Broadweave Fails to Make November Payment

The Salt Lake Tribune reports that Broadweave has failed to make its November payment to Provo City, instead having to rely on the security deposit. CEO Steve “we’re meeting our financial goals” Christensen and Mayor Billings both tried to gloss over the missed payment while Steve Turley, predictably, has called it bad news. Of course, if Broadweave is unable to bill their customers, that might account for coming up short. This will most certainly be a major issue during Provo’s upcoming municipal elections.

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58 Responses to Broadweave Fails to Make November Payment

  1. luminous says:

    boy that was fast… I figured they would at least lasted a year. I suppose they will burn through their security fund slowly for the next year or so, and I suppose its possible that with time they can get back into the black.

  2. Honest Jim says:

    I can’t say I’m surprised that Broadweave can’t pay their bills, but I am surprised that they missed November’s payment. That means that they’re probably missing December’s as we speak. (anyone know when it’s due?) I know there is an Mstar Death Watch post, but Mstar may actually outlast Broadweave. What a mess. I think Provo had good intentions with this, but they sure blew it by selling to Broadweave.

  3. Honest Jim says:

    One more thing. I thought the $6M was so that Provo would have some sort of contingency if Broadweave failed, as opposed to just being a buffer for Broadweave. What I mean is that if Broadweave failed, I thought Provo would recover $6M and use that to transition the network back. However, if they’re just allowing Broadweave to burn through the $6M, then when the $6M is gone, Provo will be left picking up the pieces left by Broadweave with no funding. Please tell me this isn’t possible.

  4. Jesse says:

    I’m reasonably sure that the surety and security deposit are two separate instruments. Still, I hope this means that the surety will not decrease until Broadweave is making full payments again.

  5. Ben Saunders says:

    I believe December is already due. I hear they are also delinquent on other bills. Is it confirmed that the security deposit that was used to cover the November payment was really the $6 million dollar “transition fund”? That money has got to be sacred and out of Broadweave’s hands or Provo has no insurance at all that the network won’t be destoyed and then handed back.

    Also if they can use the $6 million then remind me of what they brought to the deal? I have always contended that they paid nothing and now they can spend this too?

    How pathetic! Mayor Billings and Kevin Garlick have once again demonstrated their amazing grasp of business management. How could they let this happen. I say if they can’t pay then send them packing.

  6. Harold Bills says:

    Then trend is obvious here. Tell me anything that improved under Broadweave. The Mayors 1000 new customers is BS! If not then lets talk about the average monthly revenue those customers resulted in. Broadweave probably doesn’t know who they are and doesn’t bill them anyway. It’s already time to face the obvious and dump Broadweave.

  7. Mike says:

    Believe me when I say, I know from first hand experience. Broadweave has NO system in place to track customers. No organization skills. Nothing solid. They write ideas down on papers and pink sticky notes and use them for the rules that day. Their is constant inter office confusion on procedure and policy, their call center can’t communicate with their NOC because of Egos and stress.

    This situation is so bad that at Broadweave’s best day, they could not match what Mstar was doing at it’s worst day! I know from personal experience on both ends. Mayor, you should have sold to Mstar. That would have been the right thing for the people of Provo. Instead players like Frasier Bullock, Chicago Venture, and other non-disclosed players are pirating the city of Provo. A full out investigation on all their actions should be initiated. The Attorney General should be looking into these deals, back door scandals, and threats against certain people who had interest in this whole thing.

    At first I supported Broadweave. After learning of several things I now know better. I involved friends in this project. I am sorry for that. Broadweave is a complete hoax, failure and scam.

  8. Chocolate-Dipped-in-Blonde says:

    Where is Capt. Video when you need him? He could always spin the Broadweave deal into a silk purse…

    The very least Provo could do would be to start preparing a fall-back operation or operator.

  9. Provo City Resident says:

    I am sorry for such a long post, but I wanted to get all this out for people to absorbe.

    Several months ago Jesse had to submit a GRAMA request to get all the of iProvo documents related to the sale. One of thoes documents is the Surety Agreement. It has several relevant sections to this discussion. I have spent many hours the last couple of days trying to figure out what is going on. I want to make it clear that there are two seperate funds, the security deposit, and the support amount. The security deposit is basically one bond payment and the support amount is the 6 million that was talked about. Here are some section that I think are revelant.

    section A.1 states :Purchaser [Broadweave] shall deliver to and for the benefit of Seller [Provo], in immediately available U.S. funds, the following: a. $277,505.55 (“initial Deposit”), to be paid by Purchaser to Seller upon execution of this Agreement; and b. An additional %277,505.55 (“Additional Deposit”), to be paid by Purchases to Seller at any time after execution of this agreement, but prior to and as a condition of the suspension of Provider’s Support Obligations under Section B.4.

    B.4 is the Suspension of Providers Support Obligations which covers how they are allowed to decrease the 6 million support ammount.

    It later states in Section A.3 that the Seller may only use the Security Deposit to make regularly scheduled principal and interest and late interest payments due under Section 3 of the Notes… If purchases fails for any reasion whatsoever to make any monthly proncipal and interest installment payment due under Section 3 of the Notes on or before the 25th day of the month in which such installment is due, Seller shall, without any notice to Purchaser, Guuarantor, Sponsor or any other person or other process whatsoever, use any available Security Deposit to pay all amounts owning with respect to such monnthly installment payment plus late interest accrued thereon from the 15th to the 25 of such month (“Delinquent Note Payment”).

    Then in section B.5.a it states that if the Purchaser fails for any reason to replenish the Security Deposit in full by the 5th day of the month immediately following a Delinquent Note Payment, Seller shall draw upon the Support in the amount of the Security Deposit.

    Here is a possible timeline of events.
    ~ November 15th, Broadweave missed the bond payment needed for the Head-end note
    ~ November 18th, Provo City Council meets, and this is not brought up as there is still the cure period
    ~ November 25th, Provo is required to make the payment or be late, which would affect the city’s credit rating etc.
    ~ December 2th, Provo City Council meets, and the Mayor and other cover the fact of the missed payment, as broadweave is still able to replenish the fund until the 5th.
    ~ December 5th, Broadweave is not able to replenish the funds and quoting Steve Christensin from the salt lake tribune, “Broadweave has already given company stock to pay for the cash.” Broadweave “replenishes” the fund with Broadweave stock, thereby making Provo a part owner in the company, and leaving the City without the security fund.
    ~ December 9th, Provo City Council has a study session where part of the information is disclosed.
    ~ December 10th, The article is run in Salt Lake tribune, which was sited above.
    ~ December 15th – Next payment due?

    Now this brings up a lot of questions that need to get answered.
    ~ Did Provo pull money from the support amount?
    ~ Did Provo accept stock to replenish the security deposit, if they did does this violates the replenish clause in the contract?
    ~ How does this affect the group that put the Bond together, they signed off on the sale that the city would follow the contract?
    ~ Why didn’t Provo declare them in fault? Is there another place that determines how they have to do this?
    ~ Will the city inform the Council at the meeting on the 16th of December if they made the December Payment?
    ~ The security payment was money to the city, not for Broadweave, how did Broadweave use it? The contract specifically states that this would be a delinquent note?
    ~ The Head End Note was to complete on the 15th of December. If Broadweave used Provo’s money to make a payment on the Head end are they in breach of this contract? Will they own the head end on the 15th? What will be the status of the Head End?
    ~ If Provo ends up with the network back, what happens to the head end?
    ~ If Provo violates the contract can that affect the City’s ability to get future bonds at the preferred rate?
    ~ Does the council feel that they are being properly informed?
    ~ With this change what is the current relationship between Provo / Broadweave / UTOPIA?
    ~ Did Provo already pay Broadweave the 300K that is in the contract?

    Other issues separate from this
    ~ What is the make-up of the 1000 customers? (Reconnects, MDU’s, New Installs etc)
    ~ What is Broadweave’s acquisition cost, they actually pay sales guys etc, Provo didn’t have these costs?

    Then there is the number game, and I would like alls help on this. When Provo sold the network there were about 10000 customers made up of family’s, mud’s and businesses. It was like 6000 Portals give or take. and if broadweave added 1000 customers then 11000 total customers. I don’t think that they have 24×7 coverage, so probably three people there, csr’s etc, so let’s say they had to hire 10 people to manage the additional work load that iProvo brought in and then the rest of the people are shared from the previous network (economy of scale) lets also assume that they pay is low and averages 15$ hr. (40 hrs * 4 weeks * 15$ * 10 People = 24,000$ month) Which I think this is low, because it doesn’t account for the contractors that are used. Probably at least what that is. This leaves a lot out, like marketing, and commissions and all kinds of other stuff, so I would think that I am low. Rounding, Bond = 280 K, Hiring’s = 25K, Contractors = 25K Other real services = 10K, that means that at a min Broadweave would have a monthly tab of 340K. With 11000 customers that would mean they would need to make 31$ per customers just to break even, and this doesn’t even cover the services that the customer uses, they would still have to pay for the internet pipe, phone numbers and calls, and whatever the video agreement stuff is? I wish I could make all these numbers work? What is their ROI, what percent of people have one service, how many two or three? Then also what about them having to buy equipment, are they doing this, they said that they would do this, what is the cost of devices that would have to be included in this?

    Could the city release some of these numbers? We are supposed to have representation but it feels like we are blind. I really hope that some of what I have guessed at is wrong, and I am looking for an official response from the city, with numbers to back it up.

    I am sure that there are more questions and I hope that people will read this and figure out for them what the other questions are? I hope someone can shed some more light, or if someone can find more applicable clauses in the mess of contracts.

  10. Jesse says:

    Replenishing a cash reserve with stock should be a violation of the agreement. Stock has a highly variable rate and can become worthless if the company fails.

    Thanks for the insightful post. It makes the mayor’s version of the story seem almost laughable.

  11. Mike says:

    Maybe as concerned citizens, we should bring our questions before the council on the 16th? Do they plan on opening the floor for the public to speak on this issue? I’m not sure how it all works. I believe we need to bring more attention to these details.

    ~Maybe a protest rally on Provo Center Street? A permit is easy and very much within our legal rights to obtain. Our nation was built on these principles. The protest would have to remain on the public easement and not infringe or impede the flow of traffic. I think signs saying “Beware of Broadweave” and then we all carry handouts we give to people who ask for them. The handouts would simply show the facts. Very much like the ones in this blog and in the tribune. They can get the information and then move on. That way we would not interfere with City traffic or create a situation where people feel like they need to cluster. That’s when it gets to be a problem. No lawn chairs. We should all be walking with signs and be able to move out of peoples ways if needs be. I would be willing to seek out permits and print up fliers. I would need the support of others. Bright colored New Years Eve hats and such are helpful to wear and get attention.

    ~We don’t have to be sheep in this folks. Haven’t the hard tax payers of Provo already paid enough? Now in comes Broadweave, they try to work the network for a little bit, absorb and hide all the money they can, milk Provo dry, and then up and bail, leaving the tax payers holding the bag, and from the sounds of it, double the debt! How can we effectively make change? How do we take our town back? How do show the people that WE elected to represent us that it is time to stop the bullcrap? 2009 is coming up. I say we look for a real Mayor that will come in and clean up. It sounds like Mayor Billing is just some business man’s puppet at this point. Who would be willing to work this? I say enough of blogging and just bickering. Let’s talk change.

    ~Maybe a petition to have Broadweave investigated? Too many tricky dicks are playing into this. I’ve heard rumor of threats to people belonging to Chicago Venture, under the table money to certain people, and decisions being made to be profitable to only certain individuals at the expense of the Provo people. The Attorney General should investigate and hold these people accountable. This is worse than being robbed at gunpoint people! They are robbing us while they stare into our eyes and smile!

    ~So the question is, are we sheep, or are we lions? We decide our future, don’t we? We need to stand up against this. So again, who is with me?

  12. Ben Saunders says:

    To: Provo City Resident,

    You have done a great job in interpreting a complicated document! Thanks for your efforts. It’s is overwhelming what Provo has let Broadweave pull off here. They really did bring no capital, cash, or even real surety to the purchase. Now they are systematically de-valuing the Provo network with horrible performance and squandering the collateral. The mayor continues to make claims in the paper that they are doing great. He needs to stop lying and stop hiding behind closed doors with the truth.

    I don’t think Dan Campbell (Esnet) and Fraser Bullock who provided the $6 million support fund guarantee have any intention of making Broadweave’s bond payments for them month after month. They likely only provided the guarantee after an incredible amount of arm twisting and assurance from Mayor Billings and Kevin Garlick that the city would never let that happen. Kevin Garlick is probably busy coming up with another new way to move Energy Department revenue to Esnet to cover this.

    Great job! I admire your conviction.
    This needs to stop and it needs to stop now. I would be happy to take part in a protest at city hall. We need to get it well publicized and attended or Provo Administration will laugh it off just like they do any other public feedback.

  13. Ben Saunders says:

    I see that an on-line petition for an investigation has been started at:

    I would encourage you to get everyone you know to signup there.

  14. Capt. Video says:

    Capt. Video is dealing with issues related to a death in the family and cannot come out to play right now.

    Hats off to Provo City Resident for the kind of analytical thinking I like. It’s all about the numbers.

    Now lets see that same type thinking applied to UTOPIA and used in all posts on both networks.

    I suspect we would all help more by getting people to sign up with Broadweave and UTOPIA than by protesting in the streets?

    More to follow later.

  15. Mike says:

    ~Sure Capt. Video, let’s do that. Let’s sign more people up for Broadweave so when they come crashing down because they are incompetent then more Provo residents can suffer. That is exactly what I want to put my friends and family through. Broadweave did not plan this out. I worked at the heart of it, and I also worked at the heart of Mstar when it was starting up as well. Mstar had better leadership, more honest people, people who actually cared about customers, and a plan. You should know this better than anyone else! None of this was present with Broadweave. And saying it is new business getting started up and any company would have the same issues, it’s simply BS. Mstar was in a much better position to work and handle this network. Ben Gould presented a much healthier proposal that would have relieved the Provo residence of this burden. Frasier Bullock and several others bullied their way into this by making certain threats to people at Chicago Venture in order to get Broadweave in the door. I didn’t see you sitting on the floor in the basement of Veracity with two employees, 2 phones, and two broken down computers trying to handle 1900 new phone customers on June 19th my friend. Believe me, it was hell from the beginning and they simply don’t have what it takes to make this happen. If you want to support the network, and be realistic and help your friends and neighbors, I suggest you recommend NuVont as a last ditch effort to support the Provo Network. You know as well as I do Paul that Broadweave was never capable of this, and there is glaring evidence that the Mayor made some poor choices and there was foul play. You can continue to act like sheep and take in the garbage they feed you, or you can act like a lion and think for yourself. I’m not here to compare Utopia to iProvo. I’m here to shed light on the underhanded wrong doings of Broadweave, Frasier Bullock, and Mayor Billing. When this comes out and the truth is shown, I wonder how you will comment here and justify what they have done to Provo?

  16. suspicious says:

    The Trib is reporting that Broadweave will miss (has missed?) at least two payments. They are citing their “success” as the cause of their cash flow problems. This leaves me wondering why Broadweave’s investors would agree to fund the surety deposit, but not fund customer acquisition and operational expenses, at least until the organization could operate in the black. Are they really in this for the long haul? This makes no sense to me. Was there a deliberate plan from the beginning to draw on the surety deposit as a method of funding the company until reaching operating break even? If this is the case, then Broadweave (and perhaps the mayor) have been disingenuous with the municipal council and the residents of Provo. What the crap is going on?

  17. Jesse says:

    The spin is incredible to say the least. Broadweave is basically using all of the various security instruments as their own personal piggybank and Provo is in no position to do or say otherwise.

    A bank would have canceled the loan for replenishing a cash reserve with company stock. But Provo? They’re just looking the other way.

  18. Ben Saunders says:

    It is unthinkable that Provo would allow the $6 million support / surety fund to be acessible by Broadweave in any form. The sale was justified as if Broadweave fails, the city would have the $6 million to restore the network and operations to an acceptable level. This concept is no longer looking to be valid.

    I am also hearing that the $6 million is really just a letter of credit and not cold hard cash. This is the weakest of surety instruments. So I wonder how this “letter of credit” works? Do you suppose it is some bank or financial firm stating that Broadweave has a potential line of credit should they need it and the line of credit occured due to the backing of Esnet (Dan Campbell) and Fraser Bullock? This would effectively put it out of control by Provo right up until there was a breech of contract by Broadweave. If this is the case Provo has nothing at all. Of course it would also mean that Broadweave will get a new set of payments as they dip into the fund which will expedite their demise.

  19. marmy says:

    Why hasn’t the Daily Herald picked up this story?

  20. Mike says:

    Personally, I think the Daily Herald has been “politely” cautioned about what they print. Broadweave likes to serve papers and threaten law suits often. I have actually received legal papers from Broadweave due to my blogs on here. they watch everything! They are terrified that people will discover the truth about them. They are not the helpful company “with the technician right around the corner” as they announced in council meetings. I am telling you all, they never planned to succeed, there is something in here that makes the top guys money and then they are going to bail on it and leave Provo City holding the bag.

  21. Jesse says:

    They haven’t been bothered to try and threaten me yet. I’ve been expecting them to try doing so for some time, especially since I lodge some rather harsh criticisms of the sale and their business ethics. I guess I should say something outrageous about them clubbing baby seals, eh?

  22. Capt. Video says:

    I’m back!!!

    I few random comments on this thread.

    1: On why the Daily Herald has not picked up the story:
    Perhaps because there is no real story here? The use of the reserve fund to pay the bond is not a violation of the contract…it’s actually part of the contract.

    2: On Ben’s comment saying the reserve fund was there for a recovery:
    I never heard that and from reading the documents and talking to the participants it seems clear that the reserve fund was put there specifically to cover bond payments. What can you point to from the official documents or statements that would lead you to believe the reserve fund was for recovery if Broadweave failed?

    3: On using stock to replace the draw against the fund:
    Where does it say Provo City accepted stock to replace the fund? I saw where Broadweave said they used stock but it was not clear who that stock went to (Provo, EsNet, someone else) and if the stock was converted to cash or not.

    4: On Ben asking what Broadweave brought to the deal:
    The bond payments are being made from the $6 million that Broadweave brought to the deal. As long as Broadweave is making the bond payments and NOT Provo City….Provo and it’s citizens should be happy.

    Remember that it’s Broadweave money (money Broadweave brought to the deal via EsNet, etc.) that is making the bond payment no matter if it comes from operating revenues or their capital. They are just paying the bond payment from money in another Broadweave pocket.

    5: One of the big “problems” with these networks is the very high cost of adding a customer. iProvo knew it was a potential problem, UTOPIA is very very deep in this problem and now we see Broadweave also facing the problem.

    UTOPIA has changed it’s “focus” from residential to business because they simply do not have the capital needed to install a large number of residential customers. Broadweave’s success at adding new customers has caused them to make a smart business decision to spend their on hand cash on adding new customers rather than on paying the bond….because they have other money available to pay the bond…the bond reserve money.

    6: Mike’s comments on not supporting Broadweave is not good for Provo City, it’s citizens or the network subscribers:
    Everyone wins if Broadweave is successful. I don’t think anyone wins if they are not?

    7: As a Broadweave user, I will soon write about the improvements I have seen, and what they should focus on to continue their success.

  23. Ben Saunders says:

    Capt. Video,
    It is truly amazing how you can explain away this crap.

    1. There is a big story here. There was no justification for the Broadweave selection and it is being proven everyday.

    2. The reserve fund was intended to provide funding to recover and restore the project should Broadweave fail. Both the Mayor and Mr. Garlick stated this on a number of occasions. this was common knowledge amongst the iProvo staffers.

    3. The stock supposition is out of my scope.

    4. Again Broadweave got a nothing down assumption for aquiring a city asset that cost the public $60 million dollars. There should have been at the least some money down. Many pointed at the reserve fund as money down and of course it has now turned into a Broadweave operations fund, totally outside the city’s control. Where do I get in line for this kind of deal? As I have stated repeatedly, it is not enough to just make the bond payments. The value of the asset is diminishing daily and there will still be a thirty-something million dollar balance when Broadweave leaves. Without the restoration fund, then the city will find itself again in a position requiring several million dollars to restore the asset.

    5. If Broadweave was surprised by the “high cost of adding a customer” then they should have let better informed companies take iProvo. It’s called diligence and business planning.

    6. Broadweave like any other company needs to earn their support. I think most people started with an open mind, but as we watched the arrogance, poor management, technical snafus, and now borrowing to make bond payments, we have withdrawn this support. Remember, the Mayor and Garlick sold them as best in class and the only real option and this has proven to not be the case. Why were they chosen?

    7. Yea, we look forward to your unbiased, objective appraisals. You always seem to have some agenda and this one looks pretty obvious.

  24. Robert says:

    Capt. Video,

    Ben’s points are well founded here. You seem to be trying to paint a picture that has no basis in reality.

    As a Provo resident, I believe it’s time to let my council representative know that I expect a zero tolerance attitude going forward with Broadweave. They have proven that they will take full advantage of Provo whenever they can. They need to produce now or leave.

  25. Capt. Video says:

    You are all acting like Broadweave violated the contract. As far as I know, they have not violated the contract in any way. Has there been less than zero tolerance up to this point? Has Broadweave violated the contract in any way?

    Produce now or leave?? Produce what or how?

    Provo has a legally binding contract with Broadweave and exactly how would you expect them to make Broadweave leave….unless Broadweave violates the contract.

    Do you think anyone on the council WANTS to get the network back? I’ll bet they are much too smart for that.

    Currently Broadweave is making the bond payment and if the network were returned to the city, they and not Broadweave would be on the hook for the 3 million dollar annual bond payment (plus operating costs).

    Exactly how is Broadweave not holding up it’s end of the deal? I content that the operation is running somewhat smoothly (considering the learning curve) and they are gaining customers faster than Provo City was. The operating costs are being met, the bond payments are being made by Broadweave.

    What am I missing that you see so clearly?

    I believe that the newspapers and the City Council are seeing what I see and are “cautiously optimistic” (as I am) and hoping Broadweave continues to add customers and make the bond payments.

    The council (and citizens) want a successful Broadweave. Anything else and the city has to come up with money in very hard times. If the network goes back to the city they will have to cut services or raise taxes. That is not a “maybe” but a sure thing.

    It would be better if Broadweave was not drawing down on the reserve, but we should all be thankful that Broadweave is paying the bond and has money in reserve to draw upon.

    Even after the reserve draw, I believe Broadweave is in better shape than UTOPIA. They have a reserve that will cover 2 years of bond payments. What would UTOPIA need to be in that condition? $72 million in the bank?

    I have not run numbers to support this, but I’d bet Broadweave is able to generate over 50% of the bond payment from operating revenues. UTOPIA might be at what, less than 10%? They are lucky if their revenue covers operating costs with very little available to cover bond payments.

    Both network really need the support of the residents. If these networks fail, there are decades of payments ahead. What are UTOPIA cities on the hook for, $36 million a year for 30 years? Provo for $3 million a year for 18 years?

    In my reality it clear that the reason for the reserve was to insure the bond payments would be made. NOT a recovery fund. I still don’t know where Ben comes up with that.

    In my reality Broadweave has not violated the contract?

    In my reality Broadweave has fixed their VOD problems and UTOPIA has not. UTOPIA is focused on their new headend and completely ignoring existing video problems. Mstar & UTOPIA continue to lose video customers because of video problems UTOPIA is not addressing.

    That’s the picture I’m painting and I believe it to be very real.

  26. Jesse says:

    Capt: The real question is this: what is Broadweave doing any better?

    Transparency? Hardly. City of Provo provided detailed regular reports showing subscribers, subscribed services and ARPU. You knew what where they were and what they needed to succeed. Now it’s a black box and there’s no way to truly evaluate if the city’s money is safe or not. Those thousand new customers could all be students in MDUs (you know, the ones generating a scant $14/mo wholesale ARPU).

    Public image? Swing and a miss. I said some nasty things about Veracity and their CIO invited me to their offices to set things straight. Broadweave can’t even put out a decent press release or offer any counter-points to the detractors. They still can’t even sort out their business license issues in Washington City.

    Operational efficiency? Not likely. Multiple subscribers have reported never getting a bill from Broadweave which lends strength to the accusations that their billing system is a train wreck. It’s also reported that they started billing in advance instead of in arrears, yet many former Mstar customers claim that was already the case and could account for the entire 10% increase in revenues.

    Better competition? Fail. Two of the providers will be kicked off the network once their contracts are up and the prospect of getting additional providers is nil. UTOPIA, however, has secured several new providers and is courting many more.

    I can’t think of anything that Broadweave did that the grunts at iProvo hadn’t been asking management to do for months or years. I don’t think they brought anything to the table other than a politically expedient “solution” to aid some 2009 re-election prospects. You yourself have admitted that nobody expects them to last and that this was always meant to be a temporary measure to get the bond off their back.

    What Provo did is what a lot of people who can’t make their house payments do: they do a short sale to pay off the balance of the debt and lose a lot of the value in the process. Provo spent many millions of dollars on fiber rings that was not included in the $39.5M bond. There’s also all kinds of assets from Provo Cable that went into it. Residents should still be mad about the short sale; why would they root for a private company to take in millions of immediate gain off of their tax dollars? If nothing else, they should hope that they get the network back so they can sell it for what it’s really worth.

    That’s the big difference between UTOPIA and iProvo. Citizens still own UTOPIA and have a reason to root for success.

    (PS: Your debt payment numbers for UTOPIA are off by an order of magnitude. The debt service is about half of what you quote.)

  27. Harold Bills says:


    You have captured the “reality” that Ben is talking about and Capt. Video continues to ignore. Mr Video seems to have a very short view of things and as long as today’s bond payment is made somehow, everything is rosy.

    By the way, does anyone know if the December bond payment was made? (As we approach the January payment) I am hearing that other creditors are starting to be missed.

    “NOT a recovery fund”? Video Boy where do you come up with that? Were you not around when Mayor Billings described the financing and intent?

    What has Broadweave done to improve the project? Have they made any capital improvement as they promised. For example they did a press release stating they would replace all the CPEs. Have they even done normal maintenance?

    Then there is that complete lack of marketing. How will that work?

    Believe me when I tell you that Broadweave has a very short window before the ceiling comes crashing in.

  28. Capt. Video says:

    What Broadweave brings to the table is $6 million in a fund to pay the bond as they work to become profitable.

    Transparency? One should not expect that from a private company. iProvo was outstanding is being “open” with information as it was a public network. iProvo’s transparency should be compared to UTOPIA’s, not Broadweave’s!

    Better competition? Broadweave from day one said they wanted to be the only provider on the network.

    If you think the deal was bad, or lament the lack of competition, you should be made at Provo about those things, not Broadweave.

    You say Broadweave has not done anything the grunts at iProvo were not telling management to do…the important thing here is that Broadweave has done those things and iProvo did not.

    While the citizens don’t own iProvo, they should want Broadweave to success because they still own the debt if Broadweave fails. I’m sure the citizens of UTOPIA cities are (or soon will be) very sad that they still own UTOPIA.

    You are right, I forgot the UTOPIA bond payment amount and was too lazy to look it up. It’s only $1.6 million a month, not the $3 million I used. So the citizens are only on the hook for about $576 million? Is that right? I’m sure that the citizens that still own UTOPIA will wish they didn’t as soon as the bond payments come due.

    I know the new customers installed are not MDU’s returning after being disconnected for the summer but overwhelmingly new single family residents.

    As fas as the often stated incorrect statement about a complete lack of marketing, that’s not true and other posters have made that clear saying they signed up because of the marketing. My neighborhood was door to door marketed. Why after I and others have said this before, do some of you continue to spout the lie of “no marketing”?

    Broadweave was smart to NOT replace all the portals. I suspect the public statement about portal replacement was just a shot across the bow of World Wide Packets to get their attention.

    I did believe that Broadweave could never make it…but them I ran some numbers. With a monthly bond payment of $280k Broadweave would need only 7000 customers if they made $40 per customer, and only 5600 customers if they made $50 per customer. (+ operating cost which are significantly lower than the bond payment).

    It’s not unreasonable to expect they could get that many customers, considering they had a fair number they took over from iProvo.

    Using the same $40 revenue number for UTOPIA shows they need 40,000 customers. Push the revenue to $50 and they only need 32,000 (plus operating costs).

    While Provo citizens don’t own the network, they do won the debt if Broadweave fails. For that reason they should do everything they can to insure they don’t fail.

  29. Ben Saunders says:

    Video Boy,

    Your quote:
    “You say Broadweave has not done anything the grunts at iProvo were not telling management to do…the important thing here is that Broadweave has done those things and iProvo did not.”

    What have they done that iProvo did not? I must have missed that.

    Your Quote:

    “As fas as the often stated incorrect statement about a complete lack of marketing, that’s not true and other posters have made that clear saying they signed up because of the marketing. My neighborhood was door to door marketed. Why after I and others have said this before, do some of you continue to spout the lie of “no marketing”?”

    Just “door to door” is not going to compete with Comcast, Qwest, and Dish and you know it. So who is lying here. There are no newspaper, TV, or billboard adds, no community sponsorship or PR. Again, who is lying here? Just sending some folks walking through neighborhoods is not marketing, it’s direct sales and it is highly unsuccessful without the marketing. More BS!

    Gee, when you ran your wonderful business case numbers, did you include the cost related to fact that most of the project’s equipment is now obsolete and beyond end-of-life? How will Broadweave pay to keep the infrastructure current and reliable?

    Your quote:
    “While Provo citizens don’t own the network, they do won the debt if Broadweave fails. For that reason they should do everything they can to insure they don’t fail.”

    Provo citizens own the debt until it’s gone. Broadweave is just paying rent on a house that is falling apart and the rent just barely covers the payments with no up keep. Who is going to maintain this Provo asset?
    It is entirely possible that Provo will get this project back in complete disrepair and with little real value since the current tenant is not enhancing the value in anyway.

    if your goal is just to hide from the whole thing for a few months then you are on the right path. If the goal is to protect the $60 million dolars that the people of Provo have unknowingly invested then something needs to be done to correct this mistake.

    I ain’t buying your story Video Boy!

  30. Capt. Video says:

    Jesse made the comment about the Broadweave doing what the iProvo grunts were asking be done. I was just going with that.

    While I would like to see some additional marketing, when you are limited to a specific geographic area door to door and direct mail are often your best bet.

    Given they likely do not have the resources to do too make installs at one and they just took over the network less than 6 months ago perhaps the rate they are going is good?

    I did not include network upgrade costs in my numbers. But I don’t think they need a network upgrade yet.

    You claim the equipment is obsolete and not approaching end of life….but BEYOND end of life…lol. Perhaps the person that told you that is the same one that told you the $6 reserve fund to pay the bond was a “recovery fund”?

    Since Broadweave got the network less than 6 months ago, Provo must have sold them an obsolete and beyond end of life network! Perhaps Broadweave was the one that got a really bad deal, not Provo?

    The citizens of Provo likely want the network back even less since it’s obsolete and beyond end of life? Since Provo was not planning to upgrade the network, and had no money to do so, what’s the difference if Broadweave does it or not. If Provo gets the network back it will not be more worn out than if they kept it. I can tell you things Provo wanted to do (maintenance) that have not been done since the network was built…like replacing all the air blown fiber from the demo project area in Grandview.

    While the current tenet may not be improving the network, that is no different than what Provo was doing. I do think Broadweave will invest in the network and improve it when needed. I think the 1st thing it needs is more HDTV and a better VOD offering.

    Broadweave has stepped up and put $6 million on the line. Not a “few months”, but 2 years of bond payments. If they left, Provo would have had someone else pay the bond for 2 years. Not bad in my view.

    But I expect Broadweave could make it. The real questions for these networks are thing you never talk about.

    Thinks like:

    1: What is the avg. revenue per subscriber?
    I suggest it’s about $40-$60 (triple pay), more for Broadweave than UTOPIA as UTOPIA has to split the revenue with service providers.

    2: How may subscribers does the network need to pay operating and bond payments?
    I suggest that is about 6000 for Broadweave and 40,000 for UTOPIA (just for the bond payment).

    Are there networks on track to be able to do that?

    Yes, perhaps for Broadweave.
    No, not at all likely for UTOPIA.

    Exactly what is it you are suggesting Provo do at this point? They do not have the right to un-do the legally binding contract they entered into with Broadweave. Broadweave has not violated that contract (that I know of). Please share your wisdom and tell us EXACTLY what you want Provo to do?

    I want everyone to support Broadweave. I believe this would be best for Broadweave, Provo City and the Provo Citizens. Broadweave’s failure will cause great expense and pain for Provo. Broadweave really can make it…if we support them.

    We should also all support UTOPIA, as unlikely as them making it is, supporting them is our best shot. Supporting them will help them get a better price when they sell the network to a private company as Provo did.

  31. Ben Saunders says:

    1. Triple play revenue is not pertinent unless you get a large number of triple-play takers. Not going to happen here. I suggest that the average revenue for the so-called 10,000 subscribers is about $21.00 mo. Those MDUs will kill you not to mention the fact that they don’t bill many subs at all.

    2. The 6000 won’t work at $21.00 / sub / month. Guess again…

    No Broadweave is not on-track to financial success. Your numbers are wrong and you forget that the competition is not stagnant like Broadweave.

    Your Comment:
    “Broadweave has not violated that contract (that I know of).” It may come as a surprise, but you don’t know everything. They may have actually violated the contract at this point.

    Wow! Are you saying that the project you managed had no plan to maintain and replace equipment as it’s life span expired? Shame on you! How can that succeed? This thing really was built on a fantasy business model.

    I don’t agree with your sheep-like proposition that we all should back Broadweave based upon your analysis. According to you, One moment they should not share any financials since they are just another “private” company and the next moment we should all embrace them because they have the official nod of Mayor Billings. You’ll get no special consideration from me. They need to get off the city gravy train and get in the pit with Comcast, Qwest, and Dish.

  32. Jesse says:

    Capt: My comment wasn’t meant to suggest that Broadweave is doing any of those things (who can tell one way or the other), but rather to illustrate that Broadweave doesn’t have any kind of special ability to do those things that the city, with competent management, couldn’t have.

    Also, your ARPU figures for iProvo are WAY off. Again, by an order of magnitude. We all know that Veracity has the lion’s share of the $90/mo businesses and Mstar had most of the $12/mo MDU customers. And Broadweave bought Mstar’s customers. Unless you have access to some kind of super-secret financial data that the rest of us do not, it would appear that Broadweave’s purchase of Mstar’s customer base resulted in absorbing the lowest-revenue customers. I’d say their wholesale ARPU is somewhere in the neighborhood of $20-25/mo or so and that’s being somewhat generous. UTOPIA, on the other hand, has already demonstrated an ARPU of somewhere in the low 80s because they snapped up business and government accounts and continue to do so rather aggressively.

    Supporting Broadweave may be best for the City of Provo and for residents’ pocketbooks, but I don’t think it’s the best overall interests of Provo citizens. It just gives future councils and mayors the impression that they can short-sale city property for the benefit of their friends and acquaintances without fear of retribution. The long-term implications of avoiding the short-term pain are far too important to let this all slide.

  33. Capt. Video says:

    I fully understand that not all customers are triple play. That is the reference point. You would need about 6000 triple play customers at $40 each to make the bond.

    So if you have fewer triple play (as UTOPIA does) you need more than 6000. If you have MDU’s which have a much lower avg. revenue, you need more.

    But it’s not out of the range of possibility that Broadweave can get (does not have, but can get) 6000 (or 7000+ with fewer triple play) customers in a few years.

    They have money in the bank to pay the bond for two years. The existing revenue covers operating costs. (Provo was covering operating costs and part (50%) of the bond payment with the subs they had…at wholesale. Broadweave has lowered operating costs and more subs at a higher avg. revenue (no service provider to split revenue with).

    Based upon this analysis (rough, top of my head) it seems possible that Broadweave can become profitable.

    You act like I did not know the avg. revenue for the MDU’s , etc. I know the numbers very well…including some which I am not able to share here due to legal restraints on what I can share.

    At iProvo we had a plan to set aside money to upgrade, but since the revenues were never sufficient to pay the operating plus the bond, we were never able to do so and they plan was set aside. (we did not think the network was near “beyond end of life” yet. (I notice you did not comment on any on those remarks…lol.)

    I don’t remember mentioning the Mayor or supporting the network because of his nod….you are making things up again.

    I still can’t figure out if they are on the city gravy train or were sold an obsolete, beyond end of life network for more than they should have paid?

    If you don’t see Broadweave has a chance for success based upon the numbers…you must really see UTOPIA as completely hopeless as the hole they are in is so very much deeper and blacker than Broadweave’s.

    I think Broadweave is currently in the pit with Comcast, Qwest, Dish, Direct, etc., and it appears they are gaining customers.

    I think we should all accept that until there is some evidence of wrong doing, contract violations, we must assume there has been no problem. I’m not saying it can’t happen or even won’t happen, but to the best of my knowledge, there is no contract violation. Something about innocent until proven guilty?

    This horse seems dead and we should not continue to beat it.

    Let’s move to discussing how UTOPIA is doing on getting the 40,000 customers they need. How many did they add in Nov. & Dec? They need about 2000 a month and got what a few hundred a month? That moves all the remaining months to what 2100+ a month?

    What do you think the UTOPIA avg. revenue per sub is with only 2 services offered in Tremonton? Video subs going down elsewhere due to STB problems and no new VOD movies since October.

    Now there’s a group on the path to success.

  34. Capt. Video says:

    Again, I never said Broadweave had 6000 customers or $40 avg. revenue. Those are just the numbers they need to be successful in broad terms.

    From Mstar they got a mix of SFR (single family residential) and MDU’s. They also get $50k a month in revenue from Provo City for future use and they get paid by Veracity and NuVont a transport fee.

    My suggestion is that Broadweave’s “magic numbers” (revenue and subs) are within the realm of possibility and are not unreachable by any means.

    Again, given they have 2 years to ramp up and reach them.

    I’m missing whom was the Mayor’s friend that he gave a great deal too. In fact, most here seem to disagree that Broadweave can make the numbers and be successful. In that case the Mayor’s “friend” would just lose money.

    Making the network fail and go back to Provo to teach them they can’t sell to their friends…(I don’t believe that happened)… would be foolish in my opinion. There does not seems to be a rush to sell city assets at low prices and Provo would be in very bad shape to just try and make a point?

    This network coming back to Provo is not in the best interest of the citizens. IF a lesson needs to be sent, there are better, less painful (for the residents) way to send it.

  35. Capt. Video says:

    …oh, forgot to mention that I don’t accept the $80 avg. revenue per sub. It could be, but until some numbers are made public I personally find the number a bit too high, even with business accounts.

    I’m not able to say it is not the case, and if UTOPIA made a statement that they were getting an avg. revenue of $80 I would believe them.

    Of course just adding hundreds of low paying residential homes in Tremonton must have lowered that number some? I assume they have all the larger city government accounts they will be getting?

    Until UTOPIA shares info as Provo did (they made public their avg. revenue per sub.) we just won’t know.

    But at $80 avg. revenue that would mean what, they would only need 20,000 customers (at that avg. revenue) and then only need 1050 a month and not 2100.

  36. Harold Bills says:

    Video Boy:

    Your quote:
    “They have money in the bank to pay the bond for two years.”

    Total BS! They have a line of credit which will require payments and interest. Stick that in your business model.

    For someone not wanting to beat a dead horse you have certainly beat this nag into a puddle!

  37. Ben Saunders says:

    Capt. Video,

    By the way I don’t accept the $40 average revenue per customer for Broadweave! They have too many MDU customers in the number, no commercial vision, and little ability to expand their HD offering. They have no real strategy to make MDUs pay. It looks bad to me and nothing is changing.

    By the way a neighbor of mine gets a call from Nuvont this week telling him that he will lose his video service from them in less than a week. They offer him Dish. He’s had enough! He is walking away from iProvo (Nuvont in this case) with his $700 install (less than a year old).

    Nuvont told him that Broadweave was behind the lost video and would not cooperate with them to make an agreement that would allow Nuvont to continue to serve video.

    Brilliant! Get on out there Broadweave and alienate any current iProvo customers you can. Yea they are making real progress now!
    Is this that fancy marketing you speak of?

    Clearly any right-thinking executive would have found a better way to deal with this issue.

  38. Jesse says:

    My wife’s aunt is a Nuvont subscriber and she was switched to Dish ahead of this. Broadweave will likely lose several hundred video subscribers worth of wholesale transport and I don’t doubt that Nuvont is looking at ways to bolt from iProvo for data and phone services either.

    Veracity is supposed to be working on some very high-bandwidth DSL applications. Makes me wonder if both Nuvont and Veracity will pick up their toys and go play in someone else’s transport sandbox. That wouldn’t be good for Broadweave’s bottom line.

  39. Capt. Video says:

    Am I not making myself clear? Or are you just stupid? Go re-read the posts above I’ve made or have someone explain them to you.

    My $40 estimate is the low end estimate of revenue from a single family home triple play subscriber. That’s about what iProvo was making in transport fees on such a sub and Broadweave should make more as the retail provider.

    I’m providing a vision of what Broadweave would need to be profitable in the FUTURE. (About 6000+ single family homes to just make the bond payment. additional subs are needed to pay operating and other debt.)

    I never said Broadweave’s CURRENT avg. rev. per sub was $40. I thought that was clear from my posts. I’m sorry to all if it is was not.

  40. Capt. Video says:

    I believe (based upon over 30 years in the video business and a first hand intimate detailed knowledge of the Broadweave video contracts, which they inherited from Provo City) Broadweave would be in violation of their contract to allow NuVont to continue to use them to deliver video services.

    As such, Broadweave allowing NuVont to provide video services using the Broadweave licenses is not really an option.

    NuVont’s parent company has been a highly profitable satellite sales business long before they joined UTOPIA or iProvo.

    NuVont has always sold satellite video to it’s UTOPIA subs. Which I believe is very bad for the network.

    So while Broadweave may lose some revenue from losing the NuVont video sub transport fee. They could lose much more by violating their contracts and allowing NuVont to deliver video on their licenses. Broadweave is doing the right thing, following their contracts.

    I suspect some customers will leave the network as noted in the previous post on this, and some will transfer their services to the only remaining triple play provider on the network….Broadweave. All new triple play customers will be Broadweave customers.

    I see this as a short term hurt for Broadweave but a long term gain. It’s nice to see them decide that following the letter of the law (the contract) is more important than the revenue. That say’s something good about the company’s moral compass.

  41. Jesse says:

    Those are some good points, Capt. Still, it seems like their short-term operating revenues are such that they might have trouble getting to the long-term. If Broadweave is willing to exercise the “lack of contract” option, I wonder how long it’ll be until it drops the hammer on Nuvont’s data and voice customers as well.

  42. Capt. Video says:

    Which makes their “doing the right thing” even more impressive to me?

    I do think the “lack of contract” issue is different than the “violation of an existing contract” issue.

  43. luminous says:

    my understanding of current regulator rules is that while qwest does not have to share their new stuff like adsl2, that isp’s could potentially install their own adsl2 dslams and run the back haul fiber or whatever themselves? could that be what you are referring to that veracity is planning on doing? seems to me that if that is the case that broadweave is creating for themselves new problems that will adversely effect their business plan. would make more sense to continue selling video transport to these competitors for at least another 5 years or so until their income is greater then their expenses.

    Jesse is their any more word on whats going on with Utopia’s video headend? Their has been more work going on here in layton but still no customer installs, I get the feeling that maybe they are waiting for their video solution before they open up any more new area’s?

  44. Jesse says:

    UTOPIA is reportedly working on a way to allow any provider to sell video services to their customers. That would enable everyone to be triple-play. Not sure where this is at right now.

  45. Capt. Video says:

    My friends in the industry (outside Utah) tell me they are making a deal with CSI Digital and FourCom. CSI Digital for the headend and transport and Forecom for the sub-licensing that will allow all providers to offer video.

    It’s a good solution, but of course you pay more for the video as you are buying both the headend and the video licensing from third parties.

    It’s not a solution cable TV companies use but a number of smaller video providers (telco’s, private developments, etc.) use them and they are reputable companies.

    I have not had any confirmation from local sources but this is the word on the street.

  46. Ben Saunders says:

    Video Boy,

    “first hand intimate detailed knowledge of the Broadweave video contracts”?

    How would that be? Were you in fact a part of Mayor Billings backdoor shenanigans or did you just dream this up too?

    Who cares if you think Broadweave is all that? Everyone knows that you don’t do or say anything that is not completely self-serving. What kind of credability do you have?

    Blah, Blah, Blah!

  47. Capt. Video says:

    Broadweave took over the video contracts I signed for Provo Cable/iProvo years ago.

    I’m understand that you are upset by what I consider my voice of reason, since it could disrupt your Broadweave Bashing Party.

  48. Harold Bills says:

    Capt. Video:

    If you have all the answers and seem to know more than everyone else then why did the Provo Cable / iProvo venture go so poorly? You would think you would have put this vast warehouse of knowledge to work when you had the chance. Why were so many obvious mistakes made under your leadership?

  49. Capt. Video says:

    I don’t know more than everyone else, I don’t have all the answers. But I do know somethings and I do have some of the answers. I try to find answer in the numbers or facts.

    I did not have decision making ability in the iProvo project. I don’t think the iProvo project went “so poorly”. The project was a pioneer effort and was wildly successful compared to the UTOPIA project (which most of you support). (Cost per mile built, cost per install, cost per subscriber, cost per home passed, Compare iProvo to UTOPIA on any measure you like.)

    iProvo subscriber numbers and most importantly, single family home, triple play subscribers, were lower than the consultants (or I) had expected. (But much, much closer to predictions than the UTOPIA numbers were.) In part due to the decision to not be the retail provider as originally planned. (Thanks to House Bill 149)

    Mistakes were made and I made some of them. This was not the 1st system I’ve managed and I have been successful in cable system management in many locations. I managed this system in name only. I did not have the power to hire or fire or make decisions in Provo. But I would not want to say had I had management power iProvo would have been a roaring success. Overbuilding is a very difficult path to success.

    If Provo did so badly why do you want them to get the network back?

    Is Broadweave in contract violation or not?
    Did the Mayor help line the pockets of his friends or not?

    Why are ALL newspapers and TV News, etc. ignoring this really BIG story of Broadweave violating it’s contract and the Mayor lining the pockets of his friends by this sale?

    Who’s pockets were lined? Who is cashing in on the iProvo sale? (I think everyone is still losing money.) Did Provo sell an out of date, beyond end of life network and take advantage of Broadweave who will soon go out of business or did Broadweave get the systems for a steal and they are laughing all the way to the bank?

    I’ve heard people claim both on this blog.

    But either my FACTS and NUMBERS are reasonable or they are not. That is what this should be about. Not a personal attack on me.

  50. Harold Bills says:

    The fact is that the people of Provo spent close to $20 million in costs associated with this great project and are still in debt for another $39 million. What do they have to show for it? All I see is a problematic fiber network provided to Broadweave for their exclusive use. I see all this money spent to build this project that given away for nothing down. I don’t expect this debt to go away.

    Even if you get all excited about Broadweave paying the payment offsets for the bond payments then what about the $20 million part. It will never ever be recouped in any way.

    You say, “I don’t think the iProvo project went “so poorly”. How can you delude yourself into thinking that loosing the $20 million already and likely the $40 million more is “not so poorly”? Come on, you need to get a grasp on reality!

    I am not in a position to state unequivicabally that Broadweave has violated their contract and neither are you. That game will play out later.

    Broadweave was given the big gift here when the process to select them was done behind closed doors without any other company getting a chance to compete with their deal. So I guess their pockets were lined. Did anyone at Provo recieve financial benefit from this deal? I have no knowledge of that but I cannot understand the incentive to handle this in such an unfair and unethical way. Was it just the need to control every little thing or was it really a way to benefit someones friends. Who knows. Time will tell.

    When you called Ben “stupid” that was personal. You can’t have it both ways! That’s were you get the personal responses.

  51. Capt. Video says:

    I did not call Ben stupid. I did ASK Ben IF he was stupid or if I was not making myself clear (and should not have). My poor behavior dishonors my parents, they taught me better.

    Provo pretty much stayed on or under budget in both building and operating the network.

    So all costs were know and accepted going in. Provo got what it expected (a fully operating fiber optic network, complete with headend, etc.) for what they expected to pay. The Mayor and Council were kept informed and approved each step in the process. Kevin Garlick did a good job of bring the project in at or near budget.

    Compare that with the UTOPIA project.

    UTOPIA spent more than twice as much, passed fewer home and had fewer subscribers (and no headend, which cost over a million dollars).

    The iProvo project was paying all operating costs and about half(?) it’s bond payment on the network revenues. An increase in single family residential subscribers taking triple play would have made the project break-even or profitable.

    The city elected not to take that chance and continue to fund the difference (approx. $1-2 million). They elected to sell when they received an offer that appeared good to them. It was not the first offer they received to buy the network on the RFP they issued.

    I do think they should have made clear they were looking to sell, but I don’t know if they would have received a better offer. They got more than I thought they would and when UTOPIA sells we will have a reference point to judge the iProvo sale by.

    No matter the history of the sale, or iProvo, wishing failure for Broadweave helps no one. Broadweave loses, Provo City citizens lose, and UTOPIA and all UTOPIA city citizens lose as when they sell, they will get less for their network if a previous sale (on what you believe is a sweet deal for Broadweave) resulted in failure. I guess Qwest and Comcast benefit?

    Currently, residents of Provo have more choices than just Qwest/Comcast, Provo is not making a bond payment. Broadweave is pumping cash into paying off the Provo City debt.

    Yes, this could change. These are tough times for any company and Broadweave success is not going to be easy. But I (and I believe most Provo citizens) am glad Broadweave has paid over $1 million dollars of Provo’s bond debt and I wish them well so they can continue to do so.

    You again mention “benefiting someones friends”…and I again ask WHO is benefiting. Is not everyone losing money? EsNet, Broadweave, their owners and investors? Seems like the Mayor screwed his “friends”? Perhaps the suggestion that the Mayor made the sale to help his friends is completely without merit and places a cloud on the Mayor and the deal that just should not be there?

  52. Ben Saunders says:

    Broadweave got their shot. If they are losing money then that’s the result of their own efforts. We have all heard that they don’t even bother to bill many customers. Going in they got a gift handed to them many others would have competed for and paid good money for. The whole outcome for Esnet, the owners, and the investors rested on Broadweave’s ability to pay the bills and make a profit. They couldn’t have had a better opportunity. If they blew it in spite of their “Mayor’s friend” status then maybe the Mayor just picked the wrong fiend to give this project to. The “who is benefitting now” comment of yours is irrelevant at this point. The outcome could have been very different with the right partner.

    I am certain that the investors had no intention of letting Broadweave drain the security fund one month at a time.
    They stand to lose the entire $6 million.

    Contrary to what you say, Provo is making the bond payment and Broadweave is paying rent to Provo. No matter what Broadweave does, Provo will be making the payments for the next 20 years. Provo and only Provo is responsible for the bond. That’s why protecting the asset is essential, it has to pay the payments or taxes will. That’s why I have little patience with Broadweave when I see and hear of their issues.

    Your world has a very short horizon. As long as somebody is making this month’s bond payment you are a happy man, even if it’s the hard earned money of investors like Esnet who will likely never see the money come back. This whole scenario will never get the bond paid long term. I guess it keeps you “one month at a time” guys happy.

  53. Harold Bills says:


    I think you are hitting on something here. It is just like buying a house that you then decide to rent out just to cover the payments. The rent does not cover any maintenance or property management costs so you know you will be losing money in any case. Then you realize that you were dumb enough to rent out the house with no security deposit, so you have no way to protect the value of the property. The next thing you know you hear that your renter is using a credit card to pay the rent, so he has no real cash to maintain the asset. So looking down the barrel of this losing proposition makes you wish you could do something different. So what do you do? Most landlords will just try to get by until the tenant defaults and they have the chance to do something different, then they grab it.
    What if no one else will rent it at that price? Well you may have to move back in and tighten your belt. For most of us bankruptcy is not an option, so we have to deal with the problem. We can’t run and hide from issue or get someone else to pay the mortgage.

    It’s a pretty simple example but I believe it applies.

  54. Jesse says:

    This Criagslist posting claims that a part-time sales rep for Broadweave is making $7000 a month. A good salesperson is worth the money, but this may also account for the missed payments as of late.

  55. Jesse says:

    Well… this isn’t good news. Broadweave has managed to get an Unsatisfactory rating from the BBB and has failed to respond to most of the BBB inquiries.

  56. Ben Saunders says:

    No Jesse,

    This is actually good since they are so focused. It’s hard to find companies like this. They a diamond in the rough. They are the cream de la creme of the telecommunication business in Utah. They are the saviors of Provo City taxpayers. They will pay off the $40 million. They will succeed where Utopia is doomed to fail. blah, blah, blah…

    Sorry I stepped into an alternate reality for a minute there.

  57. Ben Saunders says:

    Wowsers, I want to be Broadweave salesman. Lets see, I can spend 4 hours a day making big money and spend another 4 hours practicing my sales skills on my co-workers of the opposite sex. Sign me up!

  58. Harold Bills says:

    Has anyone heard if they made the December bond payment and if they used the line of credit to get it done? Of course we are now at the January payment being due soon. I have a contact inside Broadweave who tells me that things are not well.

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