Frustrated with the “dismal” level of high-speed Internet access available to local residents and businesses, the state of Kentucky has engaged Macquarie Capital to finance and oversee the construction of a fiber backbone that would extend throughout the state.
The project could cost anywhere from $250 million to $350 million. The state said the project will be paid for up front by leveraging private capital at no additional cost to Kentucky taxpayers.
Macquarie will be footing most of the bill. Kentucky plans to sell approximately $30 million in state bonds to support the project. Another $15 million to $20 million is expected to come in the form of grants from the Federal Government.
“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,” said Kentucky Governor Steve Beshear. “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.”
Macquarie Capital has already engaged a group of companies that includes First Solutions, Fujitsu Network Communications, Black & Veatch, and Bowlin Group, 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, Kentucky said.
“Kentucky’s Internet speed and accessibility have lagged behind the rest of the nation far too long,” Beshear said. “This partnership puts us on the path to propel the Commonwealth forward in education, economic development, health care, public safety and much more.”
In the first stage of the project, Kentucky wants to start with the fiber connections currently owned and operated by communications companies in the state, and connect and extend them so that open access fiber is available throughout the state.
That part of the project is scheduled to be completed within two years.
Internet service providers, cities, partnerships, or other groups may then tap into that middle mile infrastructure to offer last mile connectivity.
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, the state said.
When completed, there should be more than 3,000 miles of fiber in place across the state reaching into all 120 counties in Kentucky. The state said that the underserved eastern Kentucky region will be the first priority area for the project.
U.S. Rep. Hal Rogers, referred to a local program called Shaping Our Appalachian Region, or SOAR.
“We’re laying the first bricks for what could be Silicon Holler,” he said. “This new Super I-Way is the cornerstone of SOAR’s mission to diversify the economy in eastern Kentucky with improvements in business recruitment, fast-tracking telemedicine in the mountains, and adding high tech advancements in education.”
Kentucky ranks 46th in broadband availability and 23 percent of rural areas in Kentucky do not have access to broadband.
About half of the state’s households use broadband, but nearly one-quarter can’t access broadband at all (although they might have access to an ISP).
