Provo, Utah, overhauls iProvo muni fiber model

As another side effect, the city may be too lenient on service providers, the source said, claiming that service providers are currently months behind in their payments for use of the network. Gould declined to say whether MStar had an outstanding balance for transport service.

“The HomeNet thing caused [the city] to take the new providers on in a hurry, and they basically inherited the contract format from HomeNet,” the source said. “It wasn’t harsh enough; it didn’t have enough sticks built into it to keep [service providers] in line. The city needs to manage this like a business. If you’re a business and you have a partner that’s two months [behind in payments], how long do you let them float?”

It’s little surprise that the project’s current soul-searching efforts have some participants, including Stewart, decrying the wholesale municipal fiber model in general. One key presumed advantage of municipalities in the telecom game is that they can take longer to pay back funds than private firms, securing twenty-year loans, for example. But that advantage is ill-used where technology is concerned, Stewart said, because it forces cities to place very long-term bets on rapidly changing technologies.

“You don’t bond for 20 years for a technology,” Stewart said. “We can’t be sure there’s a 20-year payback with technology moving as fast as it is. We don’t know enough about whether fiber will be best technology 10 years from now, much less 20 years. Obviously the capacity of fiber is the best there is, but how much of us really need that capacity? What about WiMax? That kind of risk I think should be taken by the private sector, not the public sector.”

At the same time, he conceded, “There’s no question we’re servicing all the residences that choose to join the network better than Qwest or Comcast has.”

The council has already altered the model to aid the project’s financial health, asking city departments to pay for their use of the network despite originally citing free use of the network as a municipal cost-saver. One source said the city was considering a certification process for service providers using the network that would rate their service quality, potentially offering transport discounts for high ratings.

Talking to consultants this month, the council will likely view proposals for a new way forward in January, Stewart said, predicting the council will opt to add utility meter-reading to the model. Following the example of an electric utility in Clarksville, Tenn., Provo may use its fiber network to link to residents’ electric meters, allowing them to be read remotely to save labor costs.

Stewart worries that even that venture could have a long payback period. But Gould, for one, is in favor of the strategy.

“For them to not do that would be ludicrous,” he said. “You’ve got 100 Mb/s to every home. Why would you not take full advantage of it?”

In any case, the city’s progress will no doubt be taken by many as a referendum on the muni fiber model.

“When we got into this project, people said, ‘You shouldn’t do this because government doesn’t do business well,’” the source close to iProvo said. “We’ve gone out of our way in some cases to make that become true."