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Provo takes back iProvo network, leases it to Veracity

Published April 18, 2012 8:03 am

Technology • Veracity defaulted on its purchase agreement in July.
This is an archived article that was published on sltrib.com in 2012, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

Provo • The troubled iProvo fiber-optic network is officially back in the city's hands.

The Municipal Council voted unanimously Tuesday to approve a settlement agreement with Veracity Networks that returned the network to the city almost three years after it was sold to Broadweave Networks.

Veracity, which merged with Broadweave, will continue to operate the network, and lease property from the city.

"Essentially, we are taking back the network to the city," Dan Follett, the city's assistant finance director, told the council.

In July, the city deemed Veracity in default on its contract to buy the network after its security deposit fell below $1.6 million. Veracity had been using the deposit to cover its $278,000 monthly payment to the city to improve its cash flow.

Under the terms of the original sales agreement, the city would take possession of the network in a default and continue to be responsible for paying off its $37 million debt.

The city has been searching for a new buyer, but officials say no viable buyers have been found.

Tuesday's agreement calls for Veracity to provide customer service and market the network, although the city reserves the right to market the network if it believes Veracity's efforts are not effective.

The plan calls for Veracity to pay at least $95,000 a month, along with about $7,000 a month to rent the city's Network Operations Center until February. The $95,000 payment will be kept in a dedicated fund until it totals $215,000, which would be used as a security deposit.

The agreement also calls for Veracity to pay an additional $23 a month for each new home customer who signs up, and 4 percent of the fees for apartment complexes and businesses that sign up for Veracity's services after Jan. 1.

Any money Veracity takes in after these payments is its to keep.

Follett said the city and Veracity already are operating under the terms of the agreement, which is backdated to Jan. 1. The agreement expires at the end of February 2013, which caused Council Chairwoman Laura Cabanilla some concern.

"The time will pass quickly, and we will be back here negotiating another contract," Cabanilla said.

Follett said the time frame should be enough for the city to decide on future plans for the network. He said the city can renew the agreement with Veracity when it expires.

Resident Jason Christensen said he knows the current administration inherited iProvo's woes from its predecessor, but he expressed hope the city will find a buyer soon and relieve residents of the burden of paying for the network.

The city assesses a monthly utility fee to pay off the iProvo debt.

Even when the city ran the network, subscriptions were not enough to cover the debt, and the city had to infuse up to $2 million a year from the city's Energy Department surplus funds.


Twitter: @donaldwmeyers






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