Statewide Broadband Project Moves Forward

Sep 16, 2016

Credit wklzzz, 123rf Stock Photo

Kentucky’s statewide broadband internet project, KentuckyWired, will be complete by mid-2019, according to Gov. Matt Bevin.

The $324 million public-private project is a collaboration between the state and private partners, who will operate and maintain the network for 30 years, charging the state about $28.5 million and up per year. After 30 years, Kentucky will own the network.

During a news conference Friday, Bevin said the project will help make Kentucky the “hub of excellence for America.”

“It cannot happen without broadband, it cannot happen without a strong technological infrastructure,” he said.

 

The project will stretch 3,000-miles of fiber optic cable to build out the “middle mile” of a statewide broadband network. Cities and businesses across the state will be in charge of building out the “last mile” to connect services to customers.

Macquarie Capital, Black & Veatch, Fujitsu, First Solutions and Ledcor are the private partners involved in the project. The companies will make money from charging 670 government agency locations, higher education institutions and others to use the network.

The project has changed since last September when former Gov. Steve Beshear’s administration sold $289 million in bonds to finance KentuckyWired.

At the time, officials planned on redirecting about $11 million a year in federal funds that school districts use to pay for internet, having them pay for service through KentuckyWired instead. The money would have helped pay the annual $28.5 million “availability payments” to private partners.

But after the state rebid the school district’s internet contract, AT&T protested, saying that KentuckyWired had an unfair advantage in the bidding process.

AT&T currently holds the long-term contract to provide internet for Kentucky’s 173 public school districts.

Bevin said the state wouldn’t rebid the project.

“That is their contract, they bid it, they received it,” he said. “With that is going to be honored every single relationship, every single contract […] is going to be honored, as well it should be. That’s what good business looks like.”

 

When asked how the state would pay for the $28.5 million-a-year fee to private companies now that the state won’t be able to use federal funds used by school districts, Bevin said the network will pay for itself through users.

“We will build it, they will come, their use of it will drive the revenue associated with what’s needed to pay this debt back,” Bevin said.

Public-sponsored broadband initiatives have been under fire in states like North Carolina and Tennessee, where recently a federal appeals court upheld state laws that restrict municipalities from expanding city-owned broadband projects.

The state has partnered with Cincinnati Bell and East Kentucky Network to help with construction in the northern and eastern parts of the state, respectively.

When asked if the state should be getting involved in the broadband internet business, U.S. Rep. Hal Rogers, a Republican, compared the initiative to the interstate highway system.

“There are also people these days that say the government should not be involved in building interstate highways,” Rogers said. “This is the new interstate highway of our age.”