American Fork may have a new buyer for its fiber-optic network.

City officials voted unanimously on Tuesday to begin negotiations with Surpha Inc., an Orem-based company. The company was one of three that submitted proposals to the city regarding development of the fiber network.

In October, the city had entered into a $2 million agreement to sell and lease portions of the network to Sweden-based PacketFront Inc., and its partner company, Homeport. In March, the city announced that deal had fallen through, and council members voted to try to find a new buyer.

As part of the original agreement, PacketFront and Homeport had promised to invest $8 million into the system, upgrading it and making it profitable -- something city officials said they could not afford to do.

The companies also had said they would offer Internet, cable television and telephone services to subscribers. The city now offers only Internet service.

On Tuesday, Councilwoman Heidi Rodeback said the city would enter into a 90-day letter of intent with Surpha, which would allow the city to begin negotiations about how much the city will sell its network for and what the company might do with the fiber. The deal is expected to be several million dollars, she said.

"They appear to be financially capable and they have been in the business for many years," she said. "They are professionally capable of delivering quality service, and I am convinced of their company's ability to add speed, reliability and affordability to the service. I think this would be of value to our residents."

If negotiations are successful, the details will be released at a future date and a public hearing will be held before any agreement is voted on by the council, said Mayor Heber Thompson.

The city wants to make sure Surpha is prepared to make the fiber a "triple threat," which means offering cable television and phone services in addition to the Internet, said Rodeback. The city also wants to see these services extended to areas of the city not now served by the network.

Rodeback called the network a "valuable asset but a large drain on our city budget" and said the city was prevented by state law from retailing Internet or other services using the network.

In addition to its in-city fiber network, American Fork owns some aerial fiber-optic cable that runs from Springville to American Fork and more than 100 fiber-optic strands running from Spanish Fork to Salt Lake City. The negotiations with Surpha do not include these assets, though the city has proposals regarding these assets and will consider those proposals at a later date, Rodeback said.

A committee of two council members and several residents spent months studying the options for the fiber network, she said.

In 2002, American Fork purchased its fiber-optic system from SwitchPoint for $6 million, floating a bond to fund the purchase. City officials had said the system, which has 1,400 subscribers, could bring in profits of $300,000 a month. But instead the system has lost about $1.2 million annually.

The city still owes about $5 million on the bond and is making annual payments of about $580,000, said city staffers. In December 2005, the city announced it had sold 24 fiber-optic strands -- 16.5 percent of the city's total capacity along 60 miles of cable -- to the Utah Telecommunications Open Infrastructure Agency for $1.5 million.

This story appeared in The Daily Herald on page C1.