Delayed: Provo Punts For Now

Just a head’s up that Provo’s Municipal Council had to delay the vote and discussion on the proposal from Veracity and Broadweave until another day. Some of the language in the final resolution needed a bit of tweaking and I’m sure it didn’t help that a council member was absent. I’ll be sure to let you know when it gets rescheduled.

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12 Responses to Delayed: Provo Punts For Now

  1. Capt. Video says:

    It appears they rescheduled for the 22nd of Sept. The delay was inconvenient for those like myself that planned to speak in the public meeting. I will be out of the state on the 22nd and unable to attend and speak.

    But I suspect the approval of the merger is a foregone conclusion (you don’t bring these things to a vote without having taken a behind the scene head count and knowing it will pass).

    I still believe the Broadweave deal has been good for Provo (with Broadweave paying millions on the bond Provo did not have to pay). Veracity is likely the best run, most profitable service provider associated with the iProvo Network. I personally know Drew Peterson (Veracity) is a smart businessman with high integrity. I don’t know Dave Moon (Broadweave) personally, but believe Broadweave has made improvements while focused on operational savings…clearly the right direction.

    I’m for giving them more rope and allowing them to make more bond payments. If they turn the network around…wonderful! If not they have at least paid more of the bond off. They deserve our support!

  2. Making Clay says:

    I think that this deal with Veracity is the best the possible scenario for the city. They will not lose any money, or as much money. I think the 30% on the bond is a loan. Veracity will have to pay it back, after a year and half once they get their feet back under them.

    If the city does not choose this path, or for some reason because of legalities, cannot sell this to Veracity, they have two options: Take back the network and run it themselves, or some via some third party run it, or take back the network and sell it.
    If they decide to sell, than they will lose money, for the network has certainly depreciated considerably. I would venture to say that the network is worth half of what they paid for it. The network equipment, although working, is definitely past its prime. The head-end is probably dated. The only thing of considerable value is probably the fiber.

    If the city keeps it, they do not have the talent they once did to run it. They could get Broadweave to run it. But there are other more options out there with better experience.

    Why not Utopia to manage the network? Provo City would get the benefit of service providers such as Veracity, Xmission, Integra, Fuzecore to name a few. The new management of Utopia is way better than the old. And though (from what I have read) Utopia is still in the red, it is much lower than it was before the new management came in.

    They could also have Veracity manage the network. They could do a better job than Broadweave in my opinion.

    The city might still have to subsidize the project even though it would be managed by a Utopia or a Veracity or a Broadweave, but at least legally, they could do this and receive benefit from doing it.

    For instance, the city could subsidize a city wide wireless solution for emergency services that was back-boned via the fiber, or some electrical uses like automatic reader of electrical meters, or water metering, or traffic monitoring, or security cameras for high crime spots, etc.

    If I was the city, I would keep the asset if they cannot sell it to Veracity. This would cost a lot less in my opinion than selling it out right.

  3. Jesse says:

    Selling would be a terrible option. The loss would likely be the same as what they would spent on subsidizing the network with no possibility of reversing those fortunes. It’s a non-option as far as I’m concerned and not even worth discussing.

    I don’t think Veracity’s offer is unreasonable, but I don’t like the position the city has put itself in. I’m pretty sure they’re going to take the deal because they don’t have the stomach or political willpower to try running the network again unless it’s the final and only option left for them. They’d rather spend $1.4M + lost interest than face that option. If Veracity comes back to the table in 18 or 42 months asking for another “restructuring” when the payments go up, the city might change their tune.

  4. Capt. Video says:

    I agree!

    Except I think it might take more than one more trip to the well before they get the stones to run it again.

    I hope I’m wrong, but I predict that the network will go back to Provo sooner or later….unless….hmmmm. I do think Veracity has a chance of making the network financially successful when Provo starts paying for fiber installs to new homes & businesses for “meter reading”.

    Watch for it in the coming months…UTOPIA cities with power companies may want to follow Provo’s lead. Using the fiber network for meter reading is a good way to help save these networks by providing a justifiable subsidy. Power companies have got and can get stimulus money for programs like this.

    If you are going to pump millions into the network you may as well try to use someone else’s money (stimulus) and get something out of it (meter reading, etc.). I kind of like the sound of that idea!

  5. Making Clay says:

    Capt. Video said: “I hope I’m wrong, but I predict that the network will go back to Provo sooner or later….unless….hmmmm. I do think Veracity has a chance of making the network financially successful when Provo starts paying for fiber installs to new homes & businesses for “meter reading”.”

    Except, this is illegal. The city cannot subsidize a privately owned entity. The only way I see the city subsidizing this is to own it, and then someone else manage it.

    And you are right Capt. Video, it is a good way to pay for the network.

    Jesse, is right, the city has backed themselves into a corner. This should be fun to watch.

  6. Capt. Video says:

    I doubt it’s illegal for Provo City to pay to use the network for meter reading and other services.

    They are already paying to lease fiber specifically for this purpose ($25k a month) and if they wanted to read a meter at a home or business they should also pay for the fiber drop install….they would of course NOT pay for the telecom stuff….but the costly part is the fiber drop.

  7. Perspective says:

    Hi All,
    I have never commented before but I thought I would give my own thoughts/perspective:)
    I have worked with Drew Peterson for a number of years and I can tell you that Drew’s greatest strengths is his drive, ability to build a good team and most importantly to sell.

    In this economy Veracity was rated as 35th in the 40 fastest growing companies in Utah. Veracity was able to do this with its own cash flow (anybody who knows the Telco business knows that the most expensive thing you can do is install new customers).

    When I look at this merger I believe that there is a good possibility for success because I don’t believe that the new company (Veracity Networks) is going to do what people expect them to do (the definition of insanity is doing the same thing over and over again and expecting a different result). I believe that you will see Veracity Networks do what Veracity has always done, focus on a specific business model and sell the crud out of it.

    I would expect that Veracity will make a huge push to capture all of the businesses within reach (selling them voice and data services.) I believe they will also convert all of their Provo customers off of Qwest and onto the fiber network (save some operation costs).

    I also would expect Veracity to do a few things differently as far as residential services are concerned. I would expect them release packages that encourage people to sign up for multiple services (not just data). Like a single play data might cost ”X” with a data connection of 15 meg and a transfer limit of 300 gig. But if the customer signed up for data+voice (double play) they might make the connection speed 50 meg with a 300 gig transfer limit.

    Lastly I don’t think Veracity is merging with Broadweave because it needs to, Veracity is merging with Broadweave because it gains a lot of technical experience and it (Veracity) has an actual business plan it’s going to implement (an amazing concept).

    Anyways that is my two cents.

  8. Capt. Video says:

    Well Said!

    I hope Veracity also includes video in it’s plans. I believe that leaving customers connected to Comcast on the video side, which gives Comcast a tie to the customer and an important way to sell them data/phone, etc. (Comcast gets free TV spots on about all channels) not only leaves revenue from a third service on the table but makes it easier to have them tempted back by Comcast.

    I have already commented on Veracity being the best run company iProvo has ever had as a service provider and on my high opinion of Drew Peterson. I hope all Provo residents take a careful look at the new company and seriously consider moving their voice, video and data services from Comcast and Qwest to support their LOCAL provider. Veracity Networks!

  9. Perspective says:


    Video is an enigma to me right now. Currently (as it is configured right now) it is a problematic product (from a proffit margin/support and cost perspective). From the research I have done most of the profitability of video is in the PPV arena. (More specifically the adult PPV). In Provo this isn’t really an option.

    From a high level overiew (cause I know you consult on this type of stuff for a living). What could Veracity Networks do differently than other video providers to make video profitable for Veracity and keep customers happy?

  10. Capt. Video says:

    Your assessment is pretty good!

    I would say that while video is less profitable than data or phone (in large part due to the cost of the programming…ESPN, HBO, etc.) if run carefully, it can generate a small profit.

    Sadly the install & customer equipment costs are high and it takes some time before the profit kicks in. These costs can be reduced by using existing wiring in some cases. a number of set top box manufactures have solutions that use existing coax in the home.

    But I believe you need to offer a strong video package not because of the profit it generates (which will be slower in coming) but because many subscribers want to have a single provider and single bill for all 3 services in some cases….and most importantly because you don’t want your customers to have a relationship with Comcast. Comcast will work to expand that relationship to include data and phone and has a perfect means to do so. Comcast gets free adds on almost all TV channels and TV advertising is a most effective selling tool.

    …and yes, adult content is the most profitable area…lol

    I never thought I’d say it, but if the economics of video don’t make sense (install costs & equipment vs. payback time) satellite might be considered to generate quick cash and keep the customer off Comcast. This might be short term gain?

    But selling all the services you can will generate the most revenue in the long run…and with a 20+ year bond one should be thinking of the long run.

    Video was a very profitable business for cable TV companies for decades, it should not be written off.

  11. Ben Saunders says:

    Capt. This dialogue you are having with yourself is just sad. Do you think we are that stupid?

    We need to get folks mobilized for the Council meeting on Sept. 22nd when the Veracity merger is agin scheduled to be discussed and I hope defeated. This is another huge and costly mistake. For once it would be good to see Provo take a hard line with these guys.

  12. Capt. Video says:

    My politeness prohibits me from answering the question of how stupid I think you might be.

    Since YOU are making a “call to action”, can we count on seeing YOU (in person) speaking out against the deal on the 22nd? If not, just whom are you mobilizing?

    I will be out of town but I have clearly made my support of the deal known to the council (assuming the numbers are as I’ve heard, and the Council will know).

    I have made the details of why I believe we should continue to support Broadweave/Veracity known, and believe my arguments to be logical and credible. I still wait for a logical, credible reason we should NOT allow the deal. Something more detailed than “This is a huge and costly mistake.”

    Perhaps you could provide some specific backup to that position using some numbers?

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