Ribble in Provo

Voters Choose Chaffetz

2008-06-25T11:38:00.000-07:00

And decidedly so. Read articles about the race in the SL Trib, Deseret News, and Daily Herald. Congratulations to Jason Chaffetz for an impressive campaign, and good luck on the next phase.

I'm curious to learn more about the Democrat challenger, Bennion Spencer. It's funny that in the media there is this assumption that Chaffetz has it won at this point. I wonder with the political climate this year if that will really be true. Okay, it probably will be, but you never know. I know I'll take a serious look at both candidates.

The Herald Backs Cannon

2008-06-23T10:53:00.000-07:00

The Daily Herald yesterday published an editorial backing Chris Cannon for the District 3 seat for US Congress. The editorial includes some really good arguments that fall right along my reasons for leaning for Cannon over Chaffetz. I keep hearing that if you talk to Cannon one on one you can't help but be impressed with his grasp of the issues. One of these days I'd love to have that one on one. Maybe then I would be a little more comfortable overall with Cannon.

iProvo Emergency Transition

2008-06-23T09:32:00.000-07:00

The Daily Herald reported on Broadweave's emergency transition of MStar phone customers on Friday. There's some discussion on the transition over at freeutopia.org. I'm glad to see that people are recognizing that Broadweave did some good things here. Unfortunately, this quick transition cut short plans to thoroughly test the process, but overall the number of problems have been satisfyingly low.

That said, if you are one of the customers with a problem it doesn't make you feel better to know that most other customers are not having problems. Broadweave is saying that they are committed to fixing the problems as fast as possible. If you were an MStar iProvo customer and you're having phone problems call 691-5800.

Also, let me know how they do in fixing the problem for you. I'm curious.

Parties for the People

2008-06-23T09:27:00.001-07:00

I just read this editorial on the SL Trib site. I liked it. Political parties are not an end to themselves. I'm a Republican now, but I don't agree with everything the Republicans in office do and I would have no problems being a Democrat if I decided their platform represented me better.

What's the Deal With Oil Shale?

2008-06-19T09:54:00.000-07:00

Oil shale development is suddenly getting national play. See this AP article. Utah's Congressional delegation is all for it. Colorado's is against it. Why is that? You would think that both states stand to benefit economically from shale development.

From the above mentioned article, the CO people are saying there are environmental issues with developing oil shale. I'm willing to dismiss these kinds of concerns when a New York senator raises them about a project in Utah, but when a Colorado senator raises them about a project in Colorado, it's worth looking past the partisanship and seriously considering the concern.

To extract oil from shale you have to mine the rock that holds the oil, put it in a big oven and heat it until the oil comes out. Then you can put the rock back. So I have a vision that large scale oil shale development means huge strip mines across eastern Utah - digging out the rock, bake out the oil, put the rock back.

This does not sound like a low impact project.

Chaffetz Taking Pot Shots

2008-06-19T09:38:00.001-07:00

Here is one of the things that concerns me about Jason Chaffetz. In this SLTrib article it talks about how Chaffetz took a public swat at the Governor in the convention, then uses the Governor's positive comments about Chaffetz in campaign literature.

Now, I think I understand why the swat - even at an incredibly popular figure like Gov Huntsman. Chaffetz is trying to position himself as not the establishment. Oh, and stridently conservative. District 3 likes that.

But there's more to being in Congress than campaigning. You have to work with people. You need friends to get things done. It doesn't help to take pot shots at the people you need to work with later. Sure, articulate your policy stance. But don't start public fights when you don't need to. You can say "global warming's a farce" without saying "global warming's a farce, but the Governor still believes in it!"

Oh, and Jason, why is global warming a farce? And how does that affect your policies? I'm looking for "I'm convinced global warming is a farce because X. This means that I don't support Y and do support Z." I looked on your website and didn't see anything on global warming.

Cannon vs. Chaffetz - Who to pick?

2008-06-16T15:07:00.000-07:00

I'm having a hard time deciding between Chris Cannon and Jason Chaffetz. I have generally been pretty anti-Cannon. Whenever I go to a meeting with him and listen to him speak to the crowd (I haven't spoken with him individually at all) I'm struck with how partisan he sounds. This last round he talked about how the recent Republican majority in Congress failed to do a good job because there weren't enough true conservative Republicans in office. The way to fix that problem is to vote in more Republicans.

On the other side is Jason Chaffetz, who sounds really good in speeches, but he's an unkown quantity, and can he get things done in Washington?

So I was a delegate at the Republican State Convention, and I was leaning Chaffetz when at the last minute there were two things that pushed me over to Cannon. 1) Chaffetz passed around a leaflet that added his position that we should eliminate the "anchor baby" provision of the constitution. 2) Cannon passed around a leaflet that showed how he does get a lot of things done in the background.

I'll reserve my problems with this "anchor baby" position to another post. But the other thing made me think: "Maybe Cannon is actually pretty effective in Congress, he's just a really poor campaigner." This article from The Daily Herald seems to be saying much the same thing, and I've heard it from a couple of other sources, too.

So I did vote for Cannon at the convention. I'm one of the 5 people that could have ended Cannon's run in Congress, but swung from Chaffetz to Cannon in the last few days. I'm still not sure it was the right call. I'd love to be convinced for sure, but some minor miracle would have to happen in Cannon's campaign for them to suddenly be good at communicating with voters. So far they seem to be happy with barely surviving the convention, then win in the primary on the power of incumbency.

Meanwhile I'm stuck balancing on a fence.

iProvo Broadweave a Done Deal

2008-06-04T08:11:00.001-07:00

Provo's city council voted 4-3 in favor of approving the sale of iProvo to Broadweave last night. Steve Turley stated that he thought process was more important than end result and that the process from the creation of iProvo to the sale was done wrong. Cindy Clark and Sherrie Hall Everett both said that they were concerned that the sale was does very quickly and that they hadn't had enough time to fully digest and understand the sale to be able to approve it.

Now the success or failure of the network is on Broadweave's shoulders. It will be interesting to see how this goes.

Tonight's iProvo Vote

2008-06-03T15:31:00.000-07:00

Provo's Municipal Council is supposed to consider the purchase of iProvo again tonight. It will be a long meeting, and they're even starting the meeting early.

From what I've seen and heard, there are only two likely things to happen tonight: 1) the council will approve the sale or 2) the council will vote no and require the city to issue an RFP and accept other bids for a period of time. I suppose there's a possibility for a #3 - the council will put off making a decision for one more week.

Personally, I'm sympathetic to some of the arguments George Stewart made against doing the RFP/bid process. It just seems like a gamble. Unless there is currently another credible, well-funded bidder, Provo stands to risk losing employees, customers, and putting Broadweave in a position where it could renegotiate better terms. I'm not saying that will happen, but the risk seems to outweigh the reward in this case.

I realize this is slightly a change from what I've said previously, but I am particularly sympathetic to the idea that key employees could be lost during a period of uncertainty. I have been through a number of mergers and acquisitions in my career, and I have certainly experienced that during those periods of uncertainty the best people start looking around to see if there's something better somewhere else. It tends to be good for the employees, but it' really bad for the companies. This is already a problem for iProvo and Broadweave. A two month pause would make it even worse.

I still want to see a voting member of the board for Provo, but overall I think the council should approve the sale.

Broadweave has a good chance of success operationally with Veracity on its team.
Provo will get most to all of its telecom debts paid under this deal. This is better than any other sale of a municipal network that I've read about so far.
If Broadweave fails Provo has both the capital call agreement and the ability to foreclose on the network and any improvements to the network. Failure would be bad for Provo, but it would be manageable.

I guess we'll see what happens tonight.

Getting Less Vocal on Broadweave

2008-06-03T15:24:00.000-07:00

I haven't had a whole lot to say on the Broadweave/iProvo situation the past few days. From my position working in software with Veracity I have started diving in to the details of operationally accomplishing the merger of systems and acquisition of new customers. As a result, I'm starting to have inside knowledge of Broadweave that it is not fair for me to comment on.

At this point I'm doing everything I can so that should Broadweave successfully acquire the iProvo network, they will succeed at swallowing that elephant.

I Love Provo

2008-05-29T08:59:00.000-07:00

I was just reading how Provo is listed in Kiplinger's Personal Finance magazine's "10 Great Places to Live, Work, and Play."

I have to agree - Provo is a great place to be. I came to attend BYU and haven't left. I've been here since I finished high school in 1992 (minus two years in Hungary), and I love it. I really have no desire to go anywhere else.

Sales Pitch to the Public

2008-05-28T08:47:00.001-07:00

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.

Hearing Veracity's Side

2008-05-27T12:08:00.000-07:00

Kevin Mayberry and Drew Peterson, Veracity's principle owners, have been trying to get me in for a conversation for a few days now. We finally succeeded in getting together this morning. I've done business with these guys for a number of years now, and I have a lot of respect for them. They have always been honest and upfront with me, and have lived up to their agreements. They also have done a good job navigating Veracity through various difficulties associated with its involvement in iProvo and UTOPIA.

I currently am doing contract work for Veracity, so at the moment these guys write my paycheck. They could have pulled me in and told me that if I didn't stop commenting negatively about the iProvo deal they would terminate my contract. I consider that a fair response to my actions, and would lose no respect for them if they did do that. But they didn't. They pulled me in and laid out their reasoning as to why this purchase agreement is the best thing for Provo and the best thing for me personally. They had some good arguments:

First, to my personal interest - Broadweave's offer to purchase Nuvont's customers. Kevin & Drew pointed out to me that Veracity also holds a significant piece of debt that is secured by Nuvont's customers. That secured position takes priority over the other creditors. I was aware of that, but comments from Nuvont's side put me under the impression that the majority of that debt to Veracity had been retired. From what Veracity told me today that is not the case. As part of the purchase of Nuvont's customers Broadweave would be in effect forgiving that debt, which greatly increases what I thought was the ultimate purchase price.

That said, I'm still not very happy with the way that Nuvont's options are being limited under this purchase agreement. I don't think that's right. But given the total debt load I'm thinking that Broadweave's offer may be the best Nuvont can hope for. If Nuvont ended up choosing to maintain its iProvo operations to pay the debt it would likely not succeed in getting all of the obligations paid.

So I'm in a quandary. I feel it would be the moral thing to structure the agreement such that Nuvont has a choice for its future, but I'm pretty sure that even if it did, the result would be the same. Suddenly the effort to affect change on this item doesn't seem worth it. Maybe there's some other piece of information out there that would change my mind, but at this point I doubt it.

UPDATE: I'm now told that Nuvont is not going to be released from the debt to Veracity, that it will still be expected to be paid the outstanding amount, though it may come personally from Nuvont's owner. There is certainly a big difference between the one or the other.

Second, to the interest of Provo's citizens. We talked a little bit about the other potential offers I detailed in an earlier post. Qwest is certainly a buyer of last resort and would most likely give the least favorable terms (their point, but I agree). MStar has the big problem that they are a failed business. They pursued a business model that didn't work and kept pursuing it. With that track record it's hard to hand them over the keys to the whole store. I haven't heard who else made offers.

Broadweave is a dubious choice as well. But Broadweave + Veracity, as I've said before, is as likely to be able to make a success of the network as anyone. They aren't a sure thing, but they're as good of a bet as you'll get. The only thing you can hope for beyond Broadweave + Veracity is a company with as much likelihood of success with a deal that is better financially for Provo.

Any other potential buyers should be making themselves known right now. The city should take a good look at each one, and if one looks credible and is offering something better than Broadweave is, the city should take a closer look. Broadweave should be willing to be patient. If this is really not a sweetheart or backroom deal, it will stand up in the light of day. Of course, it's hard to wait too long, so Provo needs to be quick about it.

I was really pleased with the change in the terms regarding the ability for Provo to foreclose on assets added to the network without extra charge. The new agreement is fair and shifts some risk from Provo to Broadweave. I also still think Provo should get a voting member of the board (unless there's a legal reason this can't happen) and that Provo should not be paying $500K for customer transition.

Overall, I'm with most of the iProvo Review Committee members. This looks like a good deal, with Veracity it looks like a good buyer, but the devil's in the details. Once we have the rest of the agreement, and we see that it really works the way we've been told, with no surprises, I won't have any problems supporting the sale.

I know there are those who don't like the sale on more philosophical grounds. They think the network should be open as a matter of principle, or feel that government should maintain it to ensure that the original goals continue to be met. I understand that those goals are: 1) universal access and 2) increased competition to bring better services to the city. I see those goals as having been attained, and that won't be lost with a sale of the network. Private business may not have been willing to put fiber into low income neighborhoods, but now that it's there, they certainly won't rip it out. And the fiber is there to compete with Qwest and Comcast. As long as the competitors are still there market incentives will continue to bring down our cost per unit of bandwidth. The government jump started the process. Private business can, in this case, keep it going.

iProvo's Other Offers

2008-05-26T20:39:00.000-07:00

I'm learning today some information about some of the other possible purchasers of the iProvo network. Specifically, I hear that the city recently initiated contact with Qwest, who expressed interest in discussing a sale of the network. A meeting was set up, but the meeting was canceled after the sale to Broadweave was announced.

I'm also reading through a copy of the proposal that MStar made May 15, 2007, Provo's concerns with the proposal and MStar's response, and Provo's rejection letter.

It's interesting to see some of the parallels between what MStar proposed, and what Broadweave has proposed. Where Broadweave's proposal is different the changes tend to benefit Broadweave. So - the basic points of MStar's proposal:

The network remains open. Any provider can provide service on the network. Other providers will have to pay the same transport fees that are currently paid by service providers.
MStar leases the network by paying the payments on the city's debt, both external and internal. Any transport fees from other providers are used to offset the debt payments. MStar does not pay transport fees.
Some of the assets transfer eventually to MStar, but the network remains the property of the city.
MStar operates the network in place of the telecom department.
MStar guarantees service levels, excluding outages caused by force mejure events (lightning storms, backhoe cuts to fiber, etc) or power outages.

Provo responded with a list of points of concern:

Provo did not want to refinance its bonds to 30 years. This was listed as an option in the proposal.
MStar's financial viability. Provo wanted MStar to come current with amounts due.
There were some concerns with the form of the payment guarantee. Provo wanted to make sure funds were in place upon close of an agreement.
There were concerns about MStar's customer service history.
Provo was concerned that MStar did not share its goals of universal, affordable access, quality of life for citizens, and economic impact.
There was concern that MStar's "anchor" position would put other service providers at a disadvantage.
Provo wanted to see supporting detail for MStar's financial projections.
MStar should not be able to filter or tax data by type or based on source or destination.
MStar should not be able to add "unreasonable charges" beyond what they are currently paying.
Provo was concerned with how easily Provo could terminate the lease in the event of problems with MStar's operation of the network.
Provo wanted a series of operational reports be provided to the city on a regular basis so the city could measure performance.
Provo expressed that it did not like the idea of transferring ownership of assets, preferring a pure lease agreement. It was also concerned with the compatibility of any new equipment with existing equipment. Provo was concerned that in an event where the city took back over the network, equipment changes should not force Provo to reconfigure the network.

Overall, it sounds like Provo was asking the right questions and being cautious in some good places. They were certainly being cautious in more places that they seem to have been with Broadweave. MStar gave the following responses (I'm dropping detail, but the main points):

No problem if bonds were not refinanced.
MStar admitted that under the current relationship MStar's business was not viable and hence the financial trouble. It cited as problems that fact that under their current contract there is no financial benefit to scale and MStar can't choose the products and services to provide. It gave details of sources of future financing, but that financing was all contingent on a change to the contract with iProvo along the lines of the proposal. This problem affected both the payment of current amounts due and the guarantee on debt payments. In short, investors wouldn't give MStar more money until the contract with iProvo changed.
MStar detailed its improving history of customer service.
MStar suggested that while it has different motivations from Provo City, the need to be competitive would support the goals of universal, affordable access and quality of life for all citizens.
MStar used both an airport and a strip mall metaphor to show the benefit of an "anchor" provider idea while maintaining an open network.
MStar preferred not to make any guarantees on service filtering, citing the need to handle potential virus attacks or unmanaged P2P traffic.
MStar was willing to consider language to protect against "unreasonable charges", though it contended that competition would prevent such.
On the rest, MStar was willing to negotiate the details.

In the end, Provo sent a letter rejecting the proposal. These are the reasons Provo gave:

Among other reasons, the primary concern with the new proposal is that it strays from our original goal of an open access network with multiple providers and many telecom service choices for the consumers. In addition, it raises the city's risk by placing its future success and security solely on MStar's ability to perform.

I know I'm going crazy with the bullets, but here are my thoughts on MStar's proposal vs Broadweave's:

Provo seems to think that Broadweave is in a better position financially than MStar was in making this proposal, but it sounds like a very similar situation. I don't think Sorenson Capital is giving Broadweave financing guarantees without the iProvo deal.
Broadweave's proposal certainly strays a bit more from the open access network ideal Provo touted in the rejection letter. As in, MStar said the network would be open and Broadweave says it won't - no question.
Broadweave's proposal raises the city's risk even more by completely putting its future success and security solely on Broadweave's ability to perform. At least with MStar there could be other service providers still on the network.
I admire MStar's ability to say "we are not succeeding being a service provider and this is why."
I think, being in Provo's position, I would have had concerns with MStar's proposal. But my concerns would have been focused on why MStar found itself so far along a business model that they were now saying was not viable. What did they do wrong and why would they not do it again?
I like the pure lease and I like the open network provisions of this proposal.

MStar also sent a letter last week to the city citing concerns with the RFP process. They contend that the sale appears to have been done in a secretive, closed door process that is against state law. They say that because the agreement with Broadweave is a sale of assets it requires an RFP that is specific and addresses the scenario directly. Apparently when MStar attempted to enter a discussion with the city about a sale of the network a city official told MStar that they could not consider an outright sale without a new RFP specific to such a sale.

These sound like good arguments to me.

The Future of Provo

2008-05-24T21:02:00.000-07:00

I just noticed this piece on Provo's downtown development plan. I guess there have been 4 public meetings to gather input, and there will be an open house the third week of June. I'm very curious to see the plan. I really like Provo's downtown. Hopefully the plan keeps the spirit of the existing downtown while adding good new bits.

The iProvo Clock is Ticking

2008-05-23T11:20:00.000-07:00

It's highly likely the final Provo city council decision will be deferred on Tuesday. As reported in the Deseret News, the most important parts of the sales agreement still aren't available for them to review. Personally, I would rather they postpone 2 weeks and get a good look at the details versus cramming at the last minute and vote.

That said, the public comment period is Tues. We need to make sure that people show up to make comments, whether for or against, so the council knows we care about this issue. Hopefully we will be able to comment again after the full details are out. It would be unfair to take public comment only before the public is able to digest the details of the terms of sale.

Still Holding My Breath

2008-05-22T10:00:00.000-07:00

There are still some changes I want to see in the iProvo purchase agreement:

Get rid of the $500K payment to aid customer transition.
Don't give proceeds to Broadweave with exercise of UTOPIA right of first refusal on headend
Give Provo a full board seat on Broadweave Networks
Make the playing field level for Nuvont in negotiating the sale of customers

IProvo Sale Moving Foward

2008-05-22T09:33:00.000-07:00

Good Change
I attended the iProvo Review Committee meeting this morning. It sounds like some parts of the agreement are starting to move Provo's direction. Specifically they are now saying that if Broadweave defaults on payments, Provo can foreclose on the network and also gets any upgrades to the network and network fixtures without charge. This is a really good change. Thumbs up.

Surety Agreement
There was a lot of talk about the surety agreement. As part of the terms of sale, Broadweave Networks of Provo (Of Provo), a subsidiary of Broadweave Networks (Broadweave), is buying the network. Broadweave is guaranteeing the payments of Of Provo. In addition, Sorenson Capital is guaranteeing the payments with a $6M guarantee for the first 2 years and a $3M guarantee for another year. If Broadweave meets financial performance measures that essentially require it to have an EBITDA of $4.5M annually for 12 months, the $3M guarantee goes away.

Overall this seems like a decent guarantee. My concern is, what if Broadweave is doing well financially and meets the measures, but Of Provo is not. Broadweave could choose to bankrupt Of Provo when no guarantee is in place. This is a really unlikely scenario, but still, it could happen.

Equipment Upgrade
Steve Christensen talked a little bit about how Broadweave intends to replace all of the WorldWide Packets boxes (the box in the house that connects the fiber). He said that these boxes don't support the SIP VoIP protocol, so they're going to replace them with a box that does. iProvo guys (Kevin Garlick, maybe, I don't remember), agreed that while the WWP boxes are good at data and video, they aren't good at voice.

I understand what they're saying, but I don't understand why they would do it this way. The WWP boxes are good at data. You can buy a SIP box that can operate on a data line for a lot less than you can buy a new fiber box that can do SIP. Why not keep the WWP boxes, change the voice system to use SIP over a data VLAN, and install SIP ATAs for voice. It's less expensive, allows you to use a best of breed approach for the different types of services, and would likely be less intrusive of a change for the customers.

Provo Services Right of First Refusal
As part of the terms of sale, Provo agrees to give right of first refusal on all Provo telecom contracts to Broadweave. So when Provo city needs to renew a phone contract, for example, it can negotiate with whatever provider, but before the contract is complete, Broadweave has the ability to meet the offer and provide the services to the city.

I don't have a problem with this, this aligns a couple of the cities interests. My only concern is what if Broadweave is a bad service provider. Meaning, maybe Broadweave is willing to meet the contract price, but the service quality is considerably worse. I guess this can be taken care of by service level provisions of the contract. If Broadweave didn't live up to those provisions the city would have recourse.

No Rose Colored Glasses
As there always seems to be in these kinds of meetings, there was a lot of talking about how Broadweave and Veracity are such technically able and experienced companies and how much better they are than all of the other past suitors. Now, I have some good opinions of Veracity's people, and I've heard good opinions from Veracity of Broadweave's people. That being said, there are some deficiencies.

This is going to be a big, ugly, transition. Broadweave has never had to do this kind of thing, and Veracity has never had to do it on this scale. There will be mistakes and problems and angry customers and bad publicity. I will not be surprised if people get really made at Provo for making the sale.

Also, Veracity doesn't like residential customers. They've tried, they didn't like it, they spun off Nuvont so they didn't have to deal with them anymore. Broadweave will have to handle those pretty much on their own, and it's a quick tenfold increase for them. Again, it's going to be messy.

So lets set expectations where they ought to be - really low. The pain doesn't really start until the deal is closed.

Update: Provo Ethics Rule Dies in Study Session

2008-05-21T10:05:00.000-07:00

The ethics rule I didn't like died last night in the council study session 4-3. I'm glad. It was a bad rule that I expect would have turned out to be unconstitutional.

I still agree with the Daily Herald editorial, and I like their solution. Strengthen the rules on disclosure. It should not be possible for a council member to be able to hide their conflict of interest behind corporations or lawyers or closed mouths. And if it's found that they have done so there should be strict punishments.

Apparently I'm a Shill for Steve Turley

2008-05-21T09:55:00.000-07:00

I heard yesterday that there is some talk in city offices that I'm a shill for Steve Turley. That struck me as very funny. I guess it's a nice way to attempt to discount what I have to say.

Steve Turley is my next door neighbor. We have swapped information for a long time about iProvo. I'm close to the service providers and tend to know what's going on with them. He's on city council and has good insight on what's happening politically. We both know things that are helpful for the other, so it's a good symbiotic relationship.

That being said, we disagree a lot. Steve is easy to disagree with. I'm sure that from his point of view, so am I. I expect that he's running as fast as he can away from me, my present actions, and any future actions. And I would like it to be well known that nothing Steve says or does in any way represents me or my opinions.

I have my own opinions and act on my own initiative. Hopefully that's clear.

MStar's Easy Transition - Yeah Right!

2008-05-20T10:50:00.000-07:00

In this article about the acquisition of customers from Nuvont and MStar, MStar's VP Kirk Tanner says "Throughout the transition period to Broadweave, Mstar’s customers in Provo should expect the same quality of service and support they have grown accustom to."

This has to mean MStar's customers are used to really bad quality and support. I respect Veracity's ability to get things done, but from what I hear this is going to be a nightmare. Veracity's people don't even want to do it. They're telling Broadweave that the MStar transition is their job. There's a good possibility customer's phone numbers won't be able to be ported, and all static IP addresses will change as well. If MStar customers go into this with the expectation that it's going to be a smooth transition, they have a really rude awakening coming soon. Not to mention MStar customers will have the biggest sticker shock with upcoming price changes. Hold onto your seats, it's going to be a rough ride.

Provo Ethics Rule: Bad Idea

2008-05-20T10:33:00.001-07:00

I've been paying attention to a proposed new ethics rule for Provo City. I first heard about it in a Salt Lake Tribune article. There's another one here. It sounds to me like a bad idea. The state requires disclosure of conflicts of interest, and I tend to think full and public disclosure is the best ethical solution. It doesn't shut the person out or shut them up, but it lets everyone else know how to treat their comments.

It seems that others agree with me. The Daily Herald editorial board puts forward a strong argument against the rule.

I requested a copy of the proposed rule from the city and was sent a copy by Neil Lindberg, the city attorney. I asked him to give me some ideas of how the rule would work in real life with a series of what if scenarios but haven't gotten a response. He must be busy with the iProvo sale.

Let's Not Rush Into a Decision

2008-05-19T22:29:00.000-07:00

One more thought for the evening. For Provo's council: let's not rush into a decision. I've been hearing that more than one alternate offer has been put on the table in the past week. This is only good for Provo. Give these other potential buyers some time to get some information and make a real offer. Competition is good - it will only result in a better deal for Provo's taxpayers.

The mayor, Broadweave, and certain other council members will probably threaten that Broadweave will walk away if the council postpones a decision. You may not have noticed, but Broadweave really needs this deal. They're backed by venture capital and have an obviously broken business model. They need this deal more than Provo does. They'll wait.

The mayor may rant and rave about the upcoming budget, but let him. This is not a good deal for Provo yet, but with a little patience it could be. This is what we elected you for. Stand up and make sure this is done right. We're counting on you.

If I Had a Vote

2008-05-19T22:00:00.001-07:00

After all of my research and pondering and digging, I'm thoroughly convinced that this iProvo sale is slanted in Broadweave's favor at every turn. If I were on Provo's city council and I had a vote on May 27 I would vote no on this deal. I could be convinced to move to a yes vote, but there would have to be changes to the deal on each of the following points:

$500,000.00 Payment in aid of customer transition. No. There is no reason for Provo to pay for customers to be transitioned. There is no reason for Provo to pay someone to take over this network. This payment should be $0.
UTOPIA Right of First Refusal. The agreement says that if UTOPIA exercises the right to buy the video headend, Broadweave gets the proceeds. This is not acceptable. Provo should get the proceeds and should use it to pay down the bonds.
Improvements to the Network. Under the current agreement Provo can reclaim the network in the event of a default, but must pay for any improvements to the network. This is not acceptable. Provo should be able to claim the network and all network fixtures, even if they were added after the purchase of the network. This is part of Broadweave's "skin in the game." They don't want to put up cash so they can spend money on "upgrading the network." I think their "upgrades" should be put at risk. That will be the skin that's still in the game when the $6M surety expires in 2 years.
20 Year Payback. Broadweave is buying a fiber optic network and all the fixings, and gets to pay it off over 20 years. The argument is that the fiber optic technology will still be state of the art even in 20 years. While I agree that the fiber lines in the ground and on the poles will probably still have the same value in 20 years, there is no way that any of the fixtures that connect to the fiber, the servers, the set top boxes, the VoIP clients, or even the NOC will have much value in 20 years. Can you imagine still paying today on a server that was built in the late 80s? At the least, speed up the payment. Ideally value should be applied to different classes of equipment and a reasonable payment schedule should be worked out for each class such that in 10 years the city doesn't end up with debt on the books secured by equipment with no value. This isn't such a big concern if Provo gets to claim network improvements as per item #3.
Open Network. I'm not 100% on this one, but I would highly prefer some provision that would allow for other providers on the network, similar to the regulations that local telephone networks operate under. I think the open network idea still has merit, and it doesn't have to conflict with Broadweave being a retail service provider.
Board Representation. This deal represents significant exposure for Provo City. The city should have a voting representative on Broadweave's corporate board. Broadweave the parent company, not Broadweave of Provo.

I think I may be missing one or two items that I was thinking about last night, so I may add to the list soon.

Dear Municipal Council Members...

2008-05-19T16:58:00.000-07:00

So I just sent the following letter to members of Provo's city council. I have been thinking about this issue for a little while. I have other things to say on the iProvo issue that is more about looking after the city's welfare, but this one is purely about the fact that I don't think I or the other investors and creditors of Nuvont are being dealt with fairly.

I'm interested to know what others think. Am I being reasonable here or is my judgment being clouded by my financial interests? For my part, I think I'm being more than reasonable, and I'm ready to fight for fairness.

Dear Municipal Council Members,

I am writing to you as a creditor of Nuvont Communications, Inc, to express my concern with the iProvo purchase agreement with Broadweave Networks of Provo. It is my opinion that the agreement as written includes provisions that are a bad faith effort on the part of both Broadweave Networks and Provo City to take possession of Nuvont's iProvo customers.

The Nature of the Investors and Creditors
Unlike other service providers on the iProvo network, Nuvont Communications was not funded through venture capital. Most of those who invested or lent money to Nuvont are like me: I am a Provo resident, formerly the owner and manager of a high-tech small business. I own two inexpensive homes in Provo, one of which I rent through Provo Housing Authority. My net worth is a percentage of the value of one of those inexpensive homes. I don't consider myself poor, but I'm not very wealthy, either. I try to be careful with where I put my money.

In the course of doing business with Nuvont and based on personal relationships, I lent money and performed services that have not yet been paid, both personally and through my business. I also was employed by Nuvont for a short time. I was intimately aware of Nuvont's operations and was supportive as I and others were laid off and operations were reorganized in an attempt to make Nuvont profitable and able to pay its obligations. As a part of this all outstanding debt was also reorganized. Nuvont agreed to a 5 year payment schedule and promised to pay 80% of any additional profits to accelerate payment. Nuvont's customers were promised as security against the debt. This means that if Nuvont's management failed to live up to their agreement, the creditors are able to take over Nuvont's fiber customer operations.

Since that reorganization, Nuvont has shown that its reorganization strategy has been successful and has paid according to its agreed schedule. The strategy has even been more successful than initially expected and Nuvont has been able to take care of some other outstanding obligations.

Nuvont's Good Faith Operation
As you are well aware Nuvont Communications was originally part of Veracity Communications. As Veracity worked to manage both business and residential accounts it was determined that different departments should handle the different types of customers. Eventually, the two were split into two separate companies, one to market to and manage residential customers, the other to market to and manage business customers.

The original contract with iProvo was agreed upon when there was a single business. When Nuvont was created it continued to operate as if it was under the same contract with iProvo. It continued to market to customers and to invest in services provided on the iProvo network. It paid transport fees according to the Veracity contract. Nuvont is operating under an oral contract that is substantially the same as the written contract with Veracity. It has behaved in every way under the good faith understanding that it was obligated and protected by this oral contract.

Provo's Bad Faith Agreement
Provo's purchase agreement with Broadweave states that "Any oral executory contracts relating to the Business shall be terminated or assigned to Purchaser at Closing, at Purchaser’s discretion." This provision is aimed directly at giving Broadweave the right to terminate services to Nuvont. Provo City, in its rush to sell the iProvo business, is giving to Broadweave every ability to take the customers outright from the existing service providers. With this effort to sell the network, Provo City has apparently determined that it has no need to acknowledge the good faith of existing providers, or their investors and creditors, as they are no longer needed by the city.

I am told that there was an attempt to deal with Veracity in a similar manner, but Veracity revealed that as a CLEC it has the ability to move customers onto Qwest T1 and DSL lines without very much effort. Veracity was able to deal with iProvo and Broadweave on an even footing because it had more leverage than a reliance on the city's good faith.

Broadweave's Bad Faith Agreement
Thanks to the iProvo Purchase Agreement, Broadweave now has the ability to dictate all terms to Nuvont. Nuvont is currently under contract to pay at least $20,000.00 per month to its creditors, with the payment divided evenly among the creditors based on percentage of total debt held. This was a difficult reorganization for the creditors. The terms were considerably less favorable than the original terms. Broadweave has offered to purchase the customer base by paying that obligation, but instead of the agreed upon $20,000.00 per month over 5 years, (EDITED- I cut out the specific terms to satisfy someone else's NDA.) These terms are incredibly difficult. For my business this won't even pay the interest on the credit that was needed to pay for the original work performed.

Nuvont has attempted to negotiate more favorable terms for its creditors, however Broadweave is in the position to be able to say that Nuvont will either accept the terms as offered, or Broadweave will not purchase the customers and will no longer provide service to Nuvont. Under the pending Purchase Agreement, Nuvont and its investors and creditors have no recourse beyond the mercy of a court of law.

Request for Change in Terms
I would plead with the council to consider the good faith efforts of Nuvont's investors and creditors. We made business decisions and placed money at risk based on the expectation that the city would honor the oral agreement to provide services and to run the network in such a way that Nuvont could service its customers and realize a return on investment.

I ask each member of the council to vote against the sale of the iProvo network to Broadweave Networks of Provo until and unless the purchase agreement is amended to allow Nuvont Communications and other service providers to continue to purchase services on the iProvo network for a period of at least 5 years. Such a provision will give the investors and creditors of Nuvont the ability to choose to either sell its customer operations to Broadweave at mutually acceptable terms or to continue to provide customer services for a period of time that will hopefully be long enough to at least recover the initial investment. At the very least, we would be in a better position than the take or it leave it currently offered by Broadweave.

I would love to speak with each of you individually on this matter. Feel free to contact me by phone or email, or we can arrange a time to meet in person. Thank you for your consideration of this issue.

Respectfully,

Jarrod Ribble