State awards contract for statewide high-speed Internet by 2018

Gov. Steve Beshear, at the podium, and U.S. Hal Rogers, at his side, announce statewide broadband initiative at a Capitol news conference in Frankfort. Photo by Jack Brammer | Staff
Gov. Steve Beshear, at the podium, and U.S. Hal Rogers, at his side, announce statewide broadband initiative at a Capitol news conference in Frankfort. Photo by Jack Brammer | Staff Herald-Leader

FRANKFORT — By 2018, all parts of Kentucky will be able to tap into high-speed Internet service, a move state leaders say will propel the state in education, economic development, health care and public safety.

At a news conference Tuesday in the state Capitol with Gov. Steve Beshear, U.S. Rep. Hal Rogers, R-Somerset, called the expanded service "the modern-day equivalent of the interstate highway system."

Beshear and Rogers, who are partnering to improve Eastern Kentucky through SOAR, the "Shaping Our Appalachian Region" initiative, announced that the state signed a contract last Friday with Macquarie Capital of Australia to develop "a robust, reliable, fiber backbone infrastructure to bring high-speed Internet connectivity to every corner of the Commonwealth."

The contract is between $250 million and $350 million. The wide range in the price tag, Beshear said, is because of the possibility of Macquarie's using some existing fiber line that is buried or aerial.

The crucial first components are scheduled to be in operation in less than two years in Eastern Kentucky, he said.

The venture is a public-private partnership, Beshear said, at no additional cost to Kentucky taxpayers.

The project will be supported by about $30 million in state bonds and $15 to $20 million in federal grants.

Rogers said the recent federal omnibus budget bill included $10 million for the Appalachian Regional Commission to improve broadband in central Appalachia.

Beshear said the state will apply for grants from the commission for the new project.

"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."

Kentucky now ranks 46th in broadband availability. About 23 percent of rural areas in the state do not have access to broadband.

Most households in the state have access to an Internet Service Provider, Beshear said, but that's not the same as high-speed broadband.

High-speed broadband is capable of carrying much larger amounts of information to a larger group of users at faster speeds.

Only about half of the state's households use broadband service. Nearly one-fourth of the state's households cannot access broadband at all.

The first stage of the project is to build the main broadband fiber lines across the state.

The project will take advantage of existing lines, partnering with local telecommunications companies, local governments and major carriers to deliver the network more quickly and reduce construction costs.

Cell phone coverage also is expected to improve. Cell phone companies will be able to use the state's fiber optic cable network to add capacity and broaden coverage areas in the state that have had poor cell phone reception.

The project will have more than 3,000 miles of fiber across the state.

The fiber will be in all 120 counties and Eastern Kentucky will be the first priority area.

Work along Interstate 75 from Northern Kentucky to Williamsburg will form the "spine" of the network. Work in the priority region of Eastern Kentucky will occur at the same time.

More than 100 key properties will be connected, including universities, state government buildings and community and technical colleges.

The Center for Rural Development in Somerset will partner with the state, focusing on communities east of Interstate 75. The center also will hold education workshops to help communities learn how to use the new network.

One of the most important features of the network, Beshear said, is that it truly will be "open access."

That means other Internet and cellphone service providers can lease portions of the network.

These leases will not be limited to one provider per county or community, he said.

Several groups may lease the network, giving consumers a choice in buying their broadband at possibly lower costs.

Macquarie is to design, develop and operate the network over the next 30 years.

Private partners will bear developmental and operational risks of the project, and the state will retain ownership of it.

"Macquarie Capital and its partners are extremely excited about the opportunity to develop this network under the public-private partnership model, bringing together a team of market leading specialists focused on implementing the network as quickly as possible," said Nick Hann, the company's managing director.

Macquarie's consortium partners include First Solutions, Fujitsu Network Communications Inc., Black & Veatch and Bowlin Group, a Kentucky wire and fiber-line contractor in Walton.

One of Bowlin's officials is former University of Kentucky basketball star Jack "Goose" Givins.

He said the project is "a winner" for the entire state.