Google's sweetheart deal to take over the city of Provo, Utah's loss-making fiber network will come with hidden costs, the city's mayor has revealed.
Last week, The Register reported that the Provo city council was planning to vote on a deal that would allow Google to take ownership of the city's multimillion-dollar municipal fiber network for $1.
That vote has since taken place and the plan has been approved. But in the process, it came to light that the city will have to pay approximately $1.7m in costs to complete the transition, the Salt Lake Tribune reports.
Part of the problem, it seems, is that Provo has laid so much fiber under its streets since it started building out its network in 2008 that it no longer knows where it all is.
The contractor that originally buried the cables didn't keep records, so the city will now need to pay a civil engineering firm around $500,000 to find them.
That requirement was actually put forth by Google, which under the terms of the deal must invest an estimated $18m to upgrade the infrastructure around the fiber.
But that isn't all. Provo Mayor John Curtis said the city will spend an additional $722,000 on equipment to allow city facilities such as traffic lights and police and fire service to continue to access the network.
On top of that, Provo will spend $500,000 on an insurance policy that will cover the cost of any potential legal damages, in the event Google determines that Provo hasn't lived up to its end of the deal.
None of these costs had been mentioned in earlier discussions of the sale, which already sees Provo essentially giving away an asset that cost $39m to build and has been operating at a loss since its inception.
The city must already shell out bond payments of $3.3m per year for the next 12 years to cover its debt from the initial network build-out – debt that Google will not be assuming as part of the sale.
Royce Van Tassell of the Utah Taxpayers Association told the Salt Lake Tribune that he wished the city had allowed more than five days for public comment on the sale, but seemed resigned to the deal nonetheless.
"There are serious questions about the costs," Van Tassell said. "Those kinds of question have to be asked. That said, given all the situation, this is a quantum leap ... it's probably the best we can do."
Provo residents who attended public hearings on the matter reportedly seemed excited about Google's plans for the network, and the city council approved the sale by a unanimous vote. ®