Provo Muni System Faces Near $1M Shortfall

Published May 1, 2006

The City of Provo, Utah will transfer $980,000 from its utility reserve to cover shortfalls in the iProvo municipal fiber service, Salt Lake City’s Deseret News reported in March. Although the project is ahead of schedule in terms of construction, it has only half the 10,000 subscribers its business plan had called for at this point.

The original breakeven point had been projected for December 2005. It has now been reset for August 2007. City officials expect ongoing shortfalls into 2008 that may require additional transfers of up to $2 million.

iProvo is a city-owned fiber optic backbone and cable TV headend. The city sells bulk bandwidth to itself and to large users. Retail partners market voice, Internet, and cable service to residences and small businesses. Until now, Provo had been considered one of the few success stories in municipal broadband, and Provo Mayor Lewis Billings has endorsed similar projects in other cites.

“The people paying their energy bills faithfully are now the ones paying for the iProvo shortfall,” Councilman Steve Turley told the Deseret News. He added that he was assured by Provo Energy Department Director Kevin Garlick that the reserves would be replenished when iProvo breaks even.

The project ran into problems last year when HomeNet, the only retail service partner to sign on with iProvo, abruptly closed up shop, leaving iProvo scrambling to find replacements. Veracity and MStar, two local ISPs, stepped in. While the number of iProvo subscribers has been increasing steadily since then, they largely represent a migration of existing Veracity and MStar accounts onto the municipal backbone.

Steven Titch ([email protected]) is senior fellow for IT and telecom policy at The Heartland Institute and managing editor of IT&T News.