Kentucky’s high-speed internet project should be done by mid-2019, Bevin says

Will high-speed internet save Eastern Kentucky?

Jared Arnett, director of Shaping Our Appalachian Region (SOAR), says high-speed internet access will bring great economic opportunity to Eastern Kentucky.
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Jared Arnett, director of Shaping Our Appalachian Region (SOAR), says high-speed internet access will bring great economic opportunity to Eastern Kentucky.

A high-speed internet network that supporters say will have an historic impact on Kentucky’s economy will be completed statewide by mid-2019, Gov. Matt Bevin estimated Friday.

The project, called KentuckyWired, will include installation of more than 3,000 miles of fiber-optic cable around the state, creating access in each county.

Bevin and others said high-speed internet connectivity is as crucial to economic development in the digital age as good highways were in the industrial age.

The new network will create economic options that don’t exist now because of uneven access to broadband around the state, as well as opportunities in health care, education and other fields, officials said.

“Connectivity is becoming everything,” Bevin said at a news conference in the Rotunda of the Capitol building in Frankfort. “This will make a profound difference.”

U.S. Rep. Hal Rogers, a Republican who represents Southern and Eastern Kentucky, pointed to spots in his district where access to fast internet service already has helped create jobs.

In Jackson and Owsley counties, for example, Peoples Rural Telephone Cooperative put together $50 million in grants and loans to extend high-speed internet throughout its territory. That has allowed about 200 people to get jobs working from home, Rogers said.

The problem is that there are big gaps in the availability of high-speed service in the state — an example of the “digital divide.”

Tom Wheeler, chairman of the Federal Communications Commission, said at a conference in Pikeville in June that 34 percent of houses in rural Kentucky can’t access internet service with a download speed of 25 megabytes per second, which is the federal standard for broadband.

The KentuckyWired project will make Kentucky a national leader in internet speed, Rogers said.

“This is historic. It’s complicated. But it can mean the difference to the economy of this state, especially in the eastern part of the state where we’ve suffered so much disaster economically,” Rogers said.

There has been considerable survey, design and engineering work and some construction work completed on the project, and the Kentucky Communications Network Authority has signed agreements covering 63,000 of the 82,000 utility poles statewide where the cable will be attached.

The authority also has set up partnerships with local internet providers and is in the process of negotiating more.

The plan is to build the network first in Eastern Kentucky, but with concurrent work in Northern Kentucky because that is a key access point for Kentucky to the larger web.

The state network authority has signed deals with Cincinnati Bell, which will install 166 miles of cable in Northern Kentucky as part of the project, and with a consortium of five regional telecommunications companies serving 21 Eastern Kentucky counties.

The consortium will add 305 miles of cable to what the members already have in place and lease the combined system to KCNA to be part of the network, rather than the state’s contractor having to install new fiber, according to a news release.

KentuckyWired will provide what is called middle-mile service —the bridge between the worldwide web and local communities. Local providers will have the job of extending service throughout counties, known as the last mile.

The project is a public-private partnership, with taxpayers owning the system but private companies building and operating it.

An Australian company, Macquarie Group, won the solicitation to build, operate and maintain the system for 30 years.

The company sold bonds totaling $270.9 million for the project, with Kentucky taxpayers obligated to make good on the debt. A key piece of Macquarie’s return will be from selling internet service to state agencies and universities.

The state issued $30 million in bonds and Rogers arranged for $23.5 million from the federal government, according to the authority.

Rogers and former Gov. Steve Beshear started pursuing the project. Officials estimated the network would be up and running in Eastern Kentucky by April 2016.

One reason that timetable got delayed is that Bevin’s administration made a greater effort to involve companies, co-ops and others that already provide internet service, in order to make use of existing infrastructure, officials said.

“It is a partnership, and that is exactly why it will be solid and good and long-lasting,” Bevin said.

A question on funding also slowed progress.

After Bevin took office, officials said there was a problem in how Beshear’s camp had set up the deal to pay Macquarie. Part of the revenue — about $12 million annually — was to come from providing internet service to more than 170 public-school districts, but AT&T already had a long-term contract for that service.

The new plan for the network does not include that money, Bevin said.

Officials said using existing cable will cut construction costs and help close the gap.

Bevin said he does not plan to take on more debt for the project or appropriate money from the state’s General Fund to support it.

“It is our intent for this to be a network that cash-flows itself. I believe that it can,” he said.