Public-private partnership will create 3,000-mile fiber network throughout Kentucky, improve broadband access in mountains

12/23/2014 09:57 PM

FRANKFORT — Congressman Hal Rogers’ vision of a “silicon holler” in eastern Kentucky came closer to reality Tuesday after officials announced a wide-ranging effort to provide high-speed Internet access throughout the state, with Appalachia getting some early attention.

Rogers, Gov. Steve Beshear and others touted the public-private partnership between Kentucky and Australia-based Macquarie Capital to develop a fiber infrastructure as a godsend for the impoverished mountain region.

“Eastern Kentucky will be equal to the world in limitless technology — no more boundaries sketched by our terrain, no more boundaries for high-tech work,” said Rogers, R-Somerset. “In the past we were limited by rough terrain and a shortage of modern highways. We can truly create a ‘silicon holler’ and compete with the rest of the world because the cable levels those mountains and gives every county worldwide access.”

Eastern Kentucky is a priority in the Next Generation Kentucky Information Highway plan, as officials hope to complete work on a fiber infrastructure “spine” from northern Kentucky to Williamsburg along Interstate 75 by spring 2016.

Also in that timeframe, Macquarie Capital will build a fiber “ring” branching from Fayette County east to Boyd County, south through Floyd and Perry counties and culminating in Pulaski County, as seen in the diagram below. The red portion indicates in first phase of the project and the remaining blue lines show the second phase, which will cover the rest of the state and be completed by fall 2016. The fiber network is expected to be fully operational by 2018.

The final price tag for the project has not been set, but Beshear said estimates show the cost ranging from $250 million to $350 million, depending on whether existing fiber lines can be used.

Much of that sum will come from Macquarie Capital, which placed the winning bid on a 30-year contract for the 3,000-mile fiber network, but the state will provide $30 million in bonds with federal grants totaling at least $15 million. Rogers, chairman of the House Appropriations Committee, said the “cromnibus” federal spending package signed into law last week includes $10 million for the Appalachian Regional Commission to help bring broadband to the mountains.

Improving high-speed Internet access is one tenet of the Shaping Our Appalachian Region initiative, which Beshear and Rogers, among others, launched last December.

House Speaker Greg Stumbo says he can already see progress on the horizon for eastern Kentucky. Along with the fiber infrastructure project, Stumbo said Beshear recently visited Salyersville to kickstart expansion of the Bert T. Combs Mountain Parkway and stopped in Pikeville to ceremonially sign the coal county scholarship bill.

“The good part of the story is that there are men like Steve Beshear and Hal Rogers and others who joined that SOAR conference a year ago who haven’t given up on eastern Kentucky, who do believe that there’s hope in those mountains and who’ve taken the positive steps in the right direction to give opportunity in the future for those who may’ve seen a rather bleak, or seen a rather bleak time this Christmas,” said Stumbo, D-Prestonsburg.

The project isn’t just a boon for eastern Kentucky, officials said. Every county is expected to have access to the fiber network by 2018, with the state potentially netting some additional revenue from broadband providers as they tap into the “open access” fiber network. Beshear could not provide any revenue estimates.

Beyond monetary gains, officials say the fiber network will improve the state’s dismally low broadband connectivity. Kentucky ranks 46th out of 50 states in that category, with 23 percent of the state’s rural areas without access to high-speed Internet.

Without the “essential” public-private partnership with Macquarie Capital, Beshear said the broadband project likely would have withered.

“The bulk of the money that will build this network is from the private sector,” the Democratic governor said. “We probably would never be able to build this kind of network if we were just depending on tax dollars.”

Macquarie Capital has already 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.

The Australian group has played a role in more traditional infrastructure projects as public-private partnerships to enhance broadband availability are “relatively new,” said Nick Hann, Macquarie Capital’s senior managing director. Kentucky will be among the first states to build such an extensive fiber network, although others “have taken smaller steps towards this,” Hann said.

“At the moment there are 320 communities around the country who are taking steps towards this, but I think it’s fair to say that Kentucky is the first state that has embarked on a middle-mile project of this scale using the PPP model,” he said, referencing the major fiber lines called “middle miles” in the plan.

Kevin Wheatley

Kevin Wheatley is a reporter for Pure Politics. He joined cn|2 in September 2014 after five years at The State Journal in Frankfort, where he covered Kentucky government and politics. You can reach him at kevin.wheatley@charter.com or 502-792-1135 and follow him on Twitter at @KWheatley_cn2.

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