Category Archives: Jeers

Bad news.

Broadweave CEO Steve Christensen Got Exclusive Contract in Traverse Mountain From His Father

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This kind of news is almost too good to report. After being tipped off by an anonymous source, I did a bit of digging as to who owns Traverse Mountain. Turns out that it's a Mr. Stephen Christensen, an uncle of Broadweave CEO Steve Christensen. In short, it appears that Broadweave's sole development project is the result of an inside family deal, not any kind of business acumen. This should raise a lot more questions about the viability of this provider.

It's also reported that the supposed development in Washington County that has a video head-end doesn't have an appropriate video franchise to operate it. Combined with the lack of video in Traverse Ridge, we should be asking if Provo is best served by an exclusive provider with zero video experience. Survey says "not bloody likely".

The stink on this one grows every day.

UPDATE: According to this article copied from the Deseret News, they are actually father and son. Still shady; title has been fixed.

Payson Says No Again By 4-1 Vote

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Despite high hopes. Payson's City Council voted 4-1 against the new UTOPIA bonds citing concerns about their future revenue streams. Council Member Hancock cast the lone yes vote despite getting a second for the motion to adopt the resolution. This means that they will likely have to start paying out around $259K every year over the next 19 years to satisfy their portion of the old bonds.

I view this move as a calculated risk. Payson knew they were getting their network regardless of how they voted because it makes financial sense for UTOPIA. They also know that their pledge amount is small enough that it won't sink the deal. In short, they knew that opting to not pledge additional money would not mean they wouldn't see more of the network and decided to enjoy the benefit of UTOPIA without risking any more money. I think they also have a hope in their mind that UTOPIA may not call their bond pledge immediately or may opt not to do so at all if it can retire the old bond with the proceeds of the new bond. I hope that isn't their game because it's very unfair to other member cities. 

The iProvo Deal Worsens: Broadweave Also Plans to Buy Defunct OEN Network in Houston

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Talk about stretching yourself thin. Broadweave mentioned to the Daily Herald that they plan to buy a fiber optic network in Houston, Texas, likely the OEN network that went belly-up after less than a year of operations. They only manged to reach about 5,000 customers before abruptly halting service, falling far short of their goal to wire 1.6M homes. Despite the large investments from venture capitalists, I doubt Broadweave has the money to continue construction in Houston, do further roll-outs in Provo and continue to build their network in Traverse Mountain.

Wake up, Provo. This company isn't going to be around more than a couple of years and you'll still be left holding the bag.

EDIT: Almost forgot to mention that Broadweave also plans to upgrade the TV signals on iProvo from MPEG-2 to MPEG-4. This will require replacing the existing set-top boxes to support the new signals. At around $300 a pop, it would take nearly $1.8M to upgrade the existing video customers on iProvo. Yet another hunk of cash I doubt they have.

iProvo "Sale" Will Be Another HomeNet Fiasco

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As more details about Provo's pending sale of iProvo to Broadweave surface, it becomes more and more obvious that this is a bum deal for the city.

Broadweave isn't exactly buying the network. Instead, they are assuming the bond payments from the city. The original bond, however, will remain with the city. This means that Provo can only make the bond payments if Broadweave makes their payments to the city. If Broadweave goes under, the city is still on the hook.

So how financially viable is Broadweave? Rumor has it they aren't turning a profit on their existing infrastructure in Lehi and St. George, something that should be grave cause for concern. We should also be worried that they are attempting to take over a network many times the size of what they currently manage. Time and time again, a smaller operation taking over a larger one ends up being a disaster since they can't cope with such rapid growth.

We may also see a large loss of customers. As the contracts with MSTAR and Veracity expire, those customers will be forced to switch to Broadweave, a company that has data speeds of 10Mbps/1Mbps instead of iProvo's current 15Mbps/15Mbps. Such a drop in speed with what is presumably a equal or higher price will cause massive attrition back to incumbent carriers who offer the same pricing and service levels. And Nuvont customers? Expect to get an immediate boot since that company doesn't have a contract in place.

What we're looking at is a move back to what iProvo was like under HomeNet: one retailer to rule the network that hasn't figured out how to make money either. While the mayor, municipal council and UTA are drunk on the euphoria of washing their hands of iProvo, this is nothing more than punting the responsibility to another party and setting themselves up for massive failure in a couple of years. Shame on them all for managing this city asset in such an irresponsible manner, "selling" it for much less than it cost to build and refusing to do the grunt work necessary to make it succeed. I hope the good citizens of Provo will remember this betrayal at the ballot box in 2009.

Read more from the Tribune, Deseret News and Daily Herald.

iProvo to Be Sold

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Looks like iProvo is going on the chopping block with a flurry of questions as to if it will even happen. Broadweave Networks of South Jordan has been announced as the buyer and will assume all wholesale and retail operations for $40.6M and they will assume the bond debt from the network. This means that MSTAR and Veracity are going to be cut out of the picture and Provo will have yet another vertically-integrated monopoly, one that apparently can't even deliver speeds close to iProvo's current speeds over its own network in Lehi.

Most disturbing is the lack of an open and transparent RFP process, something that makes the whole deal reek of a back-room deal. Mayor Billings just two weeks ago said a sale would be premature, then he pulls out this deal that was obviously in the works for some time. According to the Deseret News, the city had RFPs to buy the network from April of 2007 yet there was little-to-no public discussion about it. There's also the question as to if Provo can sell off the fiber rings that were paid for largely by federal grants as part of an air quality project to monitor traffic flows. While the city will still be able to use the network for municipal functions, eliminating the competitive marketplace for retailers is anathema to one of the original purposes of the network.

I'm left wondering if Veracity, Nuvont and MSTAR can survive having thousands of customers pulled out from underneath them like this and if this means that all three will no longer be viable options for UTOPIA. An implosion of all but XMission could have serious repercussions if new providers are not added soon, especially since CCG doubted that either company could escape bankruptcy for long.

I'm very disappointed in Mayor Billings and his lack of vision. I hope voters won't forget having the rug pulled out from under them like this.

From the "Told You So" Department: Qwest Trying to Ditch Line-Sharing

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Just like I told city councils on Monday and Tuesday of this week, Qwest is trying to weasel its way out of sharing lines with competitors for phone and DSL services. According to a report from competitor XO Communications, this could mean that the average household bill will rise by as much as $115 per year or nearly $10 per month. Verizon did the same thing when it filed a "forbearance" request with the FCC so that they didn't have to share their lines. Given the FCC's Ma Bell-friendly attitude these past few years, Qwest is likely to get what it wants.

Currently, Qwest has forbearance in effect in Omaha, Nebraska and wholesale rates rose steeply, forcing many competitors to pass that along to consumers. While the current request isn't targeting Utah (Phoenix, Denver, Minneapolis and Seattle are the "lucky" areas), you can bet that UTOPIA is about the only thing holding them back. Hang on to your wallets, Utah; Qwest's CEO needs a new pair of Rolls.

Overpriced and Anti-Competitive: The Dark Side of Qwest's Fiber

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Much has been made of Qwest's announcement that they're rolling out their new FTTN network in Utah, but the media has missed some critical points regarding the dark side of Qwest's plans.

The first jaw-dropper is the sticker shock: $105/mo for 20Mbps/896Kbps DSL or $52/mo for 12Mbps/896Kbps DSL. Interestingly enough, these services are only initially available in parts of Draper, Salt Lake City and East Millcreek despite their claims that they are pushing hard to roll out access in UTOPIA cities and underserved areas like Woods Cross. The closest comparable service is a 30Mbps/30Mbps package from MSTAR running $50/mo. Not only is it faster than either of Qwest's planned DSL offerings, it beats both on price. When looking at bundles with phone service, Qwest will clock in at a budget-busting $146/mo for the top-tier DSL speed and unlimited long distance while MSTAR sips from your wallet at $74/mo, almost half that. While must is being made of UTOPIA's new installation fees, the savings pay for it after just 14 months with the Internet/phone bundle. This is a huge pricing differential that consumers must be made aware of.

The real scandal is what this will do for local loop competition. AT&T is building a network similar to Qwest and based on the same FTTN technology. Because it's fiber optics and not the old copper plant, they are no longer required to line-share with other providers. Qwest is doing the exact same thing. There will be no XMission, no MSTAR, no Infowest for your DSL provider in these areas; Qwest will be the sole retailer. Expect a similar picture when it comes to your phone service. Seem like paying $24M to kick out the competition was a steal for the incumbent.

This kind of market consolidation is bad news for Utah consumers.

BREAKING: Midvale Approves Rebonding, Payson Rejects It

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I attended the Midvale city council meeting tonight and the city council unanimously approved the new bonds for UTOPIA by a 5-0 vote, much to the dismay of many of those in attendance. I know I was somewhat ambiguous about the new bonds but after the presentation by Kirk Sudwicks (?), I knew they had put together a solid plan with high odds of success. The city council realized it too and I could tell they'd done their homework when they later explained their votes. Kudos for them to being willing to do what they thought was right in the face of so much hostility (and a fair number of folks speaking out of order). 

Payson, meanwhile, rejected the new bonds by a 4-1 vote. This came as a surprise as it was expected as recently as last week that they would pass the new bonds. Word on the street is that the Utah Taxpayers Association launched a blitz on their city council to talk them out of it. Payson residents, there's still time to talk to the council and have them reconsider the motion. I know that once I get a chance, I'll be opening a dialog with each of them to find out why they rejected it.

I haven't seen anything on the five other cities voting on the bond issue tonight, but I'll be sure to post more as it hits the newswire tomorrow. 

Evaluating Qwest's "Price for Life" Program (hint: It Sucks)

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I've noticed a few random web surfers coming by looking for information on Qwest's heavily-advertised "Price for Life" program for DSL and thought I should let them know what exactly they're getting into. On the surface, it seems like a great idea: you guarantee that your price won't increase for as long as you have DSL service. The reality, however, is filled with more loopholes than the US tax code, all designed to keep your price inflated and gouge you for additional fees.

So how much will you save? That all depends on how long you keep the service. Qwest offers the same price for the first year regardless of if you go for the "Price for Life" or not. What's the difference thereafter? A meager $6 a month or $72 until you can escape the $200 early termination fee.

And what exactly triggers this early termination fee? Aside from obvious things like disconnecting service, you'll also break the contract for altering service including changing your speed tier, changing your ISP or even moving. Considering that Qwest plans to roll out 20Mbps service within the year, it seems like a terrible idea to lock yourself into a speed for two years that will be obsolete before you complete the term of the contract. And why would Qwest charge you an ETF when you keep the line and only change the ISP, even if the ISP wasn't them to begin with? It's almost like Qwest wants to lock a bunch of their users into lower speeds to throttle bandwidth. Hmmm.

All in all, the program is a bunch of clever marketing with a whole lot of consumer-unfriendly gotchas. Do not want!

From the FUD Department: Qwest's Fiber Pipe Dreams

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Get your Reality Distortion Fields ready: the Salt Lake Tribune reports that Qwest is planning on building fiber. Despite the catchy headline, it looks like this plan is a lot of smoke and no fire. Qwest plans to build a FTTN network capable of 20Mbps by the end of the year at a cost of $300M. Compare that to UTOPIA who can do 50Mbps right now at a cost 10% cheaper per household served.

This raises some great questions, chiefly how it is that UTOPIA can build a better network at a lower cost than one of the country's largest telecommunications companies. Qwest's cost per served household is somewhere in the range of $1500 while UTOPIA is doing it for $1350. When you figure out the cost per megabit per household, Qwest is spending nearly triple what UTOPIA is. If Qwest stockholders are expecting a decent return on investment, I've got some great investment opportunities in subprime mortgages for them. This is further proof that Qwest just doesn't get it.