Provo Municipal Council to Consider Broadweave/Veracity Deal Tomorrow

Provo’s municipal council will meet tomorrow to discuss and vote on the proposal from Veracity and Broadweave to ease up on payments for a few years. The meeting will be at 7PM in the council chambers at 351 W. Center St. I’d encourage everyone to show up and share your thoughts with the Council.

As an aside, the Herald’s editorial board sees what I do: the choice between two options, neither of which is terribly palatable. I still don’t know that I favor one option over the other. Despite being a loud proponent of open networks, the management that Provo picks hasn’t exactly shown competency in the area. It’s hard to tell if Provo has more of a stomach for either extending their risk or doing the work that is necessary to make the network work under city control. In either event, I want to make sure that the council has considered their options and is making their decision based on facts and rational thinking, not fear.

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14 Responses to Provo Municipal Council to Consider Broadweave/Veracity Deal Tomorrow

  1. Capt. Video says:

    They (Daily Herald) seem to be of a similar mind as I am on this. They say,

    “Yet it should be noted that as debt is paid down, future liability for the city decreases should it be forced to take back the network. So a little government assistance by way of payment relief doesn’t seem to have much of a downside except that it hurts Provo’s cash flow a little for a year and a half.”

    I would disagree with the last sentence, since the money will come from Energy Dept. Reserves and NOT the budget, there should be no effect at all on Provo City “cash flow”.

    The key is the assumption that the debt will continue to be paid down by the new company as it has been by Broadweave. I support Provo approving the merger (assuming the numbers are as they appear). The Council should make a decision based on the numbers they have that we don’t.

    If the current network revenue and current Provo payments to Broadweave (all payments including the $25k monthly payment Provo is making, reported on line in the Daily Herald discussions which I had forgotten about) are less than the $195K bond payment and operating costs (meaning Veracity Networks will be contributing to lower the bond, not just using network revenue), the deal benefits Provo.

    If however the numbers show that the new Veracity Networks revenue is greater than the $195K bond payment they will be making plus operating costs, then there will be no contribution from Veracity Networks toward lowering the bond payment. (No contribution beyond what would be made if Provo operated the network and got the customer revenues.)

    Broadweave has a significant amount of skin in the game (millions from the surety fund), Provo needs to feel comfortable that Veracity Networks also has some skin in the game as we move forward.

    I have not seen the numbers (they will not be made public) but I count on our elected representatives to protect our interests and I support the deal if they close it after seeing the numbers.

    Broadweave has been good for the City, improving the network and paying the bond we should all support them!

  2. Ben Saunders says:

    Yea it’s all good if:

    1. You don’t mind spending $62+ million and getting nothing for it.

    2. You don’t mind a ton of bad PR for your city.

    3. You don’t mind bilking investors of millions.

    4. You don’t mind diverting precious energy reserves from their intended use.

    5. You don’t mind allowing an entity to modify your asset without any approval from the ownership.

    6. You don’t care that your municipal government has completely lost sight of the proper role of government and now illegally subsidizes hand-picked private sector entities. This is socialist and just wrong. What if Obama picked one health care provider to subsidize for his reform plan?

    7. You don’t mind sending $1.5 million to a company that has ready spit out the silver spoon that Provo gave them in the previous iProvo experience. Vercity will risk nothing and will have the power to completely and finally detroy their biggest competitor in Provo. They actually win no matter how badly it all goes.

    I truly hope that litigation helps remind Provo City of how wrong this is.

  3. Fred Pee says:

    Come on Ben, are you still upset that you got moved away from the Iprovo project? I know you though that was your baby, but not even you could do your part. Hey it looks as if Broadweave needs a grounds keeper, there lawn has not been mowed in weeks.

  4. Ben Saunders says:

    Mr. Pee,

    I’m not getting whatever that is, but I see that the same old irrational postings go on here still. I guess I’m not surprised.

  5. luminous says:

    The risk of Provo being taken to court over this should be big enough problem to kill this idea. I am with Ben Saunders on this one, What he is saying makes a lot of sense.

  6. Capt. Video says:

    I am not an attorney, but I do know Provo has a number of highly qualified legal minds on staff. I would expect they (having read the contracts and being attorneys) might have a better idea than Ben of the legal liability. So I’ll go with them on that issue. If they are not worried, I’m not.

    (Side Notes:
    Past predictions of legal action were ALL wrong. Who was it that made such predictions? Are they still predicting? Do they have more or less credibility now?

    Same with those that predicted this was a sweet deal where Mayor Billing was making his friends rich. Anyone gotten rich on this network yet? If those were friends of Mayor Billing back then are they still friends now after losing millions of dollars on iProvo and one even losing control of his company?)

    I don’t believe Provo is doing anything they could not have done in the original contract and this small modification seems unlikely to be illegal.

    Exactly what do you and Ben believe to be illegal. What specific statute do you think is being violated by this action? Whom do you predict will sue now?

  7. Jesse says:

    Capt: I would remind you that you don’t have to be in the right to file a lawsuit. Qwest did it to UTOPIA to delay things just long enough to cause significant issues. They certainly could do the same thing here, filing a civil suit to delay the merger just enough to cause Broadweave to default and capitalize on the fear of the council. That mind sound like crazy conspiracy theory, but Qwest has done it before.

  8. Capt. Video says:

    I agree that could happen…but of course they could do that any time and don’t need the new deal for that. (To file a lawsuit without merit.)

    Would you suggest someone not do what they believe is right and legal because someone could file a lawsuit without merit?

    That would seems foolish to me!

    I’m not sure Qwest or Comcast is at all worried about iProvo/Broadweave/Veracity to the point of wanting to rock the boat and have the network returned to the city.

    Remember they are the ones that supported the sale to a private company rather than the network be city owned/involved/run?

    But anything is possible.

  9. Jesse says:

    I merely mean to point out that Qwest has a history of filing strategic lawsuits when it fits their purposes. That’s not enough basis for acting differently.

  10. luminous says:

    Qwest despises competition from anyone not just muni’s. I don’t see reason to think Qwest wouldn’t benefit from IProvo falling back to the city. Another major debacle their could chase customers off of IProvo and potently into Qwests waiting hands, Not to mention they could use it not only against Utopia but anyone else so inclined to try this whole Muni broadband thing.

    Qwest has benefited from prior lawsuits to prevent competitive market participation, no reason for this trend to not continue.

  11. Ben Saunders says:

    “Would you suggest someone not do what they believe is right and legal because someone could file a lawsuit without merit?” – Capt. Video

    Do you really believe that any of the leadership in Provo considers what is “right” anymore? The have bent the rules and compromised integrity so many times that this thought is just ludicrous.

    There has never been a time in the course of the iProvo misadventure that the city has gone this far across the line in direct funding to a private entity without open competition or unbiased consideration.

    I am quite tempted to sue Provo myself since my business has not had any opportunity to seek this kind of funding from the city. What makes Broadweave and now Veracity qualified when others are not even allowed to apply? It’s not just Qwest, Utopia or other telecommunications entities that are being discriminated against here. It’s anybody doing business in Provo.

    This kind of relationship between government and the private sector is just as wrong as it gets.

  12. Jesse says:

    This isn’t the first time that Provo has funneled money into a private enterprise, directly or indirectly, and they appear to have a history of getting away with it. Whether it is legal or not is anyone’s guess. I don’t know if anyone filed suit or not, but I would bet that they grumbled loudly for a while and then let it be.

  13. Capt. Video says:

    I see this as a somewhat minor change to the original contract. They could have had this payment schedule built into the original contract.

    I guess only time will tell if the concerns about getting sued are a real concern for Provo City or more wild claims of illegal activity as we have seen in the past (including some from you?).

    I think my statement stands…
    “Past predictions of legal action were ALL wrong. Who was it that made such predictions? Are they still predicting? Do they have more or less credibility now?”

    I again ask that you clearly state the specific law that is being violated.

    Provo has a legally binding contract for the purchase of the network and the payment schedule thereof…you are expecting us to believe that a mutually agreed upon change in that payment schedule (wherein Provo gets paid more in the end) is a violation of the law?

    How likely is that?

    Seems if the original deal was not against the law, this change in the payment schedule is not likely to be against the law.

    I’m still thinking the opinion of the Provo City Legal Department carries more weight than your opinion on legal issues? I’m guessing this action is not illegal?

  14. Capt. Video says:

    Is this not something cities (and even states) do often?

    Tax breaks if you move to my city?
    Paying for things like a soccer stadium?
    Giving Disney money to film High School Musical I-III in Utah?
    Park City and the state supporting Sundance?
    Provo supporting Stadium of Fire (Freedom Festival)?

    Lots of businesses receive lots of money from cities to locate there or grow jobs, etc.

    Public support of private projects is not something unheard of…and not illegal.

    In some cases…it’s not even bad public policy.

    Is not the whole municipal open network idea exactly that? While you may say but the network is open to anyone…the reality is it hurts companies like Comcast that have already paid to build their own network by introducing competition and allowing companies to compete without the investment of millions in building a network.

    I’m not complaining about it or saying it’s wrong. I am saying to point at Provo and say they are doing something unusual by helping “private business” is ignoring a somewhat common practice that is clearly legal?

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