HomeNet Communications Inc., the first provider offering triple-play services on the IProvo network, flipped the switch on Tuesday, lighting up the first phase of the municipal fiber project in Provo, Utah.

HomeNet will offer integrated voice, video, and data packages that include high-speed Internet connections with speeds of up to 10 Mbit/s, digital television with video-on-demand (VOD) capabilities, and VOIP phone services. Cost for entry-level integrated triple-play services will range from $89.99 to $124.99 per month.

HomeNet’s services will be available to all of the 3,000-plus households in Provo’s Grandview neighborhood by January 2005, where more than 250 homes have been testing the service since early this year. The iProvo project is scheduled for completion in July 2006.

IProvo is just one of numerous municipal fiber-to-the-premises projects under construction throughout the country. Many communities, particularly in rural areas, have started building and financing their own fiber networks, because incumbent phone companies and cable providers have been reluctant to introduce cutting-edge services in areas that aren’t as densely populated. City-owned fiber networks also act as an incentive to lure businesses to an area.

Not everyone is thrilled that a city would want to improve itself by bettering its infrastructure. “We think it’s improper for the government to gamble with taxpayer dollars to compete with private industry,” says Vince Hancock, Qwest Communications International Inc.’s (NYSE: Q) spokesperson for the Utah, Montana, and New Mexico regions. “Especially when the services are already being offered in the private sector.”

Hancock counters the assertion that carriers aren’t reaching the areas that demand services. “The question is: ‘What is not being provided that customers are demanding?’” he says. “Big carriers have tended to fight the trend" of municipally-owned fiber networks, says Mike Render, principle of market research and consulting firm Render, Vanderslice & Associates. “In my opinion, it’s not a particularly big threat to them, because it’s a relatively small portion of the market, usually in areas where there are lower population densities where MSOs and major carriers are not coming in early.”

Qwest’s Hancock wonders what will happen when a larger municipality decides to build its own network. “If government networks are being supported by public dollars, then they have many essential advantages,” he says. “As a corporation, we pay taxes and we’re having our tax dollars used to compete against us. That’s unfair.”

He also points out that there is no pressure for municipalities to make a profit. “I challenge you to find a municipally-owned network that is profitable,” he says. Their job is to break even so they’re not spending taxpayer money.”Another project being worked on in Utah, the Utah Telecommunication Open Infrastructure Agency (UTOPIA), is one of the first municipally-owned networks to adopt a wholesale business model where cities participating pay to build the network and own the infrastructure, which is then leased to different providers (see Utopia Launches Phase I).Utopia is in its first phase of construction, which will connect more than 50,000 homes and business in portions of six cities in Salt Lake and Utah counties. The long-term goal of the project is to connect 11 to 14 cities that have pledged funding to the project.

”Many of these municipalities developing these networks do it out of the need for economic development and to keep human capital in the area,” Render says. “As one said when we interviewed them, ‘We were bypassed by the interstate, but we’re not going to miss out on the information superhighway.’”— Chris Somerville, Senior Editor, NGS