City leaders strategize to revive iProvo

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buy this photo CRAIG DILGER/Daily Herald Terry Krug, an network operations control technician at iProvo, monitors the network on Monday, April 21, 2008.

As iProvo's new subscriber numbers have plunged, Mayor Lewis Billings and others laid out strategies on Monday to bring the struggling communication system into the black. And while points laid out during the city's Telecom Division Board meeting were long-term solutions, the only short-term solution left may be to raise power bills. Billings will present options on May 6.

The city was expecting a net gain of 60 subscribers per week during 2008 for the high-speed network that includes services for TV, Internet and phone lines. The projection was based on 2007 numbers of 61 new subscribers per week.

The actual net 2008 sign-up rate has been 15 per week, and perhaps more disturbing is that the growth rate seems to have flat-lined in the past several months. The system has been in the red since the beginning, losing between $1 million and $2 million a year since 2003. The lower subscription rate means this year's projection will likely be a $2 million loss instead of a loss of $1.2 million, Billings said.

The option that many opponents would prefer is to sell the system to a private company. Billings said they have indeed been approached by companies with offers. And though none have proven adequate so far, it's not an option he opposes.

"If the private sector can, if the private sector will, then we should let the private sector do," he said.

Until the right offer comes along, however, the two consultants and the mayor's staff have some suggestions to turn around the financial slump.

Royce Van Tassell of the Utah Taxpayers Association expressed concern with some of the other options presented Monday. Those include staff presentations on the possibility of getting into other business-type ventures, from Web-hosting services to data centers.

"If the staff is any indication, he wants to expand into the private sector rather than get out of the way," Van Tassell said.

Billings said later that any venture into commercial enterprise would likely involve selling a piece of iProvo then buying back in to satisfy the city's needs.

The biggest proposal Monday was for the city to use the excess capacity of the network for various things and pay for that use. Of course, if the city is paying additional money for use, that ultimately comes back to the residents.

For example, using the system to read power and water meters instead of sending out employees to every home and business could save hundreds of thousands per year, though the start-up costs would likely be steep -- in the millions of dollars -- to install the right equipment at every meter.

"There's a whole lot of ways the electric company can use the network," said Doug Dawson, a consultant hired by the city to examine aspects of iProvo.

That's not something Councilman George Stewart is crazy about. Stewart, often a critic of iProvo, said the power bills of city residents are going to have to go up to pay for iProvo's shortfall this year and perhaps into the future. In previous years, budget surpluses have covered the losses but that was before a softening economy.

"I don't know where else you're going to get it," Stewart said.

Stewart is taking his own tack at the problem, launching his own review committee this week. On the list are council members Cindy Richards and Steve Turley, as well as Sen. Curt Bramble, R-Provo, Rep. Steve Clark, R-Provo, County Commissioner Steve White, Stan Lockhart of IM Flash and the state Republican Party, among others. The committee's first meeting will be Wednesday at 7 a.m.

Drew Peterson, the CEO of Veracity, one of the iProvo service providers, stood Monday and defended the system, saying that the benefits to the residents of Provo aren't all to be found in the bottom line. He cited rates that have been lowered by other providers because of the increased competition.

"I would suggest that you would see the citizens not using iProvo have seen substantial cost savings in their bills," he said, adding that the amount people are saving would be well above any additional money they would have to pay to subsidize current losses.

The city is looking into compiling a list of the peripheral benefits of iProvo, Billings said.

Joe Pyrah can be reached at 344-2559 or jpyrah@heraldextra.com.

Options for helping iProvo


The mayor will present his proposed budget on May 6 and will include the options that his staff felt would be the most effective to stanch the bleeding. A list of the options being considered, but not finalized, are:





• Borrowing against the city's Energy Department


While no one wants to see power bills go up, the city offers the lowest rates in the state and an increase of $2.50 a month on an average power bill would cover the iProvo shortfall.


• Improving the relationship with existing retail partners


Incentive packages could be offered to iProvo's ISPs for improved customer service, upselling of services to current customers and raising the number of business customers.


• Bringing in new retail partners


iProvo ISPs initially had to be able to handle triple-play -- TV, Internet and phone. Bringing in other providers for Internet only, or niche markets like home security would bring in additional revenue. "There are people who would like to come to this dance," the mayor said. "There are a lot of them."


• Going private


The mayor said on Monday that the city has been approached by several companies with offers to buy the system. He isn't opposed to the idea but says the offers so far aren't high enough to warrant a sale. "We have an asset," he said. "It's not a fire-sale asset."


• New opportunities


These could include using iProvo's head-end for things such as Web-hosting services, data centers and allowing big companies to bypass an ISP service and connect directly to the fiber pipe.


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