Two senior executives with Mstar Metro resigned late last week in the wake of the Provo company's sale of its entire iProvo customer base to Broadweave Networks.

Mstar CEO Ben Gould and Chief Marketing Officer Kirk Tanner left last week as part of a reorganization of the company's management as the Provo-based phone, video and Internet service provider scaled down its operations. Mstar is owned by private equity investment firm Chicago Venture Partners LP.

"We're going to be transferring a good portion of our subscribers to Broadweave. It'll be a smaller company, so we won't need as many people. Some changes are necessary," said Jon Hansen, Mstar's interim president. "We won't replace the chief marketing officer right away. We're not sure if the company needs one. The members of the board of directors have stepped in to fill the void with Ben's resignation."

"Ben has found another business opportunity. I'm not really sure about Kirk," he said.

Gould and Tanner didn't return calls seeking comment.

Broadweave, a West Jordan fiber-optics network and services provider, acquired iProvo last month from Provo city for $40.6 million, and as part of its privatization effort, acquired 10,500 residential customers from iProvo service providers Mstar and Nuvont Communications, as well as 3,000 business customers from Veracity, another iProvo service provider.

Hansen, also a partner with Chicago Venture, declined to divulge Mstar's current customer and employee count. The company, which had 100 employees last year, underwent several rounds of layoffs in the past few months, according to Tanner in a previous interview with the Daily Herald.

Hansen declined to reveal the number of workers that were terminated. He said there are no further management cuts or layoffs planned for now.

"There have been some delays in the UTOPIA roll-out, and the network -- in terms of customers we can market to -- didn't grow as fast as we thought it would. We had staffed up in anticipation of being able to harvest more customers than we were able to. Our head count was larger than was supportable given the number of marketable opportunities. As construction of the UTOPIA network goes ahead, we're relying on UTOPIA to deliver marketable addresses so we can go after those customers and get them signed up," he said.

UTOPIA is a multimillion-dollar, municipally-run fiber-optics network built with bonds backed by sales tax revenues from 11 pledging cities in Utah including Orem, Lindon and Payson.

He said Mstar will try to ensure there are no, or minimal, service disruptions in the transfer of its iProvo customers to Broadweave. "We have enough employees to service our customers in the same way they've been serviced in the past," Hansen said.

"It's a very technical, complicated process, and there could be temporary service disruptions, but we're not anticipating that. Our technical and business process people have been meeting to come up with a bullet-proof plan," Hansen said. "Just because we have a smaller operation in terms of the number of employees doesn't mean there'll be service disruptions."

Hansen declined to comment on details of a settlement it reached with Broadweave earlier this month in return for Mstar's agreement to withdraw its objections to the iProvo sale.

Critics objected to the way the Provo administration handled the sale, saying the city should have openly sought bids to buy the network rather than work with Broadweave behind closed doors.

"My duty as fiduciary is to maximize and protect Chicago Venture's investment. When I was comfortable that was happening, any questions I had about the fairness of the transaction became secondary," Hansen said.

He said he believed Broadweave, as owner of the network, would not likely be subject to the same problems Mstar had with iProvo, and would be better able to compete with the incumbent telecommunications providers.

"Our biggest challenge was competition from Comcast and Qwest on the retail side. We were limited in what we could charge because of competitive pressures on pricing, and not having as much influence on the wholesale rates we paid to Provo," he said. "Broadweave won't have that problem because they own the network. We felt that it's a right thing to do to privatize the network."

Unlike iProvo, Mstar is "free to contract with UTOPIA in whatever way is mutually agreeable," Hansen said.

He said the company is now focused on building its remaining customer base with UTOPIA and is exploring options to bring in more investors and capital and develop relationships with other municipally-owned fiber-optics networks in the nation.

"UTOPIA has given us more flexibility to change our leasing agreement with them in the past few weeks. They've modified it so there's more of a workable margin for us," Hansen said.

"What's required is a lot more capital than what Mstar had access to. We're in talks with investors to secure additional capital for growth. But that's conditioned on a number of things happening. We can continue to market to footprints already released on the UTOPIA network. But we won't be as successful as when there are new footprints [or geographical markets] released. It also depends on the rate at which the new footprints are released, and whether we can establish good relationships with other fiber-optics networks."