Provo Mayor Lewis Billings announced Tuesday that the city is selling its 5-year-old fiber optic network for $40.6 million.

"That is a principle we've expressed and embraced from the very beginning," Billings said of finding a private corporation to take over iProvo.

The fiber optic system was installed in 2003 and promised faster Internet, as well as HDTV and digital phone systems at a lower cost than commercial providers. While the system generally performed as advertised and now has more than 10,000 customers, it faced a number of setbacks, from bankrupt service providers to a failure to attract the business community. Its service providers also are being investigated by the State Auditor's Office for potential failure to make payments to the city.

Broadweave CEO Steve Christensen said his company would be focusing on customer service and attracting new business accounts, which offer higher profit connections. The wholesale model, which Provo was forced to use by state law was difficult to make work because customers had to deal with both the city and their service provider.

"There are inefficiencies with that model and challenges with that model which the city could not solve," Christensen said.

Under the terms of the deal, which first must be approved by the Municipal Council, the city retains a license to use the network to connect city buildings, schools and power infrastructure at a cost of $300,000 per year. Billings said that will be well below the actual cost of using the network. The city will also have some remaining costs to pay despite the sale, and there remains a $600,000-800,000 shortfall in funding this year that must be paid. Whether or not the sale will take care of that shortfall won't be answered until Thursday's Provo Telecom Board meeting. In the mayor's proposed 2008-2009 budget, also announced Tuesday, there is no money for the iProvo system.

Despite the back-slapping for potentially pulling off a sale that takes the taxpayer off the hook for a $39.5 million bond, at least one telecommunications player took issue with the deal.

Pete Ashdown, CEO of the ISP XMission, contends the bidding process for the publicly owned asset wasn't open. Billings countered that the city sent out a request for proposals a year ago and received several bids for the network. The exact wording in the request is "to provide telecommunications services and business opportunities on the iProvo Network." Billings said purchasing the entire system would fall under "business opportunities."

Ashdown disagrees.

"With all due respect, the RFP was for providers on the network," he said.

Ashdown said later that his efforts to get XMission onto iProvo had been repeatedly rebuffed and that he doesn't see Broadweave allowing other service providers onto the network.

"This is a government-installed monopoly," he said.

Exactly how current ISPs Mstar and Veracity will be handled is unclear. Broadweave CEO Steve Christensen said there will be an announcement in a few days addressing that and other matters but wouldn't give any additional details. Broadweave officials, however, repeatedly touted the benefits of being both the owner and retailer of the system.

Anderson said that Mstar and Veracity were notified of the sale before Tuesday's announcement. When called on Tuesday afternoon, Mstar operations and marketing officer Kirk Tanner said he found out details of the sale only after reading about it on a news web site, adding that it is too early for the company to make any additional comment.

Provo council members were making plenty of comments, however.

"Hallelujah, the day has finally arrived," said Councilman Steve Turley, the lone vote against iProvo when it was first proposed. "Hopefully the suffering is over."

Councilman George Stewart, who long advocated selling the system, said the sale was to the "right company" at the "right price" and that it will fully compensate the city for its investment.

While the city may be made whole from the deal, there are 15 Provo telecom employees who will need to find another job. All 15 will be interviewed by Broadweave to see if they fit in the company and Provo will assimilate a few as well. The rest will receive "outplacement" services.

While the mayor and Broadweave executives would like to close out the deal before July, there are still opportunities to comment.

"The next step in the public process is for the Municipal Council to decide whether to approve the sale. There will be multiple opportunities for the public to weigh in as part of that," Billings's spokeswoman Helen Anderson wrote in an e-mail later.