Sales Pitch to the Public

I attended the very long public hearing meeting for the iProvo sale yesterday. And today. There were some interesting tidbits:

• There has been a little more movement on the surety agreement. Earlier we were being told that the $3M guarantee could be brought back if Broadweave didn't hit their financial measure for 12 months, now it's 6 months. So 12 months to remove the guarantee and 6 months to get it back. Good change.
• Provo's Telecom and Energy Boards both reported unanimous support for the sale. They were questioned as to how they voted their support without the agreement details. They replied that they were speaking to the broad points of the agreement and that they trusted the city council would take care that the details matched the expectations set by those broad points.
  
• Broadweave CEO Steve Christensen had a presentation where he showed the expected operational savings from taking over the whole network. I should have taken better notes, but an example is that currently triple play costs $43 in transport fees plus cost for phone switching ($18 per voip line maybe). I believe they showed that Broadweave expected a cost of around $15 total once they have total control of the network. That's a huge saving. Hopefully I can get a copy of the powerpoint so I can get the numbers again. Otherwise I'll have to watch the meeting on tv again.
• Steve also revealed some of the pricing. Most of what he showed was pricing for data services. There are going to be a bunch of tiers based on available bandwidth. The first tier is a $19.99 package with 3Mbps down 512Kbps up. The middle tier that you could say matches the current one data choice is a 15Mbps up and down package that will be $49.99. The top tier is 60Mbps up and down for about $180. He also showed a basic triple play package for about $52. From what I saw on package pricing I expect my bill for Internet and Video Premium will go up by $10-$15.
• They are also including a data backup service that is included with some packages or can be added on. A la carte pricing wasn't shown for anything but data.
• A representative from Chicago Venture Partners, the primary investor in MStar, came and complained for a while about how MStar has been treated in conjunction with their attempts to offer to lease or buy the network. Councilman Steve Turley asked some tough questions, pointing out that during all of the talks with MStar it wasn't current with its bill, which gave it very little credibility. MStar complained that it communicated clearly with the city its problems with the business model - blaming the city's inflexibility on network transport fees. Councilwoman Midge Johnson pointed out that MStar was aware of the fees at the beginning and made big promises based on models using those fees. Drew Peterson of Veracity later pointed out that while MStar was floundering with providing services under the existing fee structure and not paying their bill, Veracity has built a profitable business while paying the same fees.
• MStar also threatened legal action based on the fact that the sale was not announced through a clear and specific RFP process. The city legal counsel said that the city is not bound to an RFP process. It is required to take public comment on a sale, which it is doing.
• A representative from Comcast stood to express general support for putting the network into private hands. He also mentioned points from a letter sent to the city that expressed concerns with fairness in details of the deal, such as the cable franchise agreement and conduit and pole lease and access. There was mention that Qwest also sent a similar letter. The city promised to respond to each point from the letters prior to a final decision.
  
• There was plenty of talk during the course of the meeting about the process - whether they should open the sale and take time to gather other proposals or move forward with this proposal. Council Vice Chair George Stewart expressed his concern that extending the 'for sale' period to gather other proposals would lead to a high likelihood of customers cancelling services and loss of iProvo employees. Customers and employees don't like uncertainty and tend to run away from it. I think these are good points worth considering. In my mind the time for other proposals is right now. Any other potential buyers have the benefit of the purchase agreement with Broadweave that is being made public in bits and pieces.
• There were a couple of Traverse Mountain residents that came to voice support for Broadweave, though under city council questions it sounded like they probably came at Broadweave's request.
• Public comment among people from Provo seemed pretty evenly split. I would say most of the opposition was based on the desire for an open network and most of the support was because of financial realities.
• Rep. Steve Clark urged the council to push for a voting member of the Broadweave Board of Directors for Provo. Cynthia Dayton later expressed support for the idea. I also support the idea.
• The council voted to hold off on a vote and take more public comment June 3, conditional upon the remainder of the agreement being a available Thurs May 29 at noon. If the agreement is not ready by then the meeting will be held at a later date, but I don't think that date was specified.

It seems that agreements continue to move slightly in Provo's favor, which is a good thing. The terms of the sale can still be improved some, but as some points have changed in the city's favor it seems that there continues to be less opposition. Overall I think this agreement is a positive for the city. Not perfect or a slam dunk, and certainly not without risk, but positive.