    So I’m saying Mstar is totally responsible for the debt, if that debt turned into a loss for the company it was owed to, someone at that company might be responsible for the loss.

  26. Capt. Video says:

    I have no knowledge of Mstar account status with NGT and would not be surprised to learn they might be behind in payment to some degree.

    I do know that NGT supports the Mstar phone service for both Provo and UTOPIA. It’s interesting that there was no disruption related to Mstar’s UTOPIA NGT customers. Mstar continues to add new customers to NGT weekly?

    There was more to the phone problem than meets the eye or was in the paper.

  27. Jarrod says:

    These are more complicated situations than Comcast with an end customer. There are serious consequences to shutting off services. Provo couldn’t exactly shut off services to MStar to get them to pay the bill. That would have been shooting themselves in the foot in a serious way. Provo’s best option was to set up to remove the customers from MStar, something I believe their contract allowed in cases of nonpayment.

    I believe I read somewhere in the recent deluge of rumor and innuendo that MStar’s service providers were soon going to be “sister companies.” This tells me that maybe some of the other debts are being converted into equity. Imagine if they just shut off services instead. Suddenly MStar can’t service their customer base and all of the customers leave for a new provider. MStar now has 0 cash generating ability and absolutely no hope of ever paying anyone back.

    So the point is that sometimes shutting off service is going to hurt the creditor more than help. I wouldn’t assume that they were just looking at the mounting balance due saying, “I sure hope they pay us soon!” There has to be a fine balance between applying leverage to force payment and not killing the revenue base.

  28. Capt. Video says:

    I agree with that, including that SOMETIMES shutting off service is going to hurt the creditor more than help…but those times are VERY RARE. Most of the time not shutting them off will generate a larger loss (write off).

    I think taking “action” is the key. Not a wholesale turn-off of the customers as a first step.

    In iProvo’s case slowly selling/moving Mstar customers to Veracity was an option. (Perhaps each month moving customers valued at the amount owed that month?)

    If Provo took SOME action, with a small number of customers as soon as Mstar was over the contractually allowed payment amounts (60/90 days?) they would have sent a CLEAR message that not paying is not an option and changes at Mstar would have been made (including management and ownership if needed) to avoid seeing their entire asset become worthless to them as subs were moved.

    Requiring customer payments to go to a lock box (as was done many months too late) was another option.

    There are lots of options to get their attention (limiting network speeds, cashing any security bonds or deposits, etc.) and payments. Doing nothing is just not one of the good options.

    That’s what iProvo did. Nothing.

    I don’t know what Center 7 did, but I also don’t know that Mstar actually owes them $900k or anything at all.

    My comments are a general statement that allowing an individual or company to get too far behind is likely to cause a large loss in the end. I think this is well known and most companies will not allow it.

    Most believe it’s better to write off a smaller debt. If they can’t pay you $100,000 is it likely that can pay $1,000,000 if you allow the debt to grow?

    All UTOPIA cities (except Payson) just took your course. Allowing themselves to increase their risk hoping to avoid a smaller loss.

    Time will tell if they made the right decision…allowing their creditor (UTOPIA) to go deeper in debt in hopes they will one day be able to pay.

    Risky Business!

  29. Anonymous? says:

    Anonymous? Laughable. We all know who it is and it’s going to come back and bite this person…

  30. Jesse says:

    Do you? There’s dozens of folks who have the inside track. Might make for an interesting game of Clue (“Bob Jones… in the break room… with his cell phone!”), but speculation is just that: speculation. The only people who know are me and my source.

  31. Jarrod says:

    I was amazed it took so long for Jesse to get the news. It was announced company wide within Veracity Tuesday morning and Jesse didn’t post it until Wednesday night. And it wasn’t like Veracity’s employees were told not to tell anyone (I think, I didn’t actually get the email, I just heard the news from others when I walked in the office.)

  32. Deep Throat says:

    It was me, I’m the anonymous source. Now that you say it’s going to come back and bite me, I’m trembling with fear. Please don’t hurt me mister!

  33. iStillLikeiProvo? says:

    My external managed DNS service recently lost the ability to receive zone transfers from my box running on Nuvont/iProvo. After determining that nothing was wrong on my end, I took the opportunity to call Broadweave and see what was going on (I haven’t heard one word from them about the transition, and my Nuvont services have been mostly uninterrupted).

    The Broadweave service rep. said that I was still a Nuvont customer. I asked when that would change, and he said it might not change. He said that some segments of Provo will remain Nuvont customers as part of the deal, “so [I] might not have any problems after all.”


    This must be some new deal I’m not aware of. I attended all the hearings and read lots of documents, but don’t remember anything that sounded remotely like this.

    Anyone know what’s going on?

    Next, I called Nuvont. After a while, an automated answering service picked up. This was a small miracle. This is the first time I’ve ever been able to call Nuvont from my Nuvont-powered phone. It usually just results in a fast-busy. The automated answering service said, “thanks for calling Veracity.” When I finally talked to a human, I was told that Veracity and Nuvont are kinda-sorta the same thing. The after-hours Veracity tech didn’t know if/why some Veracity/Nuvont customers wouldn’t be transferred to Broadweave, and he was unable to look in to my DNS problem.

    /me longs for Xmission on iProvo.

  34. Capt. Video says:

    It’s all very confusing.

    I feel for all involved. Poor Broadweave expected the deal to close on July 1st and they could “take over”. Then two monkey wrenches were thrown in the gears.

    Veracity nixed the merger and that changed things. So now Broadweave had to adjust their plans, including the use of Veracity techs and customer service reps. NuVont was a spin off from Veracity so I’m not sure how independent they are and how the Veracity non-merger effects them?

    Then the iProvo purchase deal didn’t close, so Broadweave is running iProvo (sort of) but they don’t own it yet. So Provo City still has final say and some control. In some ways Broadweaves hands must be tied? How much money would you put into the network if you didn’t know it was a sure thing that you would own it? Expecting it to close (as I do) and spending your money on the network before it closes are two very different things.

    We (iProvo subscribers)need to suck it up and wait until Broadweave is able to spread it’s wings and fly alone before we judge them too harshly.

    There is no doubt they should have communicated with their customers better. But some of the rocky road related to the transition must be due to the unexpected elements of the deal.

    I’m sure Broadweave is looking forward to owning the network as much as Provo is looking forward to NOT owning the network.
    What have they got 50 days and counting?

  35. Jesse says:

    If anyone from Broadweave is reading (and I’m sure they are), they really ought to consider setting up a company blog with regular updates on where things stand. Every day that passes without news of what’s happening is a day that customers get nervous and jump ship.

  36. FGF says:

    Jesse, that’s an excellent suggestion and let me know if you are willing to cover wagers that it will happen, I’m always looking for a safe bet. As far as blogs covering iProvo updates, this is it.

  37. Show Me The Service says:

    That informs the geeks, but what Broadweave really needs to do is the basics to inform ALL their customers. Not just blog readers or email readers.

    They need to spend the damn 42 cents (cheaper using bulk permits or postcards) and talk to each and every customer. It’s not rocket science. It’s not hard. It’s not expensive.

    Can you imagine being willing to spend $40 million dollars to buy a network and not spending a few thousand to communicate with your customers. If they paid 40 million for 10000 customers that’s $4000 per customer. The mailing would cost less than the value of 1 or 2 customers.

    Comcast was sure willing to spend much more to communicate their message. They didn’t have the Broadweave customer list so they send to all non-Comcast customers.

    It’s plain poor business and frankly just stupid to be too busy to communicate with your customers.

    Someone from Broadweave want to explain the lack of communication? They have a PR person on staff. I saw her picture with the Mayor in the newspaper.

  38. Jaren says:

    Show me the service: I thought the mayor was their PR person. 🙂 He sure seems to make a lot of statements on behalf of the company.

  39. Do YOU believe? says:

    Today’s Daily Herald reports that Sorenson just provided funding for another company (not Broadweave). Are we now just over thirty days from the proposed SECOND closing?
    I’m sure Sorenson has the ability to fund the iProvo deal. The question? “Is the business plan sound?” Can Broadweave cut expenses low enough, raise rates high enough, and still add enough subscribers to pay the bond plus operating expenses? While also replacing the World Wide Packet boxes, improving and adding services, (as Broadweave said they would) and paying to install the thousands of new customers needed?
    I wonder what the really smart money people at Sorenson think?

  40. Harold Bills says:

    Does anyone really believe that Sorenson is still in the game? I hear they have long since fled the scene. Broadweave is desperately searching for the capital partner they need. I also hear that they have no operating capital and are paying employees from Steve Christensen’s personal funds. How long will that last? Did Provo really give away this $60 million asset to a company with no operating capital? if you think this is justifiable Mayor Billings, you better get a reality check. Kevin Garlick has led you down the path to complete disaster.

  41. luminous says:

    I wouldn’t count Sorenson out yet, I do wonder what is going on at this point in time tho. If the deal falls apart it would likely be the end of several political careers. If it does fall apart what will provo do next? find another buyer sell it for a song and a dance and eat a large chunk of lose, or maybe work with utopia so that utopia providers can sell retail services on iprovo(I root for this one).

    I have a hard time beleaving that their are many providers that would risk trying to setup on iprovo again(or for the first time) after the stunts that have been pulled.

  42. Capt. Video says:

    Prior to the sale, all UTOPIA providers except Xmission sold services on iProvo. In fact selling more services as Veracity and NuVont were able to sell video.

    Given Xmission’s limited success (low subscribers) on UTOPIA I doubt allowing UTOPIA service providers to sell on iProvo will be seen as much more than going back to how things were before the sale. I thought Xmission was already 1 of the new service providers iProvo was already working to add before the sale? Again based upon Xmissions sales on UTOPIA their addition will do little to help iProvo.

    UTOPIA and iProvo share a single major problem. TO OFFER PRODUCTS AND SERVICES AT PRICES THAT WILL MAKE PEOPLE SWITCH. If they are able to do this they will be successful. If they can’t, they will fail! Currently either the products and services or the pricing is NOT compelling enough to make people switch, and both networks are failing.

    While I too have heard all of the rumors Harold mentioned, I’m not sure which, if any, I believe. I guess the only thing that matters is if Sorenson is in or not? In just over a month we should know. I hope we do know in 30 days and there is not a request for an extension? Given most of the iProvo employees are gone, would Provo be in position to deny another extension?

    Since I think the sale is something most Provo citizens support (It’s very clear most did not support iProvo by becoming customers. If they had Provo would not have looked at selling!) I’m not sure the deal not going through will be a black eye for the Mayor, etc. Some might think, “At least they are trying to sell!” and like the Mayor more???

    When you have Frasier Bullock from Sorenson publicly telling the City Council they will be funding the deal, how does the Mayor or anyone else get a black eye if they then don’t fund it? How could the Mayor know if they would pull out? I guess that’s why I believe they are likely still in? You have to think before Frasier spoke Sorenson had run the numbers and they worked? At that time they expected Broadweave to buy Veracity customers, not merge with them, so that deal falling apart should not change things?

    As for Kevin Garlick, he is not a politician and has a long and very successful career running power companies. Including Provo’s, where he has made many, many millions for the City. I believe he does what he is asked to by the Mayor, including running or selling iProvo?

    luminous has a good point that given Provo’s now public strong desire to sell the network they might have trouble attracting new service providers or having existing providers invest in gaining customers they would be forced to sell? But if the customer sale price were likely to be higher than the acquisition/installation cost they might try to install even more?

  43. Disturbing Rumors says:

    I’ve heard that both Mayor Billings and Councilman George Stewart are current or former stake presidents… and that Fraser Bullock was their direct supervisor as an area authority. That paints on a whole new level of conflict of interest. I suspect that the “failure” was engineered by Billings and Garlick to do a favor for Bullock. Disgusting.

  44. Jesse says:

    We have to consider that one of Broadweave’s mail selling points was that they would have complete control of the wholesale and retail sides and would be aggressively pursuing business accounts. The failure of the merger with Veracity and complete absence of pricing on business services (not to mention that Nuvont didn’t sell their customers after all) means that their revenue projections will be markedly lower. Don’t think for a moment that these two competitive retailers are still going to pursue accounts and lock up as much revenue for themselves as they can. With this kind of massive change in the financials, I don’t know that I would count on Sorenson sticking around for too long.

  45. Capt. Video says:

    What is the “favor” they did for Bullock? Getting him involved in this deal?
    Not sure that’s a “favor”.
    Or was the “favor” telling him to get out?

    If Sorenson does NOT provide the funding it looks like a black eye for Bullock?

    I have no knowledge of these church assignments, but could easily believe all those men held those positions. I don’t know Bullock, but I know Billings or Stewart and don’t believe they would do a “favor” for anyone at the expense of the City. They both seem to take their responsibility to the City very seriously.

  46. Jesse says:

    I think the implication being made is that since Bullock is an investor in Broadweave and a member of its board, there’s the possibility that Mayor Billings did him a favor by selling the network to him on the down low. It’s entirely plausible, especially since there wasn’t an open bidding process and some experts I’ve talked to say the network is worth more like $45-60M.

  47. Capt. Video says:

    I still don’t think the Veracity deal dying kills the iProvo deal.

    I assume the original purchase idea from Broadweave was that they immediately take over Mstar customers and that they would TRY to buy Veracity/NuVont customers. But if they could not reach agreement on price, they would become the “landlord” and collect the network usage fee from them until their contracts expired and then not elect to renew the contract?

  48. Jesse says:

    That would be entirely contrary to how they presented themselves before the city council. Broadweave constantly beat the “full control” drum and made it clear that they believe that the bifurcated model was the cause of the financial issues.

  49. Capt. Video says:

    But I think most people (including me) expect iProvo to be sold for much less if this deal falls through? liminous says the system will be sold for a “song and a dance”.

    That does not sound like Frasier is getting that good a deal?

    I’ll be shocked if someone else steps up and will take the same deal. If Sorenson thinks the numbers don’t work and pulls out, how likely is it someone else will take the same deal?

  50. Jesse says:

    Based on people I’ve talked to who work in the FTTP business, a proper RFP process would get offers from at least 4-5 companies for more than Broadweave is offering and without owner financing.

  51. Capt. Video says:

    I think they are very seriously mistaken.

    Paying more than it cost to build for a failing network is just bad business and I don’t believe anyone would do it.

  52. Capt. Video says:

    I think Broadweave believes in the one provider model, they made that clear at the public meetings and it makes business sense (lower operating costs than an open network for both service providers and network owners).

    That would be why they would try to buy the Veracity customers. But if they had to wait for the contract to end to fully reach their model I believe they were prepared to do that.

    Not their 1st choice, but not a deal killer?

    They had to assume there was a chance that Veracity might NOT elect to sell and they would have to wait a little to reach the holy grail of sole owner, service provider. They had to know Veracity had a valid contract they would have to honor.

  53. Jeremy says:

    In my opinion it was never the bifurcated model that was the problem. It was a lack of marketing.

    I go back to my original premise when I started iProvoWorks.com (before the Broadweave announcement), go door-to-door (homes and businesses) and tell them they can get a much faster, less expensive internet connection and support their local community at the same time, instead of pouring their hard earned money into an impersonal mega-corporation / borderline monopolies (the cable and the phone company). Seems like this pitch is a no-brainer. And it was, if properly communicated.

    And furthermore stop overcomplicating the sales pitch by practically forcing an inferior video and voice service as part of the deal. Let people keep their existing cable and phone providers if they like. In fact, if I were running the network, I’d drop those services entirely from the “Head” and just figure out how to profit from the internet connection. If people are really into HDTV (who isn’t?) I’d encourage people to keep their existing cable provider (after all they offer lots of HD programming and fully functional and CableCard ready HD-DVRs, which don’t even appear on the radar for Broadweave, or Mstar). If individual ISPs want to create their own IPTV services and offer them, then great!, but let the ISP deal with that. Drop the old school media crud, and just keep the network clean and fast!

    Or even better, show customers the future of TV and telephone. Explain to them the powerful new things they can do with this wicked fast internet connection, show them they can save money and just buy the TV shows they actually watch (iTunes+AppleTV) and show them how simple it is to sign up for services like Vonage. Or explain to people that some of their cell phone providers are now allowing their cell phones to use in-home VOIP over wifi for calls. Take advantage of your high speed upstream and explain the things they can do on iProvo that’s not possible AT ANY PRICE on Comcast or Qwest. In other words, educate your customers of the true power of a blazingly fast bi-directional in-home or in-office internet connection, and market it like CRAZY! Engage your happy subscribers to help by offering discounts if they get their neighbors to sign up, and engage the truly passionate subscribers to help with the door-to-door marketing by training and paying them for their time. It would have worked, but instead we ended up with this mess.

    Furthermore, I take issue with the claim that the “bifurcated model” lead to a such a bad customer service experience as to justify this mess. Specifically that it’s so inconvenient for the customer to have two sets of installers show up at their house and to have to take time off twice to get their connection up, that they’d rather just stay with a monopoly. Bah! Sure it was inconvenient, but have you read the horror stories of people waiting for the cable company installers to show up? They’ve made MOVIES about that for heaven’s sake. With iProvo at least both installers showed up on time and did their work efficiently. That being said, I propose a rather obvious solution. Synchronize the installer schedules so both installers show up at the same time… Sure easier said than done, but easier than selling the entire network?? I think not. [Baby… bathwater…]

    I agree with the premise of the original posting, pull the plug on the deal with Broadweave, and merge iProvo into UTOPIA. I’m sure it will make for a paperwork nightmare, but it’s the best solution all around. Customers will have superior services WITH A CHOICE of providers, UTOPIA at least doubles it’s subscriber base, the NOC has engineers again, and maybe even UTOPIA could take advantage of the infrastructure of iProvo’s NOC saving them some money down the road. And most importantly we are back to the original open network concept not just another private network. But I fear politics, both public and internal are going to sour any chance of a logical solution like this.

    For some perspective from a passionate subscriber, for the first time in a couple of years, I visited Comcast.com so I could gauge their prices and install times should iProvo go completely dark at some point down the road due to this mess. That’s both sad and scary!

  54. Capt. Video says:

    iProvo ran models on doing just internet and other options. None worked very well. You just don’t realize the serious results on the business model if you do data only. (Which is the most profitable service, but not strong enough to stand alone.) There are no additional fiber network costs or fiber install costs for the phone and video service. Install fiber for data and it can also deliver voice and video.

    The cost of building the fiber network and the high cost of each install means you go from needing a 30% penetration with three services to needing 70% or more with just data.

    If iProvo had got more than about a 33% take rate they would have needed many millions more in capital to buy more World Wide Packets switches in huts and portals in homes and do the additional installs at almost $1000 each. Perhaps moving the project from a $40 million to a $50 million or more project. The $40 million was to be able to connect about 10k homes. Which with a good triple play split is enough to be successful.

    If you run the numbers in a business model (as I have) it becomes clear that selling multiple services is the key to success. You must make the video and phone services competitive. You cannot walk away from them. You cannot be successful without them. (The service provider can be successful without them, but not the network. Which is a problem in itself as it removes the need or desire of the service provider to do more services, which the network NEEDS to be successful.)

    iProvo only needed 10k subs to be successful (with about 75% being triple play). When they got lower triple play numbers, it move the number of subs needed to 15k or 18k. With single play only, it’s even higher.

    Getting 10k subs in Provo is not out of the realm of possibilities, moving the number up sharply makes it very unlikely.

    I do agree that there was not enough marketing (and discount offers) to make people switch. Comcast and Qwest have continuous marketing, with continuous offers. I’ll bet almost every home in Provo was visited by 1 or more door to door sales person (not all were home). Both Mstar and Veracity had strong door to door crews in Provo and as each area was activated it was hit by both companies sale crews. Then hit again hard during the summer by door to door. I believe Mstar spent over $1 million dollars on Marketing (and not surprisingly, they have the largest number of subs on both networks?)

    I’ll give you that not only do you need TO OFFER PRODUCTS AND SERVICES AT PRICES THAT WILL MAKE PEOPLE SWITCH, but you also need to let the people know of the offer. (Marketing!)

    Sorry, but Provo has a much better chance of becoming profitable than UTOPIA does. Provo should work closely with UTOPIA to eliminate duplicate expenses, but Provo would be foolish to take any share of the massive UTOPIA debt or turn over operations to UTOPIA. Given UTOPIA’s current position I see no possibility of Provo joining UTOPIA.

    I think Provo’s best chance of being profitable would be to operate the network themselves as network owner and the only service provider. As successful Spanish Fork City does. But it would require taking the State to court to be allowed to do so, and they might not win in court.

  55. George Bills says:

    Capt. Video,
    When you managed iProvo, you had your shot at getting it right. Poor choices on service provider selection and nothing but negative marketing killed it. Quik Internet (wireless demo), King Communications (Provo Cable), Ceristar (fiber demo), Homenet, Mstar, Nuvont and Veracity all had a hand in the debacle. They were all selected due to some political connection or backdoor alliance. Xmission and many others, who had the track record were sent away. A successful, commited service provider was never given a chance. The bad part is that these terrible provider choices spilled over to Utopia and did great damage to that project. Who knows what would have happened if Provo politics got out of the way.

    You mention Kevin Garlick bringing millions to the Energy department. What about that $40 million dollar debt that will be hanging around the city’s neck for a long time to come. What about the $20 million pulled from Energy funds to cover all the early parts of the project and bail outs.
    I’m sorry but iProvo,Energy, and the city would have been more successful financially without Mr. Garlick.

  56. Capt. Video says:

    Sadly, I never had my shot at getting it right. I never made decisions for iProvo. But I was along for the ride and there is plenty of blame to go around.

    I believe Mstar and perhaps Veracity were actually UTOPIA providers before they joined iProvo. So I’m not sure in which direction the choices spilled.

    Neither network was able to attract the large, well funded, aggressive service providers they had hoped for.

    Mr. Garlick did not come up with the iProvo idea and does not have the authority to spend millions of the power company reserves. Those decisions are made by the Mayor and Council. It was his bad luck to have his dept. placed over the project. As mentioned, with lots of blame to go around, I think it unfair to place the lions share on Mr. Garlick. As if it were his idea and his failure.

    The original idea was for the City to be the service provider, as it was with power. Qwest and AT&T got the legislature to pass a law not allowing that. That and many other decision (some political as you mention) all hurt iProvo.

    The Xmission track record on UTOPIA of gaining subs and generating revenue is not better than other providers that I am aware of. UTOPIA has Xmission (whom I believe to be a great internet service provider) and they are in worse shape then iProvo.

    The fact remains that the fiber to the home business model cannot ride on a single service as you suggested.

  57. Since our name keeps getting bandied about in this thread, I thought I should clarify one specific point.

    There currently exists essentially 4 markets on UTOPIA: 1) triple play, (2) double play (3) Data to the home and (4) business access.

    Numbers 1 and 2 account for the majority of UTOPIA’s subscribers. XMission does not compete in these markets.

    However, we do compete in numbers 3 and 4. And we have the significant and vast majority of these subscribers, a success based largely on user satisfaction.

    We are actively working on increasing our product catalog both for UTOPIA and across our other service areas (and beyond); service extensions that we hope will have a significant effect on our UTOPIA penetration.

  58. Tom says:


    What happened to VoIP on UTOPIA? I thought Xmission had started that, so you would be considered a double play provider.

    Also what tech did you guys end up using. I left the NOC before you deployed the hardware. If you did deploy the hardware that is.

  59. Jesse says:

    I understand it’s been delayed for further testing and will be generally available this fall. Part of the delay is that UTOPIA is re-working their wholesale rates.

  60. Anonymous says:

    (Hey Tom! XM misses you :p)

    Without going into too many details, our VoIP offer was disrupted by the Veracity-Broadweave merger as we were leasing a partition on a switch.

    Since all the obstructions we have hit in getting VoIP to market have resulted from third party partnerships, we are now in the process of bringing VoIP completely in house and have a live target of the end of the year.

  61. Anonymous says:

    Sorry, this is Warren. Having issues logging in today for some reason.

  62. Tom says:

    Good to hear from you Warren.

    I miss working on UTOPIA. But alas things change. Hope all those iProvo NOC people doing good on UTOPIA for you.

  63. Capt. Video says:

    George Stewart is leaving the Provo Council to serve another mission. He will not run for Mayor!

    He’s says selling iProvo was his goal?

  64. luminous says:

    Wonder what he will do if the sell falls apart? I would not be shocked to hear that Sorenson has decided to pull out. The sell isnt done yet untell Provo gets a signed contract from Broadweave.

  65. Capt. Video says:

    Today the Daily Herald reported that NuVont is out of the deal. They are not selling their customers to Broadweave.

  66. kg says:

    From the looks of things so far, NuVont is smart not to sell.

  67. Harold Bills says:

    How in the world did NuVont get to be a service provider if Xmission was turned away? I hear Nuvont has never had a legitimate basis for using the network, but are some kind of Frankentstein that Veracity created and Provo administration was too weak to kick them off. They are pretty arrogant to spit in Broadweave’s face when they have no real basis for being on the network!

  68. Tom says:

    If I understand it correctly (probably not) Veracity developed a split personality and split their business up. Business customers stayed w/ Veracity and residential went to the newly created NuVont. Which used the Veracity back end.

  69. Capt. Video says:

    I think that at one time NuVont was a subsidiary of Veracity that later spun off into a separate company with Veracity wanting to stay sharply focused on business customers and NuVont taking the residential customers Veracity did not want to deal with? I heard that NuVont had since obtained a contract with iProvo on their own? While iProvo may have lacked the “stones” to stop them, it was also perhaps not in iProvo’s best interest to kick them off?

    I believe the only thing that ever kept Xmission off the network was them not wanting to offer the triple play at that time. So now it’s more Veracity that fails to offer triple play and is more like Xmission? But Veracity might offer video to commercial accounts (MDU’s?)

    As discussed in past posts, iProvo saw the importance the triple play would play in a networks success. Perhaps their error was in not providing some significant financial encouragement to a service provider for selling the triple play.

    Accepting only triple play providers with no requirement or financial incentive to sell a high percentage of triple plays may have defeated the purpose of requiring all service providers to offer the triple play?

    I still believe the ability of the network to be successful without a high percentage of triple play subscribers is limited. The number of additional customers needed to generate the same revenue and the cost of installing those customers makes success unlikely?

  70. Harold Bills says:

    Capt. Video,

    Your are wrong about NuVont. They have no contract. This was verified from the highest of inside sources. Their participation and the process that resulted in their using the network is unfair to others companies like Xmission and clearly illegal. This has always been iProvo’s biggest problem, allowing providers to get away with anything including “homesteading on the network”.

  71. Capt. Video says:

    I’m not surprised that no contract exists. A number of “verbal” agreements were reached and then there was not a timely follow-up to move to a formal written agreement on many of them. I had thought this was one they had cleaned up, but have no first hand knowledge of that so I believe you!

    This could be interesting. Since we know Broadweave would rather NOT have NuVont (or anyone else on the network) if they really have no legal right to be on the network they could be in trouble (and they would have likely sold to Broadweave?).

    I suspect they have some legal rights, as a subsidiary of Veracity or somehow. I will agree that the process might not be fair but I’m not sure I would agree it’s illegal? It could be, but I’m just not aware of any law that was broken that would make it illegal?

    Since NuVont has customers and is up-to-date on making payments to iProvo I’m not sure allowing them on the network (even through the back door?) was that bad for iProvo?

    Had Veracity not spun off NuVont and just stopped selling to residential customers to focus on businesses would that not have been worse for iProvo?

    Also interesting that the consultants report suggested iProvo back off the service providers and not be the Network Nazi they were at times? There is likely a thin line between “allowing them to do anything” and giving them the freedom suggested by both consultants?

  72. Jeremy says:

    Does this mean I could theoretically switch from Broadweave to NuVont and remain on iProvo? I kind of like that idea since it would be re-enforcing the idea of iProvo NOT being just another closed network. Hrmm…

  73. Capt. Video says:

    lol…I’m in the process of doing exactly that. I was planning to disconnect from Broadweave at the end of the month, but will now look to switch my service to NuVont. I’ve already contacted NuVont to do that and suggested the same to a number of friends.

  74. Harold Bills says:

    Capt. Video,

    The precedent that was set by the Veracity/NuVont spawn would allow any recognized service provider to partner up with mom and pop and presto, you’re a service provider. Provo in effect lost all control of the admission process. I don’t see how this could be acceptable especially when many other companies are denied.

    I also wonder if Mstar is still a provider by contract without customers. With a little ingenuity, they could add Xmission to the Provo network following the Veracity/Nuvont spawn model and of course they could acquire new customers.

    I realize that this sounds a little crazy, but what if?

    Perhaps you can tell me why the Broadweave deal is better than a Utopia parnership for Provo? It seems like the Utopia deal could allow Provo to retain ownership of the network which they should do anyway if they can’t unload the debt responsibility.

  75. Capt. Video says:

    I don’t support the “back door” method as the best method.

    I was just suggesting that it was not overly harmful to the network or a cause of it’s failure. Since both networks are failing due to not enough customers would it be that bad to have many, many providers come in the back door as long as they were all bringing more customers and paying the transport fees to use the network? (As NuVont is!)

    I support the Broadweave deal as good for Provo City (not the customers). The Broadweave deal gets someone else to pay the bond, with a guarantee of at least 2 years of bond relief IF the deal goes through as structured (which I would suggest now it may not? Broadweave now has Provo City by the “short hairs” and can just come back now and say, “We will still make the deal, BUT without the guarantee or without that level of guarantee” and Provo is not in a position to say “No!”).

    I don’t expect Broadweave to be successful in the long run (they are just paying too much for the network, even with the sweetheart deal of Provo paying them for “future” network capacity, (lol, a sham to make it appear Provo is getting full value for the network)), but a few years of bond payment relief is still good for Provo. The UTOPIA partnership does not provide any bond payment relief and the Broadweave deal does. Mark my words, the network will come back to Provo City in the future! (I suspect the next buyer will pay much less and then may be successful?)

    I fully support a working partnership between iProvo and UTOPIA. Sharing items (like the headend and NOC) to reduce costs. They should have done that years ago! Sadly, the Broadweave deal makes this less likely now and in the future.

    But I would not support turning over management of the network to UTOPIA.

    UTOPIA in my opinion is much less skilled at running the network than Provo is. They pissed away $100+ million(?) and did not get what Provo got for $40 million. (UTOPIA is still trying to figure out what it got for it’s $100+ million?)

    UTOPIA has shown NO proven ability to build or run a successful network. I suspect Provo would never turn over it’s “almost” successful network to the much less successful UTOPIA.

    In my opinion they still don’t get the importance of the triple play to being successful. Their new outside plant manager is running around trying to figure out what is built and what is not. (They really don’t even know that, and have to go to the field and open vaults and peds to look and see where they have fiber and where they don’t!) They are (were?) considering charging a high install fee (which will never work), and I believe they need over 40,000 new customers to avoid drawing on the city bond guarantees and they don’t have the skill set or funding to build, sell and install that many new customers in the time allotted.

    The iProvo Network could break even with a small increase to the power bills (perhaps $3-$4 a month?), (not desirable, but not the end of the world). UTOPIA has yet to have it’s real “come to Jesus meeting” in my opinion.

  76. Jarrod says:

    Capt. Video, I’m really starting to like you.

  77. Harold Bills says:

    Capt. Video,

    Your post is full of Utopia is this and did that and so on. I ask, “Who is Utopia?”. It is not Dynamic Cities of the past, it is not Packetfront anymore. There is a new culture at Utopia and these folks have all new perspectives that will likely have a much better result. While I may agree with many of the issues you point out about the old Utopia, I don’t think those issues apply today. It is time for Provo city to forget the rhetoric of the past and realize that Utopia is now very likely the only entity that could step in and manage the iProvo network. Provo is still on the hook for the $40 million bond and handing over complete control of the network to a novice company like Broadweave will help nothing. Yea you may get them to pay a few bond payments before they blow up the network and die and then you start over at a cost that will exceed the value of the payments. Bottom line: net loss. Provo will have to face the reality that they have the debt, it’s not going away, and they will need to protect their asset and learn to make it profitable for the long term. A Utopia partnership is currently the only way this can happen. If you are concerned about the well being of the city and the city’s financial future, you would be calling your council members and asking them to at least give the Utopia proposal equal consideration with the new Broadweave deal.

    By the way, I agree with the power rate increase that is long overdue. It is irresponsible management to not increase rates for some 20 years while all costs are rising and while you cut staff and infrastructure below critical levels. This is just canabalizing a perfectly good business for polictical gain. Continuing this will destroy Provo City Power.

  78. Jesse says:

    Without the surety to provide for two years of bond payments, Provo City is in a much worse position. They increased their liability and continue to make payments on the network, albeit to Broadweave in the form of reserving capacity. For such an arrangement to be a positive to the city, their net liability has to be reduced. So far, it’s not looking like this is the case at all.

    I don’t think many people expect Broadweave to be a long-term success on this network, especially in light of their inability to secure financing on-time, the failure of the Veracity merger and Nuvont’s unwillingness to sell their customer base. These low expectations are what’s derailing the Sorenson financing and the promised surety. I sincerely hope that Provo City is working feverishly on a Plan B by now. It’s looking like they will desperately need it!

    UTOPIA has gone through its “come to Jesus meeting” when it had to go back to the cities and say “guys, we screwed up real bad”. That was a very humbling moment for them and combined with a flush of upper management has completely transformed the culture. Trust me when I say that the things I know lead me to believe that UTOPIA has it together a heck of a lot better than iProvo ever did. I can understand that you place a lot of weight on the poor execution of the past and the current lack of public data, but trust someone who’s looked at the inside when I say it’s better than it’s ever been.

    Your proposal to tack a small amount onto power bills sounds about the same as my suggestion to just raise rates for subscribers by about $5/mo. That would’ve made up the entire operating deficit and could have been rescinded as revenues increased. Great minds think alike.

  79. Jarrod says:

    Having either Utopia or Broadweave run the network are not the only two options. Provo could find a decent manager to run the network, give him/her the real power to do so, admit to everyone that iProvo will probably take a very long time to hit profitability and plan for it by giving it a budget out of utility revenues, stop having these counterproductive political battles, then give it some time.

  80. Jesse says:

    That would be ideal, though I remain doubtful that if a telcom manager were hired that they would be given the latitude to do what needed to be done. It’s also apparent that Provo’s mayor and city council don’t have the stomach to stick it out like they should have. Perhaps this is why the position stayed empty for so long.

    I don’t mean to demean your suggestion (I’ve made similar arguments many times), but the political reality is that Provo wants out and they’re willing to do just about anything to see that through. I don’t think anything short of replacing some elected officials will fix that aspect.

  81. Capt. Video says:

    The question is, has the NEW UTOPIA management SHOWN they have the ability to build/manage a network? I would say the answer is still no. While they have not shown they lack the ability to do so, they also have not shown they understand the issues and have solutions. (In part, because they have not had the opportunity to do so, but they do NOT have a proven track record.) Add to their lack of proven success the fact that they are starting in a very, very deep hole.

    But what I have seen so far does not prove they can do it better. I see no evidence of past success running a cable or phone company (a very similar environment)? I hear talk of some belief that customers (enough customers) will pay a high (or any) install fee. I see UTOPIA appear to NOT keep their service provider partners informed and treated as real business partners?

    Do the service provider partners (Veracity, NuVont, Xmission and Mstar) know where and when they will be able to sell to new areas again? Do they know what will happen with video headend services (currently provided by UTOPIA) when the iProvo/UTOPIA video contract expires in less than 90 days?
    Do the service providers know the install fee plan and build out plans?

    You can bet that Comcast and Qwest are currently planning their “Holiday Promotion” that may start in Nov. or even their “New Year Promotion”. Do you think the service providers have information (from UTOPIA) on what areas will become active 5 and 6 months from now so they can do that type of planning?

    I’m watching the “new” UTOPIA and as soon as I see some evidence of skill sets or success I’ll praise them for it. I’m looking for management that lays out a budget and subscriber gain plan, and then executes the plan. I believe the current and past management people are all competent professionals. But that alone will not make UTOPIA successful. Do they have the specific skill set needed to push UTOPIA to success? That is yet to be seen.

    I would like to see them saying “We need or expect to connect “x” subscribers a month starting in “, and then showing us they are meeting the goal. This type of proven success, proven ability to predict the results shows they “understand”. If they don’t set and meet monthly goals how do we know how good they are doing. You must keep score and we should all know the score to judge if UTOPIA is in good hands.

    So I don’t say the new UTOPIA management does not have the skill, experience or ability to make UTOPIA successful. I am just saying we have not seen hard number “proof” of that YET. I’m sure we would all welcome that proof.

    I fully welcome an iProvo/UTOPIA partnership in areas to reduce costs but actually turning over the iProvo network management to UTOPIA’s untested management team would not be good in my opinion. At least when you turn it over to Broadweave they are paying the bills. If UTOPIA were to sign up to pay the bills as Broadweave has, then with their cash on the line, they can manage the network.

    But given that UTOPIA will have problems paying their own bills, it’s unlikely they will step up to pay the iProvo bills too?

  82. Capt. Video says:

    I believe Jarrod’s solution was a good one! That would have been the best solution. Including working closer with UTOPIA as they were starting to do before the Broadweave deal.

    The problem was the lack of willingness to pay to support the network. They were grasping at straws to avoid paying to subsidize the network.

    They should have just bit the bullet!

  83. Harold Bills says:

    I don’t think that anyone will really pay Provo’s bills and that is why Provo must retain a vested interest. I’m afraid that Broadweave will just be a temporary,destructive, diversion, so why even go there.
    As far the track record of the new Utopia, I have heard a number of issues that have now been recognized and corrected. The ones I have heard leave me saying, “Wow! Somebody finally gets it!”
    What I hear about Broadweave is just the opposite, they are re-commiting the errors of the past like poor performance (how is your video guide), little or no marketing, a serious lack of capital, little or no experience, and worst of all technical arrogance that cuased them to squander the knowledge gained from the previous years of iProvo.

  84. Jarrod says:

    Thoughts on having Utopia run iProvo:

    Pro – Utopia now employs a number of former iProvo techs, so they have the technical knowhow.

    Con – iProvo will not be a major focus for Utopia’s management. Compared to Utopia, iProvo has much smaller problems. At best, iProvo will be held steady. At worst, iProvo will be ignored or plundered in favor of Utopia.

  85. Capt. Video says:

    I look forward to saying, “Wow! Somebody finally gets it!”

    When I hear rumors that they think people will pay a high install fee…I say the opposite.

    But those are just rumors. Soon, VERY soon, UTOPIA will have to show their thinking on things like the install fee, the importance of video and the triple play, etc.

    I look forward to joining you in saying, Wow! Somebody gets it!”

    With Broadweave the good or bad will turn upon how much harm is done during their ownership/operation vs. how much of the bond they pay off.

    If they complete the deal as proposed they would be paying over 6 million dollars (2 years of bond payments plus operating costs).

    But I fear Provo has totally lost control of the situation and is no longer in position to say “No” to Broadweave if they demand the terms change.

    We should know more at the end of next week when the deal is AGAIN scheduled to close.

  86. Capt. Video says:

    The part iProvo would need, the tech support (NOC, etc.) can be gained through a partnership without turning over the network’s financial management to UTOPIA.

    Provo would just need 2 good engineers and they are likely available from the DC crew let go in the past. They had some very good engineers. So they can likely go it alone and be ok too.

    The new UTOPIA management team will have more than they can handle in just turning UTOPIA around and asking them to also turn iProvo around at the same time might be asking too much.

    I assume they are only human!

  87. Jarrod says:

    Capt Video, that sounds like a good option, assuming the work load wouldn’t be too big for those engineers to manage both networks. I also wonder if it will work to have the engineers oversee both networks from one or the other’s NOC, or if they need to be in both places at once.

    I wish there was someone in Provo’s government with the political will to grapple with the problem rather than play political football with it.

  88. Harold Bills says:

    The new Broadweave deal is not the same deal. I understand that the initial deal stipulated that the surety was to be provided by Sorenson and only Sorenson. There are also other changes. How can they attempt to close without another pass before the council in public? Oh that’s right according to Provo legal the administration can do whatever they want and the council just lets it all go.

    The former DC engineers know nothing about the Provo network since it is totally different equipment, but Utopia staff is qualified.

  89. Jarrod says:

    I don’t understand how the mayor can change the deal without getting it reapproved by the council. Perhaps the council didn’t actually approve the deal, but really just approved the selling of the asset at any terms the mayor could get.

    Regardless, I would not allow the terms of the deal to change. The city should never have handed over operations without everything being complete. At this point I would not allow any more extensions and no new negotiations. If Broadweave isn’t ready to close the deal on the original terms with a financial backer at least as good as Sorenson at the end of this month, it’s time to take control back and move on.

    But there does need to be a plan b. At the very least something that will work for the short term.

  90. Harold Bills says:

    I totally agree Jarrod. Handing over the network before closing allowed Kevin Garlick to spin off the iProvo staff so there could be no going back to the before scenario. This results in another gun to the council’s head. I don’t see why the council does not see through this.

  91. Capt. Video says:

    I’m not sure if it’s correct to assume Sorenson is out. At this point that is just a rumor.

    But I’m also not sure Sorenson matters either. If someone puts a bond, cash, money that cannot be withdrawn in an account, anyone’s money is as good as Sorenson’s to Provo City.

    I would only think the deal needs to be re-approved by the council if the deal points changes. If Broadweave asks to not have to put up money or to put up less money, I could see that needing to be brought back to the council. If they stay with the same deal with someone else backing them. The deal seems the same and should go through without a hitch. Who’s money backs them should not matter.

    I’ve never read exactly what the deal was. Rumor was it was Broadweave putting a non-revocable bond up that would cover 2 years of bond payments (about 6 million?). After the first 2 years the bond would be reduced based upon performance? If Broadweave walked in the first 2 years Provo keeps the money and has 2 years of bond payments. Almost insures Broadweave will stay for 2 years since they are paying the bond for 2 years no matter what?

    But I believe Provo has completely lost it’s bargaining power at this point and they can only hope Broadweave is ready willing and able to close the deal on the original terms.

    While I myself an with you Jesse and would not support any changes or extension, Provo is not in any position to say “No” to them. What if Broadweave asks for another extension. With no good fallback position I think they will have to grant an extension or even make changes to the original deal.

    I suspect at this point Provo is just hoping that next week, the deal closes as originally planned. Only about 8 days and we should know something one way or another.

  92. Jarrod says:

    The reason it matters whose money it is is the exact deal didn’t require putting the $2M in a place where it was guaranteed to be available when needed. There was some degree of trust that Sorenson would hand over the money when required.

    If that was changed so that the money was placed in escrow in some way then you’re right, it doesn’t matter where it comes from. But as long as there has to be some trust in the guarantor that it will provide the money when needed, it matters who that guarantor is.

  93. Jarrod says:

    I have been reading some of the Mayor’s comments regarding this deal, and I find it funny that he’s pointing to the fact that two bond payments have been made as proof that things are going well.

    I looked back through my copies of the documents, and noticed that the city is responsible to pay 1) $500K on deal close and 2) $300K per year for future capacity on the network. The bond payments are around $250K per month.

    So are checks actually changing hands (“Here’s your check for $500K”, “And here’s yours for $250K, don’t cash it for a couple days”) or are they just doing it all on paper? With this deal Broadweave doesn’t actually have to cough up cash until month 4.

    So as a metric, making bond payments is about as weak as you can get.

  94. Capt. Video says:

    I hope you are wrong!

    I hope Provo would NEVER accept the deal without the cold hard cash being place in a bond or some irrevocable financial instrument.

    In my mind anything less is dereliction of their fiduciary responsibility and downright shameful.

  95. Jarrod says:

    There is a detail that I left out: a security deposit is required to be placed in an account that is equal to one month’s bond payment. And the bond payment is $278K, not $250K. Here are the relevant documents:


    It’s clear from the documents that Sorenson did not need to hand over, or even put in escrow, any of the funds that were part of the guarantee.

    What I don’t know is which agreements, if any, have been executed. Certainly not the Capital Call Agreement.

  96. Jesse says:

    Jarrod: That’s one of the reasons why Rep. Clark objected to the terms of the deal. Broadweave truly didn’t have any buy-in and could run for several months on city dollars. Another thing to consider is that this seed money will last a lot longer than 4 months. Provo only had a $100K per month shortfall on the bond and Broadweave has the benefit of some of the retail revenue, albeit from some of the lowest quality addresses. They could potentially use that money to string this along for months or a year before the house of cards comes down.

  97. Jarrod says:

    That’s right. “No skin in the game.” I guess we’re seeing why that’s important.

    Though even more important is actually executing an agreement BEFORE handing over the asset.

    “I’ll buy your car for $15,000.”
    “Okay, give me the money and I’ll give you the keys.”
    “I just need to run down to the bank to get the money, can I have the keys to go get it?”
    “Uh, sure, I’ll be waiting right here.”

    -Phone call-
    “Hey, uh, the bank wouldn’t give me the money today. I guess they need to check my credit for the next little while. I’ll have to get you the money in two months. That’s okay right?”
    “Uh, is my car okay?”
    “Yeah, I’m taking good care of it.”
    “Can I have it back?”
    “I need it to go to work. If I don’t go to work, the bank won’t like my credit.”
    “Well, don’t paint it or reupholster it or anything.”
    “Don’t worry, it will be fine.”

    I wonder what happens at the end of the two months.

  98. Capt. Video says:

    It appears the “additional support” will cover up to $6 million. But I can’t tell how secure that money is. It mentions things like “Irrevocable letter of credit” and such.

    Provo would demand that somebody put some money in the bank to insure they have a year or two of payments in case the deal goes south.

    I see no mention of Sorenson, but a “provider” which can be any sound financial provider.

    I see a separate company was set up for this venture, which is owned by Broadweave. Something like Broadweave Provo LLC and the guarantor is Broadweave?

  99. Jeremy says:

    Back to an earlier discussion, I’d like to put my money where my mouth is and re-enforce the concept of an open network with multiple providers by switching mine from Broadweave to NuVont. But before I pull the trigger on that, I’d like some opinions about the speed. Currently I’m getting 20Mb-70Mb downstream (70Mb to Xmission, which I assume is on the same “subnet” as Broadweave’s provider) and upload streams in excess of 15MB/s. I see that NuVont is claiming iProvo is 10MB max, but I’ve never experienced that limitation with either Mstar or Broadweave.

    I’d hate to switch, only to have my connection slow down dramatically… On the other hand, I’d be willing take a mild slow down in the interest of “sending a message” with my pocketbook to the powers that be.

  100. iStillLikeiProvo? says:

    I’m on Nuvont/iProvo. Speedtest.net to Xmission consistently rates me at 10Mbps up and down, though I’m only paying for the 5Mbps package.

  101. Jarrod says:

    I’m on Nuvont. My speedtest.net test to XMission just showed 50Mbps down, 23Mbps up.

  102. Harold Bills says:

    I hope Provo is not convinced that they have no choice but to sign with Broadweave. I don’t see why the Utopia operations concept could not step in immediately for what ever time Provo needs to make a real decision.

    Again I will say that Sorenson is gone and this is reliable information.

    Provo has never been diligent about guarantee money as demonstrated by the Homenet mess when a staffer faked the irrevocable letter of credit. It’s about time there was some adult supervision for iProvo.

    This $40-$60 million dollar asset is only worth that to Provo. All these blunders have reduced the marketability to the point that it’s not marketable. That does not mean that giving it away to Broadweave is the only choice.

    I see Provo retaining the asset with some limited management and Utopia operating the network and bringing the service providers.
    Depending on the details this would be a win-win. It has a much better chance than Broadweave which has no chance.

  103. Jarrod says:

    I agree that Provo should not see Broadweave as the only option. Broadweave is an option, but decision makers should stop thinking there is a gun to their heads.

    Likewise, Utopia is not the only other option. I prefer the idea that Provo man up and run the network itself.

    The huge benefit of running the network as a public entity is that you have the luxury to be able to measure value in broader terms than profit. Many of the original proponents of iProvo supported it in the idea that municipal fiber is in the public interest in the same way that good roads and utilities are in the public interest. With this in mind it is not unreasonable to subsidize the thing for even an extended period of time. Financially, that’s no worse than selling at a loss. And the cost of a telecom network is really front loaded, so over time it should be possible for the city to eliminate the subsidy and even reach profitability. I would bet that’s how the city utility worked.

    Here’s a back of the napkin analysis: If an RFP and sale under today’s circumstances would net $30 million, the current operating deficit is $1.5 million per year, and the outstanding bonds are $40 million, not selling would give the city almost 7 years to bring the network to break even with the same financial penalty of selling.

    That sounds achievable to me.

  104. Capt. Video says:

    I agree with Jarrod completely!

    Adding that as they operate the network (as a city network like the Power Company, not an open access network) they work very closely with UTOPIA on everything than can reduce the operating costs without sacrificing quality. (Shared NOC, shared headend, shared engineering to some degree??, shared marketing to some degree??, etc.

    This municipal supported model also sets an example for the soon to come time when the UTOPIA cities have to belly up the the bar and start contributing cash to support UTOPIA. Sadly, most UTOPIA cities do not have a profitable power company that can generate the revenue needed in the lean years to support the network.

    Provo would have to fight for their right in court to provide the service just as they did with the power company. The city will get much more support from residents when the network is a wholly owned city operation and the city is not generating revenue for private companies and the residents see that they are going to pay for the network one way or another and the painless way is just subscribing to the city network and stop sending their money to Qwest in Denver or Comcast in Philly.

    The city also provides a very high level of service to residents via the power company. They would use the same customers service, billing, etc. to provide telecommunication service. Sending a single bill for all city services, etc.

    Lots of cost savings and efficiencies to be gained by just adding telecommunication to existing city services.

  105. Jarrod says:

    I wasn’t even thinking in terms of the city providing the services – I was just thinking of the city running the network as a wholesaler.

    Here’s a thought experiment:

    The state law says that a government entity can’t retail telecommunications services if it subsidizes those services from other government sources. It can wholesale with a subsidy, but it can’t retail.

    So what if the city had two entities. One is the wholesaler, which is subsidized. The wholesaler provides an open network with similar pricing for all comers. The city also has a retail operation. This retailer buys services from the wholesaler. The retailer is not subsidized.

    So where does the retailer get the money to create a customer base? It already has one. After all, those MStar customers need to go somewhere, and if Broadweave doesn’t close the deal then they can’t actually buy those customers with forgiven debt, because they won’t own the debt.

    Interesting experiment. I wonder if the retailer could be Provo City Utilities. I’d have to read the state law, but I don’t think the utility company gets subsidized. I’m pretty sure it’s self sufficient with its own revenues. I wonder if it could expand its services by providing telecom, subsidizing startup out of utility revenue, without triggering the state restrictions.

  106. Capt. Video says:

    Qwest & AT&T did a pretty good job of tying the hands of cities. After all, they had the support of the best legislators money could buy!

    I think the city needs to press their rights to provide the service under federal law or somehow get the current state law overturned of modified. (Not much chance of that given the powerful lobby of Qwest, Comcast and others in the State.)

    The city wholesaling is good, but the city retailing is even better. It reduces costs and allows the city to control it’s fate completely.

    No service providers making a business decision of if they should use Qwest or iProvo to deliver service, a service provider (the City) completely committed to FIBER and this network, the saving by not having additional billing costs or the cost of setting up new customer service operations, etc.

  107. Harold Bills says:

    There are those that have provided an authoritative opinion that the infamous House Bill 149 is written so poorly that it would only be enforceable regarding legacy type phone services. The spectrum of data delivered services such as IP video, Internet based phone services, and Internet is well beyond HB 149 and may open the door very wide for cities to act as the retailer.

    It would be a fight never-the-less, but there is a good argument. the city as a wholesaler is a very good thought, but again Provo does not completely control it’s destiny which of course is typically fatal.

    For the city to be the retailer, even if Utopia managed the technical network is the ultimate fantasy but Provo has never had the political stones.

  108. Capt. Video says:

    lol…Great News in today’s Deseret News, George Stewart says Provo’s “Plan B” is to have Broadweave to continue to run the network until Provo is ready to take it back if the deal does not go through???

    Now there’s a really good plan!

    Provo PAYS Broadweave to run the network if they fail to come up with the money to buy it. There should be some punishment (financial) to Broadweave, not a REWARD for making Provo jump through hoops, lose it’s employees, etc.

    Well only 5 days and we should hear if the deal is going to fly or not.

  109. Jesse says:

    There’s a great plan B: let the company who couldn’t get it all together keep on doing what they’ve been doing until Provo can figure out how to clean up the mess. Bra-VO, Provo.

  110. Harold Bills says:

    I cannot believe George Stewart and others on the council buy all this crap that is fed to them by the Mayor and Kevin Garlick. I can hear it now… “No George there relly is no other option since we squandered, I mean lost, all of the iProvo engineering experience. Utopia? No those guys are drunk, they could never measure up to Broadweave’s engineering abilities. Don’t think of it as a gun to your head but think of it as an opportunity to make Broadweave rich at the city’s expense. No George, no one else would have ever purchased the network. How do I know? Oh because we pooled our collective intelligence that made this project what it is and that’s what we think. Trust us George we have this one right, just like Provo Cable, king Communications, Ceristar, Homenet, Atlantic Engineering, Veracity, Nuvont, and Mstar. Would we lead you wrong?”

  111. Jonathan says:

    I don’t know whom out of all the commenters here are Provo residents. But it sounds like you guys should get together and write a concerned citizens letter to the city. Telling them basically what you all said here about looking into all options, not letting Broadweave get away scott free, etc…

  112. Jonathan says:

    Sorry to post to my own post. Another option would be to write a nice little Op/Ed piece and submit it to the SL Tribune or Deseret News or other local paper (being from Weber County I don’t know the Utah county papers other than those listed).

  113. Capt. Video says:

    I still expect the deal to close at the end of this week. A “Plan B” only need come into play if the deal does not close.

    I still believe that IF Provo is getting Broadweave to GUARANTEE (with money in the bank) 2 years of bond payments neither hell nor high water should stop them from taking advantage of the opportunity and close the deal. As I’ve said, bad for customers, good for the city.

    They would be getting a guarantee of 2 years of someone else paying the bond ($6 million?) AND a strong likelihood they would also get the network back as it might be difficult for Broadweave to gain enough customers to make the venture profitable while also spending a million plus, replacing all the portal, as they have announced they will do if the manufacture can not make them do SIP in 90 days. (Anyone holding their breath waiting for a portal replacement?)

    Of course Provo would rather have them be successful and just pay the full bond. I’m just not sure that will work out for them.

    I’m guessing both Veracity and NuVont hope Broadweave throws in the towel before their current contract to use the network expires and Broadweave kicks them off.

    Only 5 days to see if they close as planned.
    Is Sorenson really out? Is someone else in?

    Also only 5 days for UTOPIA to stay on track and start construction in Aug. as they planned. Let’s not let the excitement of the iProvo events have us take our eye off UTOPIA.

  114. Jarrod says:

    Agreed. If Broadweave can close the deal as approved by Provo’s council, then good for them. I’ll be happy to do all I can to help Broadweave succeed.

    But if that doesn’t happen, there needs to be a real plan B, and absolutely no more “modified” terms that are totally different from what was presented to the public, vetted by a review committee, and approved by the council.

  115. Harold Bills says:

    The clincher is the $6 million “in the bank”. If Broadweave cannot provide bulletproof surety, there is no point in allowing them to continue. They have not earned this. It sounds like you agree that their success is unlikely. So what would Provo end up with? They may have two years of bond payments paid, but the condition of their $60 million dollar asset may be beyond repair. The bottom line is Provo needs to protect their asset and the Broadweave deal won’t do it. The Utopia proposal will allow Provo enough involvement to ensure the value of the asset long term. Provo cannot just allow someone to assume their $40 million debt and hope for the best. It’s not responsible.
    If you have ever known someone who has sold a home on a walk-away assumption, you know how disasterous this can be.

    You just know that when the closing attempts on Friday, that there will be a dozen requested compromises on the part of Provo, who is unneccessarily desparate due to Kevin Garlick’s “gun to the head tactics”. The city cannot allow Broadweave to weaken the deal behind closed doors. The council owes it to the people of Provo that they get the best deal possible and it may take time to get through this. The Utopia management proposal must recieve a fair evaluation.

  116. Jarrod says:

    So is this “Utopia management proposal” an actual proposal from Utopia to Provo to provide management of iProvo? Is it written? Can we review it?

  117. Jesse says:

    Jarrod: I think that it’s all rumor at this stage and probably fueled by our own wishful thinking.

  118. Jarrod says:

    That’s what I was thinking, but Harold’s last comment made it sound a lot more concrete. I’m sure most of us know things that we can’t or won’t say, and that post made me think that maybe there’s a little more behind this “Utopia proposal” than rumor.

  119. Jarrod says:

    (Sorry – continuation of my thought)

    And if there is more to this Utopia proposal than rumor, now would be an ideal time to have some public discussion about it, with specifics, as we have all of a week before we find out if that nonexistent plan B is needed.

    I’ve lost all hope that the city will provide a decent plan B. So it’s up to us citizens to figure one out and hopefully the city will pull its head out long enough to implement it.

  120. JeremyN says:

    I echo Harold’s comments about Broadweave taking over just because they might be able to cover the bond for a couple of years (what is the election cycle for Mayors anyway…). If it’s inevitable that Broadweave will fail eventually, as is the general consensus – mine included, then why ever hand it over at all. Not only could the physical network be in danger of being damaged under poor management, the equally if not more important public opinion of the network will likely be destroyed by the time Provo gets the network back.

    I say walk away NOW, kill the deal NOW, not in two years after even more damage is done. Provo needs to take the network back and look very seriously at UTOPIA taking over management. (Basically it won’t be owned by UTOPIA but for all practical purposes it will be a UTOPIA network.) It’s the only option that makes sense right now, and we get the added bonus of the network being open again, as it should be. As for who’s paying for the bonds, we all should. Add a small tax to our utility bill and be done with it (this coming from a libertarian!).

  121. Jarrod says:

    I don’t understand why Utopia running the network would be the only option that makes sense. There is no reason why Provo can’t run the network itself. Both scenarios present problems, but I am more concerned with the long term problems with Utopia running the network than Provo running the network.

    Utopia has its own very big problems, and solving those problems is much more important to Utopia management than solving iProvo’s problems.

  122. Capt. Video says:

    Has UTOPIA made some official proposal to iProvo?

    I am not aware of any official proposal that Provo has on the table to even consider from UTOPIA.

    The current Broadweave deal does hinge on “money in the bank” that would amount to about $6 million.

    We will just have a few days wait to see if that deal closes or if something else is proposed.

    I believe any “material” change to the existing deal would require council approval.

  123. Jarrod says:

    Maybe the council should grow a spine and point out that the need for approval of changes should have applied two months ago.

  124. Harold Bills says:

    I understand that there has been a Utopia proposal delivered to the council. I don’t know how fleshed-out this is. I am hoping that there is enough substance there to get the council interested.

    Jeremy, I agree that the utility increase would be palatable and get the monkey off the back of this project. If that step could happen, then iProvo could develop over time to become a profitable, desirable business that would greatly benefit the city.

    The money is already spent. No one will pay the debt out. Why just give it away to Broadweave? The utility increase would take some courage, but how does anyone know if the citizens would have a problem with it?
    What if they thought, “Well we have the debt, we maight as well deal with it as prudently as possible”. How can they feel good about giving away millions of dollars to avoid a utlility increase that is at least 10 years overdue?

  125. Jesse says:

    [B]ut how does anyone know if the citizens would have a problem with it?

    That’s the $64 question. Nobody has bothered to do any kind of survey of public sentiment during any of this mess. The city would do well to see what the citizens of Provo want outside of those of us who are loudest.

  126. Jarrod says:

    Jesse just commented to me privately that I seem to have soured on the Broadweave deal, based on my comments here.

    This is true, but it has nothing to do with my interactions with Broadweave. They’ve been pretty decent to work with.

    I’m frustrated with the way the city administration has handled the changing landscape of the deal.

    While originally critical, I eventually supported the deal as approved by the council, as did a number of high profile individuals on the review committee. There were quite a few important pieces that combined to make the deal acceptable, including: the acquisition of Veracity, the guarantee by Sorenson, and the letters of intent to purchase customers from Nuvont and MStar.

    When it came time to close, the city administration gave a pass on the single most important element in getting these various approvals: the guarantee by Sorenson. The administration handed over the network under what it termed a “modified close.”

    To me, this amounts to months of hard scrutiny by many concerned individuals, discussions, media attention, a council vote, etc, then the city administration handed over the network under entirely different terms.

    There should be a lot of people screaming for the mayor’s head over this. I would expect to hear loud complaining from George Stewart, Steve Turley, Cindy Clark, Sherrie Hall Everett, Steve Clark, Curt Bramble, Stan Lockhart, Steve White, The Daily Herald, The Deseret News, and quite a few others.

    Instead we hear that all is well. The sale closed under slightly modified terms. No big deal. We’ll pretend everything’s fine while all of the other points of the deal fall apart one by one.

    A note to you fine public figures who passed off on the terms leading into the council vote: Your responsibility didn’t end when the vote was over. We expect our public servants to keep paying attention. If you approve X and the executive does Y it’s time to act. You don’t turn your back with a ‘no comment’. This applies doubly to the ‘no’ votes.

    Yeah, I’m soured. I’m frustrated. Broadweave could be the unparalleled network savior and there would still be something seriously wrong with how this happened.

  127. Tom says:

    Cumon Jesse,

    Everyone knows that the tail wags the dog. That the minority rule.

    Its the problem children that get the attention so the city is focused on the few not the many.

    Any politician knows to limit your liabilities. iProvo is a liability to the Mayor. So make the issue go away in the quickest manner possible. Unfortunately the process of making the liability go away is not quite so easy as it was first thought to be.

    Which might in turn make the liability a bigger liability in the lack of research / time invested in making sure the “solution” was the correct one.

    Politics FTW!

  128. Capt. Video says:

    This may not be popular with this group, but here goes anyway.

    I don’t put UTOPIA’s chances at being profitable higher than Broadweave’s. Given the business position of the two, I would suggest Broadweave has a better chance of turning a profit than UTOPIA does.

    That’s just based upon my own back of the envelope, running of the numbers for both. Remember my numbers are not official by any means (far from it!), but it’s much, much, more than an uneducated guess.

    I think Broadweave needs to add about 8,000+ customers(?) and UTOPIA needs to add about 40,000+ customer to approach breakeven. (In both cases the bulk need to be double and triple play.) Broadweave is currently installing 150-200 a month and they just started. How many are being installed each month by UTOPIA?

    I actually expect the network to have more customers when (if) Provo get’s it back. I expect Broadweave’s bumpy road to smooth out a little as they learn the network and actually learn the business. It’s more a matter of how much capital Broadweave is willing (and more importantly, ABLE) to pump into the business to turn it around. (I do wish it were Provo willing to do that.)

    Are their pockets deep enough to see this to profitability? They are clearly going into the deal fully knowing they will be losing money in the early months (years?) hoping to show a profit in the later months/years or for the asset value to grow to a point where they can sell at a profit.

    I really feel certain that making iProvo show a profit will be much easier than making UTOPIA show a profit. Provo spent $40+ million and it’s a completed, fully operational network. UTOPIA spent what? over $100 million(?) and it’s a number of spread out, incomplete network pieces that total fewer home passed (available for service) than Provo?

    Just think of the gas costs of driving the UTOPIA network to do installs and service vs. the nice compact Provo network. Provo has a video headend, UTOPIA has no video headend. Provo has it’s own building, UTOPIA leases space for all of it’s network equipment and offices. Overall UTOPIA has much higher operating costs.

    I’m amazed you guys can all see the Broadweave problems ahead and are so sure they will fail, But fail to see the larger problems UTOPIA faces and feel almost sure they will be successful?

    It’s going to be a hard road for both of them, but harder for UTOPIA in my opinion.

  129. Capt. Video says:

    I don’t see why Sorenson matters?

    Money in the bank is money in the bank no matter where it comes from. Having the money in the bank is much more important than where it comes from.

    To me, NO MONEY! NO DEAL!
    If they have the money then I don’t care if Sorenson or someone else put in up.

  130. Jarrod says:

    Capt. Video,

    Well put, and I agree.

    On the Broadweave side – I think their original plans are very different from what things look like now. Merging with Veracity and getting all of the customers on iProvo to themselves was a good plan. I wonder how the financials look now. It will be a much harder slog to profitability without those elements.

    But they still compare favorably to Utopia.

    The big problem for Broadweave, as it was for every other service provider on iProvo, is capital.

    Oh, and execution.

  131. Jarrod says:

    That’s the point. Provo handed over the network with no money in the bank. The “modified” terms of the close put off the guarantee money until later.

    The details of that guarantee, making sure it was in place and secure, were very important to EVERYONE who vetted the terms, and at the last moment the administration blew it off.

    And now, plan B according to George Stewart is if Broadweave can’t figure out a way to put money in the bank they still get to run the network.

  132. Capt. Video says:

    It’s likely their original plan was to buy the Veracity and NuVont customers. (Before the merger idea came into the picture?)

    So now they don’t spend the capital but have lower operating revenues. They still collect transport fees from both and have not spent the capital buying the customers or paying to support the customers or pay programming or bandwidth costs for those customers.

    I don’t think it will be a big problem.

    But you have correctly identified the two issues.
    Capital and Execution!

  133. Capt. Video says:

    But Provo had little choice as it’s staff started to leave. The decision will only be bad if the deal fails to close Friday with money in the bank.

    If it closes this Friday is was just an unfortunate delay and no long term harm was done.

    The mistake was someone (everyone at iProvo and Broadweave?) even thinking they could close the deal in 30 days? What were they smokin’?

    I do agree the whole, “rush, we must decide immediately, gun to the head” process was ugly and avoidable. It seems the Council has had enough and is trying to put something in place to avoid that in the future?

  134. Jarrod says:

    Broadweave wasn’t paying cash to Nuvont, it was assuming debt. Similar to how it bought MStar’s customers. The Veracity purchase was part cash, part stock. The cash needed to come from an investor, in this case Sorenson. If Sorenson on June 30 balked (still doing due diligence means still deciding if this is worth investing in), did the financials look better on July 1 when Veracity and Broadweave nixed their merger? Or a week ago when Nuvont decided not to sell its customers for an assumption of debt?

    I will be surprised if the rumors are not true that Sorenson has backed out and just won’t say it yet. The question is can Broadweave find a new investor under the same terms with the new landscape.

  135. Jarrod says:

    Oh, and if it doesn’t close Friday there had better be a bloodbath This is the exact scenario a guarantee was meant to prevent.

  136. Harold Bills says:

    Capt. Video,

    The fallacy of your back of the envelope analysis is that you always insist on taking a residential customer view. This is exactly why the loss of Veracity is so bad for Broadweave. The commercial and MDU side of the business will make all the difference. Utopia has figured this out and Broadweave has no hope of competing for commercial accounts in lieu of the Veracity debacle. Utopia also has the advantage of a knowledge base accumulated over the years of experience with staff from iProvo and Utopia. Broadweave is a novice and their experience in Sienna Hills and Traverse Ridge has little or no value. They were not even knowledgable enough to get business licenses or franchise agreements. They are starting at less than zero. They told the Washington City council that they have 25 customers there. Wow, some network! that’s not even a good test! They don’t even do video in Traverse ridge. This is all new to them and they ignored those who had expertise. iProvo customers will not tolerate any more learning curves.

  137. Capt. Video says:

    You are right that I believe that the success of the networks depends upon residential customers. While businesses contribute to success and are very important. I don’t see a financial model where the businesses alone (or with MDU’s, which tend to contribute much less than residential or business financially) can generate enough revenue to pay the bond payments. I believe the residents on the cities backing the network expect the network will be mostly residential so they can benefit from the money they have risk.

    I guess I also believe that many companies like AT&T, Qwest, Comcast, and a dozen smaller others have build fiber to serve businesses. I just don’t see UTOPIA moving those businesses (most under existing contracts) to UTOPIA in numbers big enough to matter?

    I’ll be glad to share and update my numbers and projections as more information becomes available on UTOPIA’s success rate with their plans whatever those may be.

    Have you seem any numbers that suggest UTOPIA will be profitable with fewer customers? If UTOPIA would ever share some numbers we will be in a much better position to know how many business they have and how they contribute to the revenue pie. Also allowing us to determine how many the will need to add.

    I believe we need UTOPIA to set some goals and then show progress toward those goals. If they fail to do that, the cities could be in for an ugly surprise AGAIN in the future.

    How many times must I say UTOPIA is too secretive when they are doing the public’s business.

    Most importantly I stand by my claim that Broadweave is in a better position to be profitable than UTOPIA is. Remember that Broadweave makes money on every Veracity business customer. As Veracity signs them up on the network, Broadweave takes a share. If that share is enough to support UTOPIA then it should likewise support Broadweave with much lower operating costs as well as customers of their own.

    You should be careful not to put all your eggs in the business basket. Unlike residential, business (of which there are few compared to residential) are almost always under longer term contracts and find it more difficult to switch. How many big money businesses are there in Brigham City and Tremonton?

  138. Harold Bills says:

    I don’t see commercial and MDU customers as the only eggs in the basket, just ones that have been underestimated, misunderstood, and poorly marketed in the past. The Veracity MDU model for example where they have sold a few T1s to support hundreds of students at pennies per student was incredibally destructive to the business model of iProvo. Mstar’s complete lack of business services was a similar problem. I think residential revenue is essential, but it is a very tough commodity game to play. The real gravy is in commercial services. How many businesses in Tremonton and Brigham city? Enough!

  139. Jesse says:

    Capt Video makes a good point: it doesn’t matter how much you boost your ARPU with commerical accounts, it simply can’t be enough without the meat-and-potatoes residential accounts for the volume. Commercial accounts are worth going after, but you can’t ignore the residential base and hope to make your debt service unless you land some whopper accounts (UVU, school districts, Delta, IHC, etc).

  140. Capt. Video says:

    I’ll agree with what you have said Harold, (except the part about their being “enough” businesses in Brigham City and Tremonton), but I still believe UTOPIA will need 40,000 new customers in the next 2 years. If I’m wrong and they only need 20,000 or 30,000 new customers UTOPIA’s ability and FUNDING to get that much lower number is still highly suspect.

    20,000 installs that cost only $500 each (they cost more!), equals $10 million dollars. 20,000 installs spread over 26 months is 770 install a month. Do you think UTOPIA has the ability to sell and install 770 a month (starting next month)? I firmly believe 20,000 will not be near enough.

    Let’s cut right to the quick. How many installs do YOU believe UTOPIA needs in the next 2 years? How many do you think they can sell and install in a month?

    If you have not figured those numbers out, you can’t have any idea of UTOPIA’s real strength or weakness or the likelihood they can turn a profit.

    It’s all about revenue per subscriber and number of subscribers. The number of installed that can be done, the cost of each install and the ability to pay for those installs. Those are the type numbers that really matter.

    The new management team is only good if they can deliver on the metrics above. Make those numbers work and you succeed, miss those numbers and you fail.

    That’s true for all new networks. iProvo, UTOPIA, Broadweave, etc. Comcast and Qwest have different metrics as they are built out and have almost all the customers. Almost all homes are already wired for their service and they have deep enough pockets to not even worry about if they have enough money to do the installs they need. You can bet UTOPIA IS very worried about that question. (Why do you think a high install fee is/was being considered? A desperate attempt to fund the high cost and high number of needed installations?)

    As you say, residential revenue is essential. So how many residential installs are needed? Once that number is accepted, then we can discuss the likelihood of getting them and track the progress to the goal! Then and only then will we know the score. You can’t tell if you are winning or losing if you are not keeping score.

    It seems to me UTOPIA is withholding information so we can’t keep score? Am I the only one that wants to know the score?

  141. Capt. Video says:

    I just heard a fun new rumor!

    Broadweave is ready to close the deal (as originally structured) with the backing not of Sorenson but with the backing of some “meat” company?

    Gives new meaning to “Where’s the Beef?”


  142. luminous says:

    I would bet that in the first 6months after Utopia has recovered their stranded assets that the installations will pass that 770 installs per month number pretty easily the question is rather or not they can keep the install rate up after that point in time. With stranded assets in atleast 5 city’s assuming the cost to turn those assets on isnt excessive that would give utopia access to alot of customers. Given i due understand getting them to sign up is another story, getting access to the customers in the first place is half the battle.

  143. Capt. Video says:

    While having homes available to sell and actual sales of course are the start of the install process, there is really much more to be considered. Including creating a process/procedure and a “machine” that can do 38 installs a day. Scheduling time slots, having installers arrive at the right place at the right time, rescheduling not at homes, etc.

    If it takes UTOPIA 6 months to get up to speed and connect the stranded assets, then you need not 770 but 1000 installs a month or 50 a day.

    To UTOPIA the biggest challenge might be having the more than $10 million dollars to pay for the material and labor for the install, after they have paid for the construction to connect the stranded assets. Remember you are also dependent upon the service providers having money to pay for their part of the installation (if any).

    If only 30% of those homes take video (6000) it would cost almost $2 million additional dollars for the 12,000+ set top boxes. (If only 30% take video they might need more customers than 20,000 as the revenue per customer might be too low?)

    Since UTOPIA currently only serves about 20-30%(?) of the homes they pass, one would think there were a number of available installs in that other 70-80% of unconnected homes currently passed, without any cost to connect stranded assets. If UTOPIA is only able to connect 20% of the homes they pass. That would mean they will have to build past or connect stranded assets passing 100,000 homes to connect 20,000. (And I believe they will need closer to 40,000+ new connects, not 20,000)

    Am I making the size of the challenge facing UTOPIA clear here?

    Can you say “MONUMENTAL”?

    Can you see why I believe we should be getting the cities used to the idea that they WILL be helping to pay the bond in 2 years? Better to expect the worse and have the best happen than the other way around. I believe the chances the cities will not contribute to the bond payment is slim, very slim.

  144. Jarrod says:

    Meat company? That’s curious.

    At any rate, that’s good news rumor for Broadweave.

  145. suspicious says:

    Which one of Christensen’s relatives is in the meat business?

  146. Harold Bills says:

    I am hearing it is a company that makes Spam. LOL.

    Is anyone hearing about a council meeting today that will go over the many issues related to a Broadweave closing?

    Capt. Video,

    Your numbers and assumptions paint a pretty challenging picture. No question, Utopia will have to be aggressive and innovative and yea they might have to go to the cities to get help with the bond at some point. The Provo situation is pretty different from a typical Utopia city. I would hate for the council to focus on the larger Utopia challenge when that’s not what we’re talking about for a Provo/Utopia operations deal. The primary reason for that is to repair what Kevin Garlick did to the iProvo staff as well as share in economies of scale.

    We are looking for a way top operate the iProvo network for a few years without a fire sale of the asset and without an annual surprise to the general fund. Provo could have the best of all worlds with a slight, hardly noticeable, utility fee increase. It is appropriate since the Energy department brought on this situation. You keep your city-wide fiber network and invest in the future with a pretty good chance of this becoming a general fund feeder. The down side looks pretty good. All you have to do is bring Energy rates into parity near or even below Rocky Mountain Power, something that should happen anyway. This is the only way for Provo to responsibly deal with the bond debt. Thinking some company like Broadweave is going to successfully make the payments for them is absurd.

  147. Jarrod says:


    Why does Utopia want to run iProvo? What’s in it for Utopia?

  148. Jesse says:

    Jarrod: The only thing I could think of would be installed base. If UTOPIA managed iProvo and completes construction in the RUS cities, they would pass over 100,000 serviceable addresses. That kind of economy of scale would be a pretty big draw for larger and more well-known providers.

  149. Jarrod says:

    I’m wondering if Utopia is asking for a per subscriber fee to manage, or if it’s more like Broadweave – we’ll pay the bond payments, but we get to keep any additional revenue.

    If I was going in to manage the network without the upside of owning it, I would be asking for the former.

  150. Capt. Video says:

    I’m sure UTOPIA has not made any official offer to run iProvo. So there has been no discussion of cost or anything else. I feel sure iProvo has never expressed a serious interest in UTOPIA running iProvo.

    iProvo had the option to join UTOPIA when UTOPIA was starting and in much better shape than they are now. Provo elected to not join UTOPIA then (I disagreed and wanted to join UTOPIA, but in retrospect that could have been a big mistake) and I believe Provo would not have any interest in joining now or selecting UTOPIA to run their network.

    I really doubt that Provo looks to UTOPIA as a model or would hold them up as being well run?

    I could think of no situation in which Provo would feel any need to bring in UTOPIA to run the network? Provo still has their former NOC and Network Manager working for the power company, there are a number of very good former UTOPIA Engineers available. Provo could come up to speed very quickly if they really needed to. But as the sale is likely to close in a few days, none of this matters?

    Provo does NOT need to be “saved” by UTOPIA.
    UTOPIA needs to focus on saving themselves.

    How’s UTOPIA’s new management team doing on getting the construction started again? Are they working on plans that will result in 700-1000 new installs a month?

    When I see UTOPIA doing that (700-1000 installs a month, for months on end), that’s when I’m ready to turn iProvo over to UTOPIA to run.

  151. Capt. Video says:

    Broadweave reports it has hit’s it’s goal for profitability?

    Below is from the SL Trib.
    Clayton Blackham, a spokesman for Broadweave, said the South Jordan-based telecommunications company dropped the Nuvont deal because it didn’t need the company anymore. “After operating the network for two months, Broadweave hit its goals for profitability. It didn’t need Nuvont and it didn’t want to take on its debt.”
    Blackham said Broadweave hopes to win over Nuvont subscribers to its service.

    WOW!!! Only 2 months running the network and they have reached their goal. They are much, much better than I ever suspected.

    Maybe we better get Broadweave to manage UTOPIA….lol

    I’m just not sure what to make of that Broadweave statement???

    I did find it very interesting that they indicated they would try to win over Broadweave customers to their service. I suspect they will do the same to Veracity customers.

    Let the games begin!
    Broadweave apparently will not be happy collecting the wholesale fee from NuVont while trying to get customers to move from Comcast or Qwest, but will try to move customers from NuVont and Veracity?

    Can you see a good working relationship between Veracity/NuVont and Broadweave or will it be Broadweave back stabbing?

  152. Harold Bills says:

    That is just great, Broadweave meets their financial goals, now meeting payroll will be their next goal. How about spending millions to replace the CPE? That’s just crazy. The only issues on the current portal are phone related and can be worked around by adding a Vonage-like device at a fraction of the cost. They have been told this, but hey they know everything already, except how to get business licences.

    As far as them dropping the Nuvont deal, who dropped who? Nuvont claimed they backed out too. Somebody’s lying… You are right, they are off to a terrible start with their new service provider partners/customers. There is some real justice here. If Veracity and Nuvont thought Provo was draconian to work with, welcome to hell.
    Only idiots would start making any claims like that after less than two months of operations. I think they would say anything to cinch up their surety and capital financing

    Capt. Video,

    I happen to know that the council has been considering a Utopia partnership recently so you should be careful about seeing no eggs in the basket when they are there. A unified NOC and the Provo headend still have some appeal for Utopia as well as some additional revenue and numbers. It turns out that the satellite delivered headend is not all that it’s claimed to be. It’s also a creditability thing. Provo has always been the missing piece. They have the largest collection of iProvo technical knowledge on their staff. I still see a win-win.

  153. Capt. Video says:

    I think the shared NOC and joint headend had great promise and were a win for all!

    But none of that matters if the Broadweave deal goes through and I’m believing it will go through. Unless UTOPIA is will to get in bed with Broadweave, the new headend owner.

    As far as the satellite delivered headend if you mean the DirecTV version that UTOPIA is looking at, I agree it’s a bad thing for UTOPIA.

    It was designed for use by MDU’s as bulk accounts. It was never meant to serve single family homes spread across a community or a number of communities.

    I was very surprised that UTOPIA was even considering it. I have been paid as a consultant by more than one company to review a wide range of headend options and that one I rated low for anything but MDU’s in a location where delivery from an existing headend was not available. It is a good option if you are serving only gated communities or MDU’s and don’t actually want to be a real video provider but want to be just a middleman between DirecTV and the MDU. Perhaps it was attractive as it appeared to overcame a major UTOPIA network shortfall, their lack of video licenses.

    I understand they (Sky Cable the DirectTV rep. company) are actually in town right now (I assumed visiting with UTOPIA).

    Pardon my saying so, but I don’t belive anyone with UTOPIA is well qualified or experienced enough to make a headend decision. The thought of UTOPIA making a major headend decision is a little scary to me.

  154. sKoop says:

    Is it just me, or does Capt. Video really take up 80% of this comment area? WTH Cap?
    First of all (I think Harold already mentioned this) your math is completely wrong on UTOPIA, and subsequently IProvo, being able to turn things around and make money. Sure if you spend $1000 installing a residential customer that you are making $30/month off of, you are going to have problems making that up. In fact it will take over 33 months before you make that up (I used my Windows calculator to make sure). How many of us have stuck with the same Service Provider on home service for 3 years? I bounce back and forth between Dish and DirecTV ever 24 months(don’t hate me you all do to). It’s funny to me to see how often you mention failure, then use the same math and tactics YOU used, at Provo, to prove such failures will happen again…
    But, let’s say UTOPIA and or IProvo have a premonition and go after business (and MDU) customers. Bare minimum your SP signs a small business with 2 phone lines and a data connection (SP charges $150/month, UTOPIA/IProvo gets $75/month). You spend $1000 installing fiber and a portal at the building (it doesn’t really cost more to install at most businesses than it does to a home). You are now making $75/month and you pay off the install debt in 13 months! Or if you sign an average MDU in Provo/Orem the SP will charge thousands a month, which means you can pay off install in 1 month! Or how about a larger corporation that could pay tens of thousands a month? All with the same install cost as a 1 line and internet residential customer. Think of the possibilities.
    Has anyone thought about why it is that Veracity is the only SP on IProvo and UTOPIA that is actually MAKING money? (I don’t know the financials on Xmission, they could be making money on UTOPIA as well. But, probably not very much given that they are trying so hard to add Voice Services.) It’s because they stick with business customers. Didn’t someone mention that businesses usually have 3+ year contracts? Think of the money UTOPIA and IProvo could make if they actually went after those accounts and signed them to the same contract length? Possibilities, possibilities…

    The saddest thing about this whole IProvo debacle is that there is such a limited amount of Provo City Residents (taxpayers) getting involved. If this type of thing happened in Spanish Fork (where I live) I would be organizing a protest at every city council meeting until they fixed it. I am starting to believe that the majority of the people who care, myself included, have business interest in the service side of these networks. When are the people that are actually getting screwed over going to do something about it?

  155. Jarrod says:

    sKoop, sadly, I have to agree with you. It seems like everyone here has a horse in the race. Except maybe Jesse. But I think the problem lies more in the fact that those of us with inside knowledge are the only ones who realize how truly screwed up things are.

  156. KnowYourFacts says:

    Although I don’t regularly post, I do read browse this site regularly and am frequently impressed by the depth of knowledge and understanding that many posters have, many with little direct experience or intimate knowledge of these networks. I seldom read assumptions that are erroneously passed of as facts. Rumors and speculative discussions are clearly stated as such.

    Yet I feel somewhat compelled to defend Captain Video this once. The “napkin math” may not be exact, but the conclusions stated above are dead on. He arrived at this point not because he does math well, but because decades of telecom experience and years of direct involvement with these networks give him a unique perspective that very few here, if any, have. He understands consumer behavior, he has built and analyzed the financial models, and he knows very well what it takes for these networks to have the best chance at success. He deserves a great deal of our respect.

    Bottom line is that sKoop, you got your facts all wrong, and therefore your conclusions aren’t credible. Let’s help you out with some more accurate info:

    1) Of the 43,000 addresses where UTOPIA can deliver service today, less than 10% of those (~4000) are businesses. Can UTOPIA reasonably cover operating expenses and service their debt, even with a generous take rate and ARPU from businesses alone? Conversely, can the residential market, by itself, ensure the solvency of the network? A good solid mix and take rate within both markets is essential. Now, take some of these numbers, add $10M in free capital, consider the ever-increasing cost of network operations as the customer base grows, and don’t forget to add in a hefty monthly P&I payment on $189M of debt. Calculate using various take rate and ARPU combinations. The numbers will quickly look rather similar to those Capt. Video arrived at.
    2) The average cost of installing a business on UTOPIA, including electronics, materials, and labor far exceeds $1,000. Fortunately, at this time, the bulk of these direct costs are being borne by the property owners and tenants, rather than UTOPIA. Nonetheless, there is significant error in assuming commercial installations are anything like their residential counterparts.
    3) There is no MDU on this planet that can be installed for $1000 and provide service to every unit. Simply can’t be done. To reach a realistic number, add a zero or two to this figure, depending on existing infrastructure and the required technical solution.

    I appreciate the optimism and hope for the best. There are few that want to see these networks succeed more than me. But I’m siding with the Capt’n on this one.

  157. Harold Bills says:

    I hope I’m not being redundant, but I can’t over empasize how important it is to recognize the profitability of the commercial services. I believe that offering state of the art, reliable business services in addition to the MDU and residential services will make this thing happen. If you overlook them as was the case at iProvo and early Utopia then you will get a similar result. The only provider that came close was Veracity. That is why they are very profitable. It’s not rocket science.

    I understand Capt. Video’s wealth of residential cable service experience. I don’t have to respect it. In fact I think that the abundance of opinion from that quarter has often resulted in poor decisions when city and Utopia officials are unduly influenced to take a wrong path.

    I believe that modern data services and their potential have very little in common with the analog cable TV world of the past.
    It’s not my goal to be direspectful or insensitive here, but Capt. Video, your ship has sailed. I don’t think you have a real grasp on what fiber to the premise could or should be today or in the future.

    I also apologize for my frequency of posting. I know many of us should step back and avoid domination of the conversation.

  158. sKoop says:

    You are right, installations to businesses and MDU’s could be more expensive. But not necessarily for UTOPIA or IProvo. They just need to drop fiber to the head-end and install an AP Unit/WWP. The SP does the rest. Maybe they need to do some underground work or go through a parking lot to get to the headend, but then their done.
    My point was that UTOPIA/IProvo installs the same equipment whether they are going to a home or to a large commercial building. So why not go after (MARKET) to the businesses.
    My experience in this industry (Telcom/ISP, not Cable TV) is once the businesses have a solid service and they are happy with the employees will start ordering it for their homes. So, you solidify your income with 3-5yr contracts with the commercial properties then let the residential side move in through time.
    May the big issue with UTOPIA is that they focused on getting fiber to the homes, then thought that 4000 businesses is enough? You’re right there, 4000 businesses is not enough. Let’s hope they focus on getting fiber drops to more Business parks soon!
    BTW, didn’t mean to hurt feelings Cap. But, when I see a massive flaw being pushed like fact, I have to say something.

  159. Capt. Video says:

    Well sKoop I too am concerned that I make up 80% of the posts. I’m not sure if the answer is me posting less or others posting more.

    I do not feel any of this is attacking me personally. Just good debate by people with different views.

    With Comcast and the old analog cable companies (which moved into data and digital cable about 15 years ago and then moved into telephone kicking Ma Bell’s butt at their own game) holding almost all the customers I’m not sure that ship has sailed. Or if it has, it’s networks like UTOPIA and iProvo that are left standing at the dock by their lack of success at offering a competitive triple play?

    I firmly believe (and if you read my posts carefully I will usually start a statement with a term like that to make clear it’s not FACT but an opinion or belief), but I firmly believe people’s behavior and purchasing decisions are not made based upon the delivery method or technology. This suggests “fiber” plays a very small part in the buying decision. Nobody buys “fiber”, they buy data, phone or TV services.

    Given UTOPIA does not have the money to install enough single family homes to reach profitability (and I would suggest this could be a fact, not opinion?) the focus on business and MDU (with much higher install costs, but often paid by the customer) is likely a very good plan.

    However I believe there are not enough businesses (even if they got most of them, which is unlikely?) or enough that are not under long term contracts and can be attracted to switch to solve UTOPIA’s problem? But they are an important element and should be aggressively worked.

    So, given that I underestimate the revenue contribution from businesses/MDU’s (I AM residential focused to a fault), who wants to tell me how many businesses they believe will connect, at what avg. revenue to UTOPIA. I will be glad to include that number in my back of the envelope analysis and adjust my residential number downward accordingly.

    I thought I was taking that somewhat into account when I said it could be only 20,000 homes needed and not 40,000. Are you suggesting it should be even lower?

    You mention getting 3-5 year contracts from businesses. I’m suggesting that most businesses are already on similar contracts and may not be able to transfer even if they wanted to. Of course we should see a good bump when the new service providers (apparently the 5 I’ve heard of are all focused on business) come on and hopefully move some existing customers (which would be great!). The test will come after that bump, can they get many “other providers” customers to move to UTOPIA?

    I do expect UTOPIA’s new lower rates will help service providers both move more customers and offer more compelling rates to new customers.

  160. luminous says:

    You discount fiber to much, sure tv and phone can be brought down using many different systems their are services that are only possible on fiber. to say nothing of the much higher data rates available on internet connections (50meg, 100meg, 1g) which their is no other system that can pull that off. cable can potentially get to the 50meg tier their system will be shared and they could never offer business level SLA’s with it.

    Their are customers paying over 3000$ right now on utopia for connections with an SLA. How many residential customers does it take to match that? Yes their are many business customers that are tied into contracts with business lines, you can bet that most of those lines are T-1’s providing 1.5meg because qwest has neglected to install DSL services to many business parks or they need the SLA and high uptimes. And then their are the new services that fiber can potentially do such as paperless offices, or services some isp’s are already providing such as offsite backup through the fiber, global failover, extremely high data rate connections (1g+), and transparent lan services.

    I would think most business would probably pickup the 100meg tier (125$ month) with a number of business (5-10% of business customers) going for high options or SLA agreements.

  161. Capt. Video says:

    As soon as you start talking about SERVICES being the selling point we are in perfect agreement!

    Fiber is a great advantage when it’s able to offer SERVICES (that people want and are willing to pay for) that other technology can’t offer. If you deliver the same services and features fiber has little to no advantage or value to the customer.

    People BUY SERVICES and FEATURES. If fiber allows you to offer services and features not available elsewhere you have a winning combination.

    FOR THE MOST PART…UTOPIA and iProvo have offered very little (that people needed and are willing to pay for) that other providers did not offer. If they had, they would be on the road to success.

    A $125 dollar business connection is only slightly higher than what a good triple play residential customer will generate. Sell a triple play customer a little VOD or an HD package or premium movie package and you are at or above $125 a month in revenue.

    iProvo also had a few point to point connect customers paying in the range of $3k a month per site. Those are GREAT and both networks should aggressively seek that business.

    Was it you that called those business/MDU connections the “gravy”. I fully agree. But you also need the meat and potatoes to have a meal. I believe the meat and potatoes are the thousands and thousands (20-40 thousand) of residential customers that are the foundation of the network?

  162. luminous says:

    nah I am the luny that said utopia needs every customer including the single service customers. which the single service customer seems to be a point of contention for many as to their value. I still believe that a customer is a customer is a customer, and that every customer is valuable rather big (3k$ SLA business customer) or small (40$ single service customer). I believe utopia needs to make it easy for an isp to sell a white box service so that every provider can be triple play without the annoyance of having to be triple play(mstar would like such an arrangement i bet).

    I don’t believe utopia has leveraged their network very well, they have fiber optics and the best they can do for residential is slightly faster internet and 2services already available from many other providers(phone,tv). They need to get 2way video phone service, on TV caller id, Maybe Telemedicine services.

    For business they of course have many different services that would be cost prohibitive without utopia yet they have only a small number of business customers. In the area of business services I cant complain to much they just need better advertising and service providers to seek out the business customers more aggressively.

    And of course we cant forget government, are any of the city’s using utopia for city services yet? Utopia should be able to charge the city’s for telephone uses, street light monitoring systems, utility monitoring, etc. Is this being done yet?

    And they need to sell Utopia as utahs network, because we are going to pay for it one way or another.

  163. Capt. Video says:

    Very well said!

    I actually agree with every bit of it. Including the importance of every single customer…including the single service customers.

    I hope I have not said single service customers are not welcome. I’ve always meant to say double and triple play customers are better for the business model, but all are welcome and needed.

    Sadly, with limited installation revenue on hand it becomes even more important that we get the most bang for the buck and that could be business and triple play if possible, but we should always remember a single play customer is an upgrade opportunity. Additional services do not require another costly install.

    I so agree that UTOPIA needs to support the white box services you mention. Not only for video but for all services.

    At one point I believe Xmission was looking at using a Veracity white label phone service? I know Mstar has offered to work with UTOPIA to create win-win opportunities for all providers to sell video either with a UTOPIA label or the service provider label. Including an offer to provide a video headend since Provo is selling their headend to Broadweave and video support for those that don’t want to actually get into video more than ankle deep?.

    This concept of UTOPIA service provider working together and selling services and support to each other is important. If Xmission or Mstar was going to pay someone for phone service, why not Veracity? Making the service providers stronger is good for UTOPIA. Mstar has video licenses and skill sets that can be leveraged by other providers on the network while making Mstar stronger. That is the type of win-win-win (the service provider with the equipment/skill set wins by gaining “wholesale customers”, the service provider selling the service as their own wins by not having to invest in the equipment/people to offer the service, and UTOPIA wins by having everyone be stronger by buying locally, from a UTOPIA provider and selling more services to each home they have paid to install.

    Mstar or Xmission might need wholesale phone service to white label and sell as their own, Veracity or Xmission might need wholesale video service to white label and sell as their own? An alternative is creating a partnership that encourages and rewards service providers for selling services of other UTOPIA service provider if they themselves did not offer that service.

    Partnerships between service providers and UTOPIA, all working together not against each other, but against Qwest and Comcast.
    Almost a no brainer?

    Think about it!

    …and yes, ALL UTOPIA cities should move all services onto the UTOPIA network (I suspect most already have?) The cities and the citizens MUST understand that this is their network. They will pay for it one way or another and they should not be sending their payments to out of state companies like Comcast and Qwest.

    Make UTOPIA a network of true partners, all working together. I’d like to see that being a goal of the new UTOPIA management team.

  164. luminous says:

    xmission is buying their own phone switch after the veracity thing didn’t work out, Also I was under the impression that mstar was reselling video from the provo headend? Assuming I am right I wonder what will happen to video on utopia after broadweave’s takeover of iprovo is completed, will broadweave continue to allow mstar to resell the video or will broadweave try and become a utopia provider(that would be interesting)?

  165. Jesse says:

    I think that calling something “fiber” is great marketing and customers recognize that this “fiber” thing has value for them even if they don’t entirely understand why. Verizon and Qwest have both used “fiber” in their advertising with great effect. The consumer impression is that it is somehow better, be it in terms of speed or voice/video quality. In that sense, I think selling the same service as Qwest or Comcast but stating that it’s true fiber would, for better or worse, pick up a more favorable customer impression. Buzzwords pack a powerful punch.

    I also have to echo that Capt Video, whoever he or she may be, brings a wealth of knowledge to the table that shouldn’t be dismissed out-of-hand. I know I’ve learned a lot from my discussions with him/her and see how residential subscribers are the financial backbone of the network. At the same time, UTOPIA’s moves to presumably pick up CLECs as service providers is brilliant since those companies are likely to move existing customers from Qwest’s transport to UTOPIA’s. With almost no effort on UTOPIA’s part, they stand to gain some lucrative accounts right off the bat. That’s some good planning.

  166. Capt. Video says:

    I do agree that using “fiber” in marketing is good. But since as you mention both Qwest and Comcast have given the impression they are fiber networks UTOPIA needs to move to something that shows they ARE different. Some slogan/tag line like “All fiber, all the time”, Utah’s ALL Fiber network”, or somethnig stressing the “FIBER ALL THE WAY INTO YOUR HOME OR BUSINESS”.

    All other things being equal (service, features, price) being both ALL FIBER and ALL DIGITAL are great marketing buzzwords.

    I just don’t think we can count on being FIBER alone, even being the best (fastest, more reliable, etc.) network as making customers switch. I believe customers select a network for the services and features offered, the pricing, the marketing, etc.

    So we need to focus on delivering the products and services people want, at a price they want to pay. That will make any company successful, no matter what technology they use.

  167. Jonathan says:

    They could tap the anti-powerboost type commercials Qwest just started running on the radio. Then tag the Qwest commercial by saying there are no speed disclaimers like on Qwest.

    The Qwest commercial has a quick disclaimer at the end that states speeds may be 15% less depending on network etc..

  168. Harold Bills says:

    I keep reminding people that the only justification for government to get in this business was to provide superior bandwidth to the existing legacy copper since the incumbents would not do it. Cities all over the nation beleive that fiber is a must have. How did they get convinced if the customers cannot be convinced? The cities were very well marketed. No one has really pushed the potential of fiber to the local customers.

  169. luminous says:

    In the case of Utopia it wasn’t just the fiber, its the fact that in many area’s of the member city’s their are no broadband options at all. Their are business parks in layton that to this day cant get dsl or cable based internet. Their are business’s here paying outrageous amounts for T-1 lines that really don’t need the SLA behind that type of line. And really why install dsl into an area where you can happily charges 3500$ for T-1 lines and customers will pay because its the only options.

  170. Capt. Video says:

    While Fiber has much more bandwidth than Copper (Coax), you really need to be careful thinking fiber to the home was “needed” for bandwidth. I don’t believe there is any home and perhaps only to a small number of businesses that actually NEED fiber for the bandwidth.

    The ability of copper (coax) to deliver bandwidth is much, much greater than you think. I’m going to guess that the Comcast network in this area can deliver about 2.5 Gb/sec. as a data rate to homes. Remember that most of a cable system (95% of the feed from the data center/headend to any home?) is Fiber. Only a short distance from the fiber node to the home is coax. And that coax has lots of bandwidth.

    (My Numbers: A cable TV channel is 6MHz and a single channel can carry 30Mb/sec of data (or more?). The network can carry over 80 channel. 80 X 30Mb/sec. = 2.4 Gb/sec.)

    In the past (and to some degree even today) cable companies have used the vast majority of their bandwidth to deliver a hundred or more cable channels to each and every home, no matter what the home was watching (or not even watching).

    As cable companies move channels to digital, and then to switched digital video they too will be sending only the channels actually being watched to the home. Making more bandwidth than any home could use available for data.

    The cable network design has fiber going to nodes that feed a few hundred customers today. (200-600?) It’s easy to either light up another fiber to the node or use WDM (Wave Division Multiplexing: adding a different color laser to an existing fiber) to split a node if needed. Some companies have considered placing only 50 homes on a node. I think an area in SLC was built this way as a test over 5 years ago?

    Almost no home has a bandwidth need that existing coax cannot serve. There is the issue of what’s available today vs. what the copper guys can make available as they see a market for it. Today most all cable companies believe they are delivering what the mass market needs, wants and is willing to pay for. As they see those needs change, they will invest to make the changes needed to offer the bandwidth needed.

    If you believe fiber was built because the coax was not going to be enough bandwidth to a home, I think you drank the Kool-Aid and are mistaken. If someone tells you that they are likely blowin’ smoke up your butt or they too have drunk the Kool-Aid.

    And yes, Cable has shared bandwidth to some degree, but so does iProvo or UTOPIA and all ISP’s? I believe, even with shared bandwidth, coax can deliver more bandwidth than any residential applications could need well into the foreseeable future. It’s just a matter of the gatekeeper opening the gate (or not) when it’s needed.

  171. Jesse says:

    A coax ring has about 4Gbps of peak bandwidth. Figure that you need to lop off about 20% for network overhead, a common figure. You also have to pull out about 500Mbps for legacy analog channels when doing DTA converter boxes.

    So how do they use that remaining 2.7Gbps? Comcast currently uses about 6Mbps per digital channel (yeah, over 13:1 compression of HD). A VoIP conversation can easily consume 1Mbps if a lot of features are turned on. Figure that each cable modem is eating up 6Mbps/2Mbps. With about 500 subscribers on your average node (some can be as high as 2000!), you’re looking at a saturation point when around 36% of your users are using all three services (and not using more than one channel) when you do SDV. What happens when Comcast starts offering 50Mbps/5Mbps service with DOCSIS 3.0? The saturation point drops to under 9%. Even if you became an industry leader and went to 200 per node like Cox Communications, you will still have a saturation point around 25% utilization.

    The numbers are even worse when you consider that Comcast’s hand is being forced on the quality front. Satellite providers are gearing up to offer 1080p VOD options at 16-24Mbps per stream. Comcast will have to match that and probably bump up its abysmal video quality across the board as well. Despite spending lots of money on SDV, DTA and MPEG-4, the acronyms only delay the inevitable point where they saturate the network beyond usability. There’s only so much blood you can squeeze from turnips.

    Right now, it’s just the gearheads talking about how much coax stinks in the long term. The trick is turning that into slick marketing to customers. It’s really way past time for UTOPIA to go on the offensive and really tear apart how poorly copper networks scale and perform by comparison.

  172. luminous says:

    Fiber suffers from the chicken and the egg problem, consumer level applications won’t arrive without fiber to run them and Fiber won’t arrive without the applications that make it worth running. something has got to give or nothing will ever happen. and I agree cable coax does infact have the ability to serve residential customers more then enough downstream bandwidth via DOCSIS 3.0 I would have to disagree that DOCSIS 3.0 will have enough upload bandwidth or enough quality bandwidth(higher priority and lower latency) for many viable consumer applications.

    Even considering that however many residential area’s do not have broadband access in the member city’s, In order for the copper is enough theory to work it has to be their in the first place.
    In my area I am lucky enough to have DSL however across the street they have no DSL, the cable system is vastly oversold and runs slower then dialup during peak hours. even on my side of the street where I am lucky enough to have DSL its max speed is 1.5meg and you can’t tell me that is enough for the average person. Across the street their is a neighbor who has a fractional T-1 ran to his house so that he can telecommute to work, he can’t use the oversold cable system he needs atleast a basic level of reliability. Copper is failing in layton to provide the services needed by the community. So yes if that is the kool-Aid you are talking about then by all means i have drunk it.

  173. Harold Bills says:


    Great post! That really spells it out.

    Capt. Video,

    Your vision of what bandwidth is needed at homes and businesses is pretty backward looking. The whole concept of fiber to the premise is to enable the applications of the future; for example all HD channels, real time corporate networks connecting all business locations, real-time video conferencing and video telephone, and many others that have not been thought of. If you think bandwidth is about a typical browsing experience, I think that is just the small beginning, but fiber is winning that game anyhow. People hate the Qwest and Comcast bandwidth experience if they can even get it.

    Just so we can quite the repetition; yea I have drunk the koolaid. Government has no business building cable networks and if fiber is not one hell of alot better then they have no business building them either.

  174. Capt. Video says:

    You are missing the point if you just see me saying fiber is no better than copper. Fiber is better and cheaper to build than copper.

    I believe government should build fiber networks AND be ready to subsidize them if needed.

    But copper (coax) HAS the bandwidth to deliver all of today’s and foreseeable future applications a home could use.

    When I think about bandwidth use I don’t think of web browsing at all, but I focus on the most bandwidth hog application, VIDEO. Even when a network offers 500 channels of HDTV, a switched digital video networks (which work on either fiber or Copper) would only deliver the channels being watched at that moment. 5 or 6 channels of HDTV in MPEG4 would equal about 60-70mb/sec of data. Real time video conferencing or live video phone (both running together) would likely add about 10mb/sec. or less. That total bandwidth is less than the bandwidth used by just 3 current analog video channels on a coax network. (Use today’s MPEG2 and not tomorrow’s MPEG4 and you use 4-5 analog channels bandwidth.)

    You and others are talking about the limited capacity of a coax network and I don’t think you have the actual hard numbers or engineering/technical background to support your claims. I’m explaining my position using hard numbers (which no-one is disputing?) and you are just saying copper can’t do this or that without understanding the bandwidth available or bandwidth required.

    I love fiber, I support fiber. I just can’t ignore everything I know about coax. If you assume the copper guys will NOT move to digital video and then switched digital video, then you are right. Today’s copper network is running out of bandwidth. But cable companies can and will do what they need to do to stay competitive. Eventually extending fiber from the node to the home when they see the need.

    I’ll stop posting on this topic. Perhaps we just see things differently and that’s ok.

  175. Capt. Video says:

    To move this topic back to it’s title:

    Well today’s the DAY!

    Broadweave and iProvo are scheduled to close the deal sometime today.

    Anyone have any more details?

    Will the close take place?
    Will the deal close as originally proposed?
    Is Sorenson OUT?

  176. Capt. Video says:

    I understand both the Daily Herald and the Deseret news are trying to find out if the deal closed as planned.

    Anyone hearing anything?

    Seems like the last proposed deal closing date also had deafening silence as it came and went?

  177. Capt. Video says:

    The Dirty Deal is DONE!

    Sorenson is OUT, EsNet is IN!

    Does it does say something when Sorenson looked at the deal and decided it was not something they wanted to take a risk on?

    And so it begins…..

  178. Capt. Video says:

    Interesting that the headline in today’s Daily herald local section said, “Negitiation for iProvo purchase deadlocked”. I thought all the negotiations were long over and all that was left was for Broadweave to come up with the guarantee money (about 6 million of the $40 million (+interest) purchase price) and sign the papers???

  179. luminous says:

    I am confused according to the website … http://www.heraldextra.com/content/view/278763/17/

    is the deal done or not?

  180. Capt. Video says:

    The deal is done!

    When the newspaper was printed the deal had not closed, so the story in the paper says the deal is not closed.

    But about 2AM in the morning (after the paper went to press), they closed.

    I believe Provo has the 2 year bond payment guarantee in place, backed by the resources of EsNet and in some financial instrument that guarantees Provo gets to use the money (draw against the guarantee) to pay the bond if Broadweave misses any bond payment.

  181. Capt. Video says:

    Since this post was originally about the state of the local iProvo fiber network I thought I would provide a broader update.

    This link is a report on the state of FTTH in the nation.

    It’s rather interesting and very positive. (You should remember it was produced/distributed by a pro-fiber to the home group, but I believe never-the-less accurate.)

    The nationwide take rate appears to be 30% for fiber networks.

    Also interesting the top 2 applications customers get fiber for are both VIDEO applications. HDTV (43%) and VOD (32%)!!!

    Not good news for a network that is focused on business services?

  182. Harold Bills says:

    Since the whole presentation is focused on a residential perspective, it does not look like the “customers” even include businesses. It does look like among residential customers, “the top 2 applications customers get fiber for are both VIDEO applications. HDTV (43%) and VOD (32%)!!!”. They don’t even say anything about business take rates or the applications of choice for businesses. As usual, the fiber to the home council has tunneled their vision to look at only homes.

    I would have to say that your conclusion is not logically valid. There is nothing to support it.

  183. Capt. Video says:

    I’m not sure I provided a “conclusion” that needed support.

    No doubt they are focused on the residential market, they are the “Fiber to the HOME” council.

    ..and YES, Business IS a very important element of success for these type municipal networks…and I do not place enough importance on business in my analysis. In part because that market is difficult to judge and predict.

    But I remain certain that business is only a minority part of the solution. I suggest that the UTOPIA focus on business is not a decision based upon a realization that the network should have focused on business from the start as much as a desperate last gasp forced by the reality that they do not have the resources (money) required to connect a significant number of residential customers.

    It’s more like, “We can’t afford to connect the homes we need, what can we do?”, “Let’s focus on businesses?”

    Would the citizens have backed a network built to connect businesses with their tax dollars? When I read the UTOPIA statements on line (UTOPIA answers to the UTA questions), they say they are still planning to bring services to every home in every city supporting them. There is no mention of a new business focus?

    But if one needs “support” for conclusions, I look forward to the “logically valid” “support” for UTOPIA’s plan.

    Actually, I just look for ANY plan from UTOPIA. Something where they tell us what they are going to do (BEFORE they do it), and then show us they can do it. Something with either subscriber numbers or revenue numbers?

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