iProvo, the largest municipally owned fiber-to-the-premises network in the entire United States, has just been sold to Broadweave Networks. The Provo, Utah-based network actually reaches all 36,000 residents and businesses of the city, and manages to connect homes, businesses, government buildings, schools and even traffic signals. The sale price was $40.6 million, which is plenty to retire the outstanding bonds incurred by Provo to build the system. The City itself seems quite pleased, as it gains the advantage of the sale and it continues to enjoy the benefits of the infrastructure. Under the agreement, Broadweave will act as the network owner and service provider, while Provo retains a license to keep on using the fiber as it has in the past. Best of all, the new owner has already promised to "invest heavily in network upgrades in order to increase capacity, features, and performance for commercial customers," though we aren't sure if that means more HD content is on the way.
Reader Comments (Page 1 of 1)
kevinj @ May 9th 2008 5:02PM
Seems expensive to me! Lets say each home is one customer @ 90$/month for cable, tel, and inet. Thats about 3.2M. It'll take 12 years to recover just the purchase price and thats being optimistic assuming all 36,000 homes subscribe. Not to mention upkeep and expansions!
GhostDoggy @ May 10th 2008 6:44PM
Kevin, is there something preventing the new suitor from offering commercial data and voice services for higher profits?
ljasper79 @ May 11th 2008 1:42AM
36,000(subs) X $90 X 12(months) = $38,880,000. Figures to be more like 1 year, 2 weeks & 2 days ($38,880,000 X 1.04423868 years = $40,600,000.) But yeah still kinda high. Typical buyouts are about 50% annual gross.
Tsunami @ May 9th 2008 5:40PM
You have to remember that the real profit will come from the businesses. you can easily get 2-3k a month from a medium sized business even more from larger businesses who have large infrastructure and telephony services. Not to mention local hosting or VPN services.
Redeye @ May 12th 2008 9:55AM
iProvo was bleeding taxpayer money by the bucket for a long time and the subsidies just kept getting larger. I'm glad they sold it. It proves to me that government does not belong in competition with the private sector. By their very nature, political beaucracies just aren't equipped to make business-like decisions, not to mention the lack of competition they naturally create.