Free UTOPIA!

In their report to the city, CCG noted that there were a significant number of HR issues leading to the deteriorating customer service situation at iProvo. They noted that "almost universally the telecom employees dislike or distrust the retailers" and observed that telecom employees were also at each others throats on a regular basis and to resolve it would "require management directive". Certainly neither retailers or their customers were served by this rivalry both within the NOC and towards retailers.

So how then is it possible that Broadweave plans to take these same people who caused this problem, the telecom employees, and force them to work both with each other and employees from a retailer, Veracity, without significant operational headaches? It seems to be that the old rivalries with each other and this retailer will continue to manifest themselves, likely moreso since, according to my sources, a majority of iProvo's employees are strongly opposed to this sale.

It's especially concerning since we hear a lot about the executive team and almost nothing about the management team; we have absolutely no idea how long Broadweave will be dysfunctional as it deals with these HR problems. During that time, customers and reputation will be lost, the latter of which takes significant time to regain. I do not think a company so young and small has the experience to successfully handle this kind of integration; even giants like HP and Sprint have failed at this task.

I received a response from the Utah Division of Corporations regarding the original filing for Broadweave Networks and Lucy, they've got some 'splaining to do. According to the original filing, the company did not file articles of incorporation until June 4, 2003. (See original document.) Their website, however, indicates that the company obtained their first contract in 1999. (Link to website, screenshot in case they change it.) How can a company that doesn't exist have functioning contracts?

It's amazing that Provo's brand of "due diligence" doesn't disclose these kinds of irregularities.

I took the time to sit down with a copy of the proposed purchased agreement with Broadweave (warning, PDF) and found a number of glaring holes and deficiencies in this arragement.

• Broadweave Networks of Provo LLC is listed as the purchaser, yet no such corporation currently exists with the State of Utah. The purchase agreement is for a non-existent entity, therefore that more-or-less voids it right off the bat. (See 1st paragraph)
• Provo is offering a 2-year warranty on the fiber. That's right: Provo foots the bill for fiber repairs for the first two years! (See 3(y)(ii) and nearby definitions)
• Since Broadweave Networks of Provo LLC doesn't exist and has no valid business license, it's not a valid Purchaser per this agreement. (See 4(a))
• Anyone with access to the Utah Courts' Xchange system want to make sure that it's true that there's no pending litigation against Broadweave? I've heard several rumors that residents in Traverse Ridge have had to go months or even years without primary phone line service from Broadweave and that several lawsuits have been threatened. (See 4(d))
• I suppose that the lack of corporate existence for Broadweave Networks of Provo LLC could be construed as a misrepresentation. (See 4(f))
• Provo is asking that Broadweave make a "good faith effort" to preserve existing services. Which, really, is broad enough to allow Broadweave to do whatever it likes. (See 5(g))
• Provo's non-voting member on the board can be kicked out of meetings if they determine that there's "highly proprietary" information being discussed. Any bets that this will happen often? (See 5(c)… the second one since someone can't use ordered lists in Word properly)
• If Broadweave sells the network just before going under, the city would lose control of the network and there would be nearly nothing left to pay remaining balances if Broadweave takes the money and runs. (See 5(d), again, the second one)
• Broadweave will be bound to continue building the network to new developments, though the agreement uses a vauge "commercially reasonable time" phrasing that could easily let Broadweave off the hook. (See 5(q))
• I noticed that nothing in Section 5 gives Provo the right to keep any upgrades or other improvements done to the network in the case of a default. If they replace the existing equipment with new equipment, then auction it off in bankruptcy proceedings, Provo could be left with a crippled network.
• Now waitaminute… Broadweave gets to do its due diligence against Provo but nothing affords the city the same right. (See 6(u))
• Broadweave is claiming that its Provo operation's address is the same as the Provo NOC. Kind of cheeky considering the company doesn't even exist, eh? (See 9(b))

My takeaway from this is that Provo hasn't covered all of its bases at all, creating a lease agreement that's very much in favor of the purchaser. Any lawyer-like people care to take a crack at it?

You'd like to think that a company planning to buy city assets would have all of their paperwork ducks in a row. Seems that Broadweave, however, has neglected to file a substantial amount of paperwork required to legally do business. South Jordan, the location of the company's headquarters, has no listings for Broadweave. Draper has never heard of them before. The woman I spoke to with Washington City said they've been trying to get them to get a valid business license for a long time and will probably refer them to enforcement soon. Lehi hasn't gotten back to me yet on their license status in that city, but given the 0 for 3 record in other cities where they do business, I don't have my hopes up that they filed anything there either.

And what of Provo? Broadweave has also failed to obtain a business license from the city of Provo. They also have not registered Broadweave of Provo, LLC with the state of Utah, the business entity that was supposed to be buying the network. How can the city sign a deal with a business entity that doesn't even exist? It's not like Broadweave doesn't know how to do it; they have registrations for subsidiaries in St. George, Hurricane, Washington, Herriman and "Rosecrest".

I'm also trying to find out if Broadweave is telling the truth about how long they have been an established business. They did not register their current domain, broadweave.com, until June of 2003 though their website indicates that this company has been around since 1999. Seems odd for a tech company to go 4 years without snapping up the domain that bears their trademark, isn't it? Pending some feedback from the Utah Department of Commerce, we'll know for sure. I'm betting the company wasn't filed until 2003 making their claim of getting their first contract in 1999 patently false.

UPDATE: Lehi just confirmed that they don't have a business license in their city either. Surprise, surprise.