Lawmakers angered by delays and increased costs of Kentucky Wired project

07/27/2017 03:09 PM

FRANKFORT – Legislators expressed grave concerns Thursday about delays hampering the launch of KentuckyWired, a statewide open-access broadband network focusing on meeting current needs for government locations, with one state Senator suggesting that it might be time to scrap the entire program.

KentuckyWired is a public-private partnership established with Macquarie Capital to design, build, operate and maintain the network for 30 years.

KentuckyWired is to be an “open access” network, meaning cities, partnerships, private companies or other groups may acquire access to the “middle-mile” lines, but the network would not be providing “last mile” services, or the lines that run to individual homes or businesses.

Members of the Budget Review Subcommittee on General Government, Finance, Personnel, and Public Retirement heard testimony from Kentucky Communications Network Authority (KCNA) Executive Director Phillip Brown about delays from pole attachment agreements, permits, access to locally controlled rights-of-way or public property, and private property easements which are delaying the startup of the service in some cases as much as 20 months.

For instance, the first area, known as Ring 1A, which is roughly northern Kentucky, Louisville, Frankfort, Lexington and areas in between was projected to be completed by January 9, 2017, but is no projected to launch on July 2, 2018.

Another area, Ring 1B, which covers all of southeastern Kentucky was scheduled to launch on November 2, 2016, but is now projected to not be up until July 16, 2018, a delay of over 20 months.

Brown, who took over his position, after work began under the previous administration of former Gov. Steve Beshear, told committee members that 152 so called supervening events have led to delays in the launch dates, resulting in added costs.

“Supervening events are instances where we have to provide extra funding to accommodate direct losses that are incremental to the project that were incurred by our private sector partners,” Brown said. “There are instances where a permit might not have been approved within a 60-day shot-clock, and so, at that point, a supervening event is created.”

Rep. Phil Moffett, R-Louisville inquired about the fines and penalties which have come about due to the so called supervening events.

“What’s your total guesstimate on the cost of the supervening events that have stacked up to date,” Moffett asked.

“I would estimate the cost overruns of the supervening events costs would be tens of millions,” Brown said.

Moffett also suggested that many of the supervening event delays are a result of not being familiar with basic information of how the industry works.

“The fact that you’re having difficulty getting access to polls and getting these easement agreements, anybody that’s been in this business any amount of time would have known that these delays were foreseeable,” Moffett said. “You have to be a registered competitive local exchange carrier to get access to the poles on a fast basis.”

Sen. Chris McDaniel, R-Taylor Mill, criticized the whole implementation process saying it was totally unrealistic to begin with.

“I said within the first 20 minutes of what was a terrible presentation that the schedule on this would never work,” McDaniel said. “Even if you had everything in place you couldn’t meet the construction schedule, let alone, all of the other components that go with it.”

McDaniel, who is the Senate Appropriations and Revenue chair, plans to discuss the matter more in September and went so far as to begin the discussion of possibly abandoning KentuckyWired because of bad execution and unrealistic expectations.

“I’m betting it’s going to be substantially cheaper to just stop and eat what we got versus what we are about to do here,” McDaniel said. “This is the 21st century version of the big dig in Boston.”

Rep. Tim Couch, R-Hyden, cautioned lawmakers about pulling the plug since the idea of broadband access was the idea of U.S. Rep. Hal Rogers, R-Somerset, and Couch believes that access to broadband is essential to his and other economically depressed areas of the state.


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