BREAKING: Broadweave CEO Steve Christensen to Step Down as CEO, Leave Company Today

Inside sources confirm the rumor from a month ago: Steve Christensen will leave his position as CEO of Broadweave and will not longer be a part of the company effective today. After months of relying on the line-of-credit to make the bond payment and facing an increasingly hostile HOA in Traverse Mountain, investors at EsNet are rumored to be taking over operations and exerting much greater control over the company to protect their investment. I say it’s about time.

This change in leadership can only be a good thing. Steve always struck me as a used car salesman in a better suit, all too willing to believe his own inflated hype. In contrast, I hear the guys from EsNet are very savvy and know how to run a business. Maybe this ship can finally be turned around.

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17 Responses to BREAKING: Broadweave CEO Steve Christensen to Step Down as CEO, Leave Company Today

  1. juba says:

    And why do we care?

  2. Capt. Video says:

    I have know Steve Christensen professionally for a number of years and have always liked and respected him.

    As far as I know, Steve founded and built Broadweave. Broadweave had stepped in and stepped up to take over the iProvo Network when the city was looking for someone to do so. I’m sure that has been a benefit to Provo City, apparently it has not benefited Broadweave or Steve near as much.

    So much for the many claims of Mayor Billings cutting a super deal for his friends (Broadweave or Steve?).

    I’m sure the overall downturn in the housing market (which Broadweave counted on in new developments like their network near St. George) has hurt Broadweave as it has hurt many other good companies.

    I wish both Steve and Broadweave the best of luck!

  3. Jesse says:

    juba: Any time I write about Broadweave, the traffic on the site goes nuts. Apparently UTOPIA supporters really like to know what’s going on with iProvo.

  4. u235sentinel says:

    Juba… Why do we care?

    Go to our State Capital and talk to any Senator or Representative about Utopia. Tell them you support it.

    Next you will hear iProvo come up EVERY TIME and it’s wows. iProvo is their way of showing that Utopia can’t succeed.

    Not every Senator or Rep. I’ll give you that. But many are just clueless as to what benefits competition and an open fiber network can provide.

    Too bad. Most foreign politicians are much smarter than ours. They decided years ago to open up networks for competition AND speeds increased while prices dropped. Now foreign citizens can provide services out of their own homes for a fraction of what it costs you and me!!!

  5. Robert says:

    I know some posters here thought that using the line of credit to make bond payments was a great idea. It looks like the end result was not good for Mr. Christensen. All I can say is that he had an opportunity no one else got and the lack of success is bad for all of the folks involved.

  6. Robert says:

    Does anyone have any thoughts as to how Esnet achieved what appears to be an equity position in Broadweave? It is surprising that they took control via the line of credit financing. On the surface, it would appear that the LOA was secured by company ownership and Esnet exercised that lein. But it could be something far different.

    It is also amazing that Provo City and the media is so silent on this series of events.

  7. Jesse says:

    The media isn’t going to be silent for too long. I’ve talked to two different reporters today about the situation in Provo.

  8. Capt. Video says:

    I’m not sure iProvo can or should be used by any Senator or Rep. as the bad example.

    Unless it’s to say that perhaps private industry is doing a better job than the city did?

    Compare iProvo to UTOPIA on any measure and I believe iProvo did better. It was built at a significantly lower cost per home passed, it was operated at a lower cost and has always had a higher take rate.

    According to reports in the papers, Utopia has 8000+ customers while Broadweave has 15,000+. Not bad considering the Broadweave network passes about 10,000 fewer homes than the UTOPIA network? Even if you discount the MDU (multi-dwelling units, apts, condos) Broadweave would still have more customers from a smaller number of available homes.

    I’m not sure I would say myself or anyone thought it was a “great idea” to make the payment from the line of credit, but I know I believed it was a good option (perhaps the only option) if revenues did not cover both operating costs and the bond payment.

    Considering that the network was about $2 million a year short of revenues covering those costs when Broadweave bought it, I would expect it to take some time to cut costs and increase revenue enough to make the bond payments from revenues. Until that happens what options would Broadweave have for making those payments?

    I look forward to seeing what source UTOPIA will use to pay it’s bond payments as their revenues will not cover both operating costs and bond payments when those come due next year. They will no doubt use their surety reserves….oh, I forgot, they don’t have a surety reserve so I guess they will have to use money from the cities budgets….something Provo City has NOT had to do since they sold to Broadweave almost a year ago!

    UTOPIA has NEVER made a bond payment on a 30 year bond debt totaling about 1/2 a BILLION dollars while iProvo has paid off 2 years of a 20 year $65 million debt. UTOPIA has a lobbyist trying to get them stimulus money from the federal government. Perhaps the conservative leaders in Utah don’t like that idea. Taxpayers across the nation paying to save a failing network?

    If Broadweave’s revenues from 15,000 subs don’t cover operating and bond payments, who expects UTOPIA to pay bond payments more than 5 times larger and higher operating costs with fewer customers?

    Which network should be uses as the “warning” by our leaders in the Senate and the House?

  9. Robert says:

    What is good about the end result of iProvo. The city has lost something like $18-$20 million and still is responsible for the bond balance, another $40 million. All this so a private company like Broadweave can have shot at getting into the business. The city doesn’t even own the fiber anymore.

    The politicians are right to use iProvo as the poster child for failure and squandering of public funds.

  10. Capt. Video says:

    Yes, the city is still responsible, but Broadweave IS making the payments.

    The very good result is that residents of Provo (ALL of them) have the option of getting a fiber to the home connection and Comcast and Qwest have competition.

    So the residents of Provo have the fiber available and a private company (Broadweave) is making the bond payments and providing good service.

    Perhaps Provo could have saved the loses (I’m not sure if it’s the $18-$20 million you claim, but they did lose millions) by never starting the project. But whatever they lost was already lost before Broadweave stepped in.

    Compared to UTOPIA, iProvo is a glowing success!

  11. Jesse says:

    Capt: For better or worse, legislators lump iProvo and UTOPIA into the same basket without taking into consideration any of the nuances. Explaining the difference between the models, approaches, history, management, etc. takes a lot time and most of them don’t really have the time for that discussion. To them, it’s all the same thing.

    What should be really concerning is that Broadweave claims to reach 43% of households, has both the retail and wholesale revenue, and raised prices and still can’t make ends meet. I don’t think taking on Nuvont’s customer base is going to plug the gap either. I’m pretty sure that iProvo or Broadweave is going to keep getting punted around to different owners who will pump money in, then do a short sale when the profits don’t materialize. That is unless EsNet really pulls a rabbit out of their collective hat. Dave Moon has a better shot at it than Steve Christensen.

  12. Capt. Video says:

    I guess my point is that the legislators should like Broadweave, a private business competing with the duopoly and being spun off by the city and the city not paying the bond.

    You are right, there should be some concern with a really good take rate if they are still unable to make bond payments from revenue. I suspect they must be really close and are hampered somewhat by the bulk account contracts they inherited (paying a low rate and not taking triple play) and the overall low triple play penetration (Veracity has no video customers and as you mentioned NuVont moved as many video customers as possible to satellite.)

    I would expect we will see Broadweave continue to invest in the network. Perhaps beefing up the video offering, focusing on the VOD and the HDTV offerings to increase the triple play customers as well as increasing the revenue per customer by selling more services to each customer.

    You must tip you hat to Broadweave for getting a penetration that high!!!! I remember some on this blog predicting all the customer would be leaving the network when Broadweave took over. Broadweave must be getting close to breakeven!

  13. Jesse says:

    Legislators aren’t too pleased with the arrangement either. Remember how Steve Clark and Curt Bramble criticized the proposal rather extensively? I don’t think they’ll be happy until taxpayers have zero risk (i.e. the bond is paid off).

    Reaching 43% of homes sounds good… except that’s pretty much the same as where it was when they took over. And now we don’t have any subscriber data to see who is subscribing to which services. It’s pretty much impossible to see if the deal is working or not until each month’s payment comes due. Apparently EsNet isn’t happy since they asked the CEO to leave.

  14. Robert says:

    How can anyone characterize a loss of that magnitude as a “glowing success”. That’s absurd. I don’t want to hear about penetration or subscriber numbers without a mention of ARPU any more. What do you suppose the revenue is for the average NuVont customer they bought? $12-15? Few if any video customers were included. It’s just more smoke and mirrors. See today’s SL Trib for some info on the payments they have not been making.

  15. Capt. Video says:

    My comparison was to UTOPIA. I did not think the loss was that high, but compared to UTOPIA it might still seem like they were a glowing success.

    I expect the UTOPIA loss to be many times the iProvo loss.

    I’m also happy to talk ARPU (Avg. Revenue Per Unit), I expect the ARPU for NuVont customers to be about $35 or more. All customers MUST have data on NuVont and data cost at least $39.95, a fair number likely also had phone. I believe NuVont had almost all single family homes. I expect NuVont to be similar to UTOPIA ARPU. Why would you think NuVont had low ARPU, just the no video? Remember only about 10%-12% of UTOPIA customers have video. Perhaps 0-10% of NuVont customers have video, They likely could not get 100% to move to dish.

    Remember when it was thought UTOPIA ARPU was about $80 on this list but the reports they filed with the State indicate it’s close to 1/2 that amount. A big part of UTOPIA’s stated “revenue” came from non-subscriber items, things like interest on their unspent bond proceeds. Those items are not helpful or used to determine ARPU.

  16. luminous says:

    all the third party ISP’s on the broadweave network have been moving customers to satellite video, and where possible to other network transports in order to keep as many customers are possible after their contract from the iprovo days ends. I can only image what this has done to their ARPU. Broadweave’s treatment of third party’s has been terrible. Their have been many opportunity’s for them to have handled this situation better. Beginning with shared the video headend, Creating an environment where the existing providers want to get their customers off of the network to other solutions, and thirdly creating a great deal of uncertainty for the customers of the third party providers and their own customers. Comcast and Qwest have certainly taken advantage of all of these issues.

  17. Capt. Video says:

    There were only 3 ISP’s on iProvo. Broadweave took over all Mstar customers…including all their video customers.

    Veracity did not do residential (they passed all their residential to NuVont) and had no video.

    So NuVont was the only other provider and therefore likely the only provider to move any video customers off the network? I think Broadweave took the high road and did NOT attempt to stop NuVont from moving their video customers. Perhaps not the best business move, but the most honorable thing to do?

    In the iProvo business model and transport fee rate structure which I suspect Broadweave inherited by contract, a video customer accounted for only 17% of the revenue from a triple play customer. Due to the higher cost of providing video (programming costs, set top box and wiring costs, etc.), the lion’s share of the video revenue stayed with the service provider and only a small share went to the network owner.

    Broadweave made clear on day one that they would like to be the only provider on their network. So I suspect the NuVont acquisition is something they have wanted to complete since the purchase and was part of their original business model?

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