Lawmakers, outside groups voice concerns over KentuckyWired; Kentucky Communications Network Authority moving forward with project

10/28/2015 07:15 PM

Kentucky is embarking on a major effort to provide high-speed Internet access across the commonwealth, but the process has some lawmakers and outside groups questioning privacy, oversight and the how the entity will operate.

The project known as KentuckyWired, also referred to as an I-Way, is the brainchild of U.S. Rep. Hal Rogers and Gov. Steve Beshear. The end goal of the project is to create a state-owned physical fiber-optic network that will stretch 3,400 miles in a ring around the state.

That ring will eventually lead to increased broadband access to citizens across the commonwealth.

Initially the infrastructure put in place will act as a “middle mile” between the global Internet and local providers, but KentuckyWired is being offered as an “open-access network,” meaning local providers and Internet service providers can tap into the system in an effort to deliver broadband to businesses and homes.

Initially much of the network will be dedicated to providing Internet access for schools, state-owned colleges, universities and government buildings across the commonwealth.

The project will cost $325 million, with the General Assembly issuing $30 million in bond sales; Rogers, chairman of the U.S. House Appropriations Committee, leveraging $23.5 million in federal funding; and $271 million as part of a public-private partnership, or P3.

Australia-based Macquarie Capital placed the winning bid on a 30-year contract for the fiber network as part of the P3. The group lined up partners for the project First Solutions, a public-private partnership alliance, will help share network revenues with the state; Tokyo-based Fujitsu Network Communications will design, equip, operate and maintain the fiber network; Kansas-based Black & Veatch will design and build outside plants; and Kentucky-based Bowlin Group will provide construction.

In September, David Williams with the Taxpayers Protection Alliance — a group partially backed by billionaire conservative brothers Charles and David Koch — said his organization has major concerns with taxpayer dollars being spent on the initiative.

“Let’s just pump the brakes a little bit here and make sure there aren’t any kind of weird things in this contract that would really expose taxpayers to more handouts,” Williams said.

Williams said his group is trying to raise multiple “red flags” about the project from privacy to potential duplication, and the possibility that internet service providers like AT&T, Comcast, Time Warner Cable or others may not adopt the use of the government’s middle mile fiber.

“We’re just talking about a system that internet providers may not adopt is going to go by these communities, and the internet providers … they may say, ‘You know, we like our system better,’ so they might not jump onto this fiber optic system, and that diminishes their subscriber base, and what does that do to the project?” Williams said.

On Friday, Mike Hayden, communications director for the Commonwealth Office of Technology, and Steve Rucker, executive director of the Kentucky Communications Network Authority (KCNA), spoke with Pure Politics about KentuckyWired in an effort to ease some concerns from lawmakers, outside groups and private businesses.

Hayden and Rucker were grilled before the Interim Joint Committee on Appropriations and Revenue field hearing held in Murray on Thursday. Lawmakers presented concerns over the bidding process on the contract, re-bidding within the Kentucky Department of Education, and the potential for duplication of existing fiber in certain communities, to name a few items.

“We are serving our own first, our government locations. We’re going to have a point of presence in every county, and from that point of presence than national or local ISP’s have an opportunity to use excess fiber that we have in order to provide service to the citizens,” Rucker said about the build out of the infrastructure.

While it may not alleviate concerns from groups and lawmakers there is a potential, Hayden said, “in some cases there may be some duplications,” when asked about potential for parallel lines to be run from both current internet service providers and the KentuckyWired middle mile infrastructure.

“We have reached out to every provider in the state, brought them to the table had discussions with them, and like Steve said, we’re in continuing negotiations not just with telco’s, but with municipals, rural electrics everybody else for this network,” Hayden said.

When it comes to overseeing the contract, Rucker said Beshear has formed the Kentucky Communications Network Authority.

“As it relates to this contract there are service level agreements and penalties involved with Macquarie and its subs that if they are not performing at a certain standard that they are penalized because of that,” Rucker said (8:00).

On privacy, Hayden and Rucker said the Internet service providers will be the entities still controlling the flow of information and that privacy concerns are off-base.

“We’re providing just basic transport — it’s a straw. We push information through that straw, we have no access to that information that’s within that straw,” Hayden said.

Hear what else Rucker and Hayden had to say about the project in the full interview below:

Correction: An earlier version of this story incorrectly identified Steve Rucker’s title. Rucker is the executive director of the Kentucky Communications Network Authority.


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