Launched by Gov. Beshear, Rep. Rogers
FRANKFORT, Ky. (Dec. 23, 2014) — A project announced today by Gov. Steve Beshear and Rep. Hal Rogers is designed to bring high-speed Internet to every corner of the state, while potentially lowering customer costs.
Currently, Kentucky ranks 46th in broadband availability and 23 percent of rural areas in Kentucky do not have access to broadband.
But that could all change through a partnership with Macquarie Capital that will be paid for up front by leveraging private capital at no additional cost to Kentucky taxpayers.
“If we were to rely solely on state government funding to get this project off the ground, it would take years, if not decades. Those kinds of tax dollars just aren’t available,” Beshear said. “In this technology-dependent economy, we can’t afford to wait another minute. That’s why this partnership is so valuable – it ramps up this project to the speed of the private sector without any additional burden on our taxpayers.”
The first stage of the project is to build the main broadband fiber lines across the state. These major fiber lines are called the “middle mile.” The “open access” network will allow the private sector to use the fiber to deliver services into communities. Once complete, other Internet service provider companies, cities, partnerships, or other groups may then tap into those “middle mile” lines to complete the “last mile” – the lines that run to individual homes or businesses.
Where already in place, the project will take advantage of existing infrastructure, thus partnering with local telecommunications companies, municipalities and major carriers to deliver the network more quickly and reduce construction costs.
Improved cell phone coverage is anticipated as part of the initiative. Cell phone companies may choose to use the state’s “middle-mile” fiber network to add capacity and broaden coverage areas throughout the commonwealth that have traditionally had poor cell phone reception.
When completed, the more than 3,000 miles of fiber will be in place across the state. This “middle-mile” fiber infrastructure is key to reaching much of Kentucky’s large rural population.
Fiber will be available in all 120 counties, and the underserved eastern Kentucky region will be the first priority area for the project. The Center for Rural Development in Somerset will partner with the commonwealth, focusing on communities east of Interstate 75. The center will also host education workshops to help communities learn how to connect to the new network.
The push for reliable, accessible high-speed broadband is one recommendation that emerged from SOAR, the “Shaping Our Appalachian Region” initiative.
Macquarie Capital has assembled a team of market-leading specialists to design, develop and operate the network over the next 30 years. While the private sector partners will bear developmental and operational risks of the project, the commonwealth will retain ownership of the network.
Macquarie will begin work immediately on phase one to design the overall statewide system and determine the project’s scale. The design and cost estimates are due by the end of February 2015 with construction of the first segments expected to begin in the summer and completed by April 2016. The total cost of the project will depend upon the ability to leverage existing infrastructure versus deploying new routes, which will be determined during the design phase.Overall, the project is estimated to cost between $250 million to $350 million, and will be supported by approximately $30 million in state bonds and $15 to $20 million in federal grants.
Work along I-75 from northern Kentucky to Williamsburg will form the “spine” of the network, with work in the priority region of southeastern Kentucky occurring simultaneously. More than 100 key facilities will be connected, including universities, state government buildings and community and technical colleges.
The initiative will be a partnership of government at all levels and the private sector. The public-private partnership—often referred to as a P3—allows the state to leverage resources to fill service gaps. In this case, private capital will be used to build the network at no additional cost to Kentucky taxpayers. This project likely would never be undertaken with traditional state financing methods.
Bringing private sector investment to build the network significantly decreases the time needed for design and construction, making broadband access available sooner for families and businesses. With the state’s oversight of the main broadband lines, consumer costs may be lowered by eliminating the need for private providers to build duplicate network infrastructure; that means Internet service providers can instead invest in cell phone service or “last-mile” service.
The project will leverage state government’s existing Internet networks to build a kind of high-speed delivery line throughout the state.
The network will be truly “open access,” meaning many other Internet and cell phone service providers can lease portions of the network. Those leases will not be limited to one provider per county or community; several groups may lease the network, which will give consumers a choice in purchasing their broadband. By partnering with the network, providers will be able to reduce their costs when building out “last mile” service to customers. That competition should result in lower consumer costs.