iProvo Deal Closes: Sorenson Gone, EsNet Takes Their Place

Seems that the rumors were true: Sorenson took a long, hard look at the sale of iProvo to Broadweave and said “no thanks”. Despite this, Broadweave managed to line up alternate funding that appears to be an amalgation of EsNet and some of Broadweave’s existing investors including Fraser Bullock of Sorenson. Broadweave is playing thier hand close and isn’t talking numbers, so I’d be interested to know what the final deal is. After all, if we’re back to talking letters of credit and not money in the bank, we should be quite concerned that these letters are spread a bit thin.

Broadweave also won’t talk numbers. They won’t disclose the number of subscribers they have or the revenues they are receiving beyond vague statements like “the numbers are higher than expected”. While I can appreciate a business’ right to proprietary information, the public financing aspect of the deal means additional public scrutiny is a must. The rumor mill is that both Nuvont and Veracity plan to aggressively pursue new subscribers and many customers who’ve gotten fed up with the dwindling VOD options, flaky program guide and no after-hours NOC have been evaluating switching their provider.

Good luck Broadweave, but it seems that you aren’t totally up to the challenge.

h/t: Capt. Video for posting a link to the Daily Herald story.

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17 Responses to iProvo Deal Closes: Sorenson Gone, EsNet Takes Their Place

  1. iprovosupporter says:

    Finally, the sale of the network is complete, and the Provo politicians can finally rest, right?

    Not likely.

    They should have pulled out of the deal with Broadweave while they still could and started over with an open and fair process. I can’t wait to see the hacked up version of what it took to finally close this deal.

    I wonder where the first lawsuit will come from. Qwest, Comcast, Mstar, etc? It will be interesting to see.

  2. luminous says:

    Don’t forget the residents of provo they would have reason to file a lawsuit to.

  3. Harold Bills says:

    Esnet of course belongs to someone who is no stranger to iProvo. Dan Campbell, managing general partner of Esnet served on the iProvo Telecom Board up until late last year and resigned shortly before negotiations kicked off between Provo and Broadweave. This fact may add fuel to the fire that Broadweave recieved a sweetheart deal that was unavailable to any other interested company. It had been rumored that Esnet was involved in the funding at the time of the first closing. One of the questions that will be asked is, “Did Provo setup the financing for Broadweave with their old friend Dan Campbell?” In any case, Provo has spent the last 8 months turning Broadweave into the company that would pay the bond payments and this piece of information is not surprising. We will likely always wonder what it was about Broadweave that made them the unwavering heir apparent.

  4. Capt. Video says:

    I agree Jesse!
    Now should you not be saying exactly the same thing about UTOPIA?

    “While I can appreciate a business’ right to proprietary information, the public financing aspect of the deal means additional public scrutiny is a must.”

    UTOPIA IS a public entity and a political subdivision of the State of Utah. We have MUCH more right to expect UTOPIA to share information than we do Broadweave.

    I’m about ready to learn how to submit a freedom of information act request to try and get the information. I’m sure all I’ll get is a reply saying why they believe they have the right to keep that information secret.

  5. Capt. Video says:

    As a member of the iProvo Telecom Board, Dan Campbell asked tough questions and drilled down into financial reports with a trained eye.

    I find it hard to believe that he believes Broadweave can make this operation profitable.

    But he’s very sharp and knows what he’s doing.
    Perhaps there is some flip potential?

  6. Jesse says:

    I agree that more disclosure is only a good thing, though I do understand their line of reasoning in not showing their full hand just yet. This bring up a deeper question of balancing the need to keep some information under wraps until the appropriate time and the public right to evaluate what’s going on. I don’t know what the right time is to start showing the cards, but I am willing to give the new management the benefit of the doubt until they start missing concrete deadlines for construction and signing up new customers.

  7. Capt. Video says:

    …And how will we know if they have missed concrete deadlines for construction and signing up new customers unless UTOPIA makes those deadlines public?

    Which they do not!
    (I’ll assume the plan to start construction in Aug. (which appears to have not happened?) was not a concrete deadline but just a loose plan.)

    There is also a difference between not showing your whole hand and not sharing anything at all. Where is the UTOPIA site where ANY information is posted. The last “news” post on their web site is 2 years old.

    There are really two parts to the answer.

    One is that there are numbers that may be available, but not voluntarily provided, which could be available when a Freedom of Information Act Request is filed.

    The second relates not to what is legally required to be made available, but what SHOULD be provided to increase confident in UTOPIA by the public.

    Given the very bad close to the first act of this play, (the requirement to ask for more money from the cities), I believe the “new” UTOPIA should actually work to show they are much more forthcoming with information and there can be no chance of a repeat of the ugly surprises of the past.

    I think we all know that all entities (businesses, governments), would ALL rather only provide the information they want to, when they want to. It’s a dangerous thing to allow THEM to make the choice of what to share and when to share it. If we do that, we will only get good news.

    We currently have no way of knowing if UTOPIA is on track. In order for us to know that, we need to see subscriber or revenue projections (month by month) and then compare their progress (month by month) to the projections. Nothing less should be acceptable.

  8. Jarrod says:

    I want to see the new iProvo deal as signed. Anyone know if it’s available on Provo’s web site like the original documents?

    It would also be good to find out about Esnet. Assuming they got the same “capital call” agreement as Sorenson, we now have to trust that Esnet has the ability to hand over money as demanded by the city if there is a failure to pay.

  9. Capt. Video says:

    There is nothing new there, but the deal was just closed Friday night/Sat morning at 2 AM so there has been no time to place any info there.

    I would like someone from the city to state if ANY changes were made to the original deal terms.

    I noticed that much of the info is still blank (60 days after the original close date). Almost all the attachments are blank pages???

    As I understand it, the money is not dependent upon the company name or reputation, but in some solid, guaranteed financial instrument. The money cannot be withdrawn or withheld???

  10. Jarrod says:

    Capt Video,

    I’m not sure why you still think the money is put in some solid, guaranteed financial instrument. The Capital Call Agreement as found on the city website (http://www.provo.org/downloads/util/capital_call.pdf) does not put any such requirement on the sponsor. Maybe that changed on Aug 30, but that’s not the original deal. Here’s how it is supposed to work, from the document:

    7. Procedure to require Capital Contribution. Upon the occurrence of a Trigger
    Event, Seller may deliver to Purchaser and Guarantor, with a copy to Sponsor in accordance with
    the notice information set forth in Section C.2, a notarized certificate (“Seller’s Certificate”)
    signed by the Mayor or other authorized official of Seller specifying (i) the amount required by
    Seller to be contributed by Sponsor to Guarantor and paid over to Seller, (ii) the name and
    number of the bank account to which Sponsor, Guarantor or Purchaser must deposit the amount
    required, and (iii) the date by which such funds must be delivered, which shall be at least 11
    business days from the date of receipt by Sponsor of Seller’s Certificate. Upon receipt of
    Seller’s Certificate, Sponsor shall contribute the amount required by Seller to the bank accounted
    designated and by the date specified in Seller’s Certificate. If, prior to its receipt of funds from
    Sponsor under this Section B.7, Seller receives reimbursement of the Delinquent Note Payment
    from Purchaser, Guarantor or any other third party, the Seller’s Certificate for that month shall
    be cancelled. If Seller receives funds from Sponsor for a month for which Seller’s Certificate
    has been cancelled, Seller shall promptly return the same to Sponsor.

    Does that sound like the money was put in a solid, guaranteed financial instrument beforehand? It sounds to me like Provo sends a letter asking for money, and Esnet sends the money. There is no requirement for 6 million to be put in a guaranteed place.

  11. Capt. Video says:

    I guess I just did not think Provo would be foolish enough leave itself so exposed?

    Service providers who were just using the network were required to have a bond in place that Provo could draw against in case they didn’t pay. (I’m not sure Provo did a good job of insuring this was done, but it was contractually required?)

    So it’s hard for me to accept that Provo would actually sell the network, which is a step beyond just being a service provider, without a bond type financial instrument in place.

    But I don’t know if that is the case, perhaps it’s just an expectation on my part that is totally without merit.

    It would be very disappointing to think there is no real guarantee.

  12. Jesse says:

    Capt. Video: I think you’re far too willing to rake UTOPIA over the coals for something they have or haven’t done without having verified if they have or haven’t done it. Their website sucks. We know it, they know it, everyone who’s looked at it in the last two years knows it. They’ve been working on a new one which is due Real Soon Now(TM) from what I hear. Until then, it’s a bit difficult to post updates. I’d only be concerned if and ONLY if you sent them a nicely-worded e-mail or made a polite phone call and they said “no way” to your inquiries.

    They have a very large task in front of them untangling themselves from old contracts, assessing where they are and moving forward. They’re scarcely three months into that process. I think it’s a bit too early to start crying foul and certainly too early to be claiming malfeasance on their part unless you know something to the contrary.

    In short, ease up a bit. Nobody expects them to make an immediate course correction.

  13. The Dog says:

    The Dog is also looking for any information and numbers for both Broadweave and Utopia.
    If you contact them and get any information please share it.

    The WatchDog

  14. Jonathan says:

    Capt. Video,

    Just a FYI the Freedom of Information Act (FOIA) only applies to Federal Agencies.

    The law that applies to the State of Utah agencies is the Government Records Access and Management Act (GRAMA).

    I just didn’t want you to get all upset when you send in a FOIA request and it gets rejected because UTOPIA doesn’t fall under that act.

  15. Capt. Video says:

    I stand corrected, but I believe my overall train of thought remains correct.

    That would be the belief that UTOPIA as a (soon to be) publicly funded entity should publish/release information that would allow the public to track their progress.

    To Jesse comment, I don’t believe individuals should have to ask for that information one by one.

    I DO NOT believe anything wrong or illegal is going on at UTOPIA. I do not even suspect malfeasance of any sort. I believe the new management team to be honorable and doing their best to save a sinking ship. The situation at UTOPIA they inherited is serious and not of their making.

    I believe that sinking ship will only be saved by significant additional investment by the cities over a long period of time. (Which I hope is accepted and supported by the cities.) I expect this will become somewhat clear to many when the numbers (actual and budget revenue and expenses, subscribers, etc.) become public.

    I believe it’s better to start that discussion sooner rather than later.

    Of course I could be completely mistaken and thing are not as bad as I believe and righting the ship will not be the task I fear.

  16. Harold Bills says:

    Capt. Video,

    I fail to see how anything Utopia does impacts you since you don’t even live in a Utopia city. Yea, you should be worried about Provo and Broadweave and it would seem that your efforts would be better directed there. It’s just my opinion but what is your axe to grind with Utopia?

    Now that the deal is done with Broadweave, I doubt there will be any on-going Utopia presence in Provo or Provo’s headend.

    Is it possible that some of your old cable company alliances still motivate you to attack Utopia?

  17. Capt. Video says:

    I do not live in a UTOPIA city, but of course neither does Jesse who started this web site and discussion forum.

    Perhaps my knowledge of the business and the experience Provo residents have from iProvo can help residents and officials of UTOPIA cities learn to ask the right questions to help them be successful?

    It’s very apparent from past history that they could need some help in that area. Resident and city oversight of the UTOPIA project has not been a strong suit.

    I am not against UTOPIA and believe that fiber projects like UTOPIA should have the FULL support of municipal governments. I wish Provo would have kept and fully supported iProvo.

    I fear that asking hard questions and trying to put real numbers to the UTOPIA experience is not something many want as part of the discussions. Frank and open discussion, including hard questions on specific numbers are good for the public debate in general.

    Having a fair understanding of the likely revenue per customer, customer take rate, construction and installation costs, equipment costs, etc., allows me to project things like the number of customers needed to pay the bond, etc. (Which few agree with, but I still believe will prove close to correct after all is said and done.)

    Should UTOPIA elect to share it’s projections with the public there would be no need for back seat drivers like myself to guess at numbers.

    I think the things I have criticized UTOPIA for are not sharing info (hard to defend when you are spending public money?) and pointing out that I believe a high install rate will be a failure. (I have stated that there is no evidence UTOPIA has the skills to make UTOPIA or iProvo successful and I guess you could call that criticism. But I have also said that was simply awaiting a future judgment after we see what they do for UTOPIA. They are really just unproven. They could be GREAT, but we have not seen enough to pass that judgment yet.)

    Pointing out that they need 40,000+ installs in 2 years to pay the bond and that they do not have the money or machine to do that is a well reasoned opinion and not a criticism.

    I have no cable company alliance. I have considerable knowledge of the ability of the cable companies which are often underestimated on this list.

    UTOPIA is spending over $100 million dollars of the public’s money. I think it would be wise to hold their feet to the fire. I’ll bet all UTOPIA cities wish they had done so years ago when they could have made a course correction. I’ll bet the current UTOPIA management wishes someone would have been watching closer to avoid some of the problems they have been brought in to solve.

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