KentuckyWired’s decade of failure for taxpayers demands legislative action | Opinion

A recent bill in the Kentucky legislature would eliminate the executive director position for KentuckyWired and place control of the struggling state broadband network in the hands of the state’s technology office. This is a step toward oversight on a failing system that never should have been built. Policymakers across the country should take note and demand transparency and accountability for failing government-owned networks.

House Bill 314, sponsored by Rep. Matt Lockett (R-Nicholasville), would remove Doug Hendrix, director of the Kentucky Communications Network Authority (KCNA) that oversees KentuckyWired, and eliminate the position. The director of the Commonwealth Office of Technology (COT), which provides information technology support for state government, would lead the network.

Lockett said COT was the right organization to take over, already overseeing most state IT projects and capable of managing the network. He and the Information Technology Oversight Committee reviewed KentuckyWired, a 3,200-mile middle-mile network spanning all 120 counties. Hendrix resigned shortly after, with a spokesperson noting his retirement after 27 years.

“No matter who came before us, one theme kept coming up: widespread concern about how KCNA is overseeing this project,” Lockett said.

KentuckyWired’s troubled history is well-documented. The network has been embroiled in controversy since its inception more than a decade ago. In 2018, then-state auditor Mike Harmon called the KentuckyWired project a massive “bait-and-switch on the taxpayers,” with the project shifting the burden of construction costs from private partners to the citizens of Kentucky. The project’s total cost exceeded $1.5 billion, with Australia-based Macquarie Capital only having to fund about 2 percent of it.

Taxpayers’ pocketbooks suffered further when KentuckyWired failed to capture intended E-rate funds from the FCC’s Universal Service Fund. Leaders hoped to collect $11 million annually to service about 1,100 government facilities and repay project costs.

The original financial model for KentuckyWired was flawed from the start, assuming the Finance and Administration Cabinet would hand the contract straight to KCNA. Private providers rightly protested, pointing out that KCNA had an unfair advantage once Steve Rucker, a former Finance Cabinet deputy secretary, took over as executive director. Predictably, the bid process collapsed, Rucker resigned, and taxpayers were left footing the bill for a network rigged from the outset.

Even worse, Accelecom, a Macquarie offshoot, was handed exclusive control of half of KentuckyWired’s fiber for commercial use in 2021. This cozy arrangement guaranteed that profits flowed to private partners while Kentucky residents continued to shoulder the risks and costs. It’s a textbook example of government mismanagement and favoritism masquerading as progress.

KCNA later attempted to terminate its contract with Accelecom, alleging the company violated the terms of its agreement. Accelecom CEO Brad Kilbey told WDRB in a statement that KCNA had not conducted its relationship with the company in good faith. The litigation has been tied up in Franklin County Circuit Court for about two years.

Lockett’s legislation finally puts some much-needed accountability into KCNA, replacing a board stacked with cabinet secretaries beholden to Gov. Andy Beshear with constitutional officers, and giving the governor just two appointments. Shifting control to the Finance and Administration Cabinet and including the chief information officer for the Department of Education signals a step toward professional management instead of political patronage. It’s long past time KentuckyWired was run like a serious network, not a playground for political cronies.

The Information Technology Oversight Committee recommended suspending some KentuckyWired funding until litigation and a follow-up audit by State Auditor Allison Ball are complete. The Legislature allocated more than $25 million on bonds for infrastructure upgrades in the current two-year budget.

KentuckyWired proved to be a mistake from the start. While Lockett’s bill feels a bit like reshuffling the deck chairs of the Titanic, attempting to rein in control of the struggling network is better than inaction.

Johnny Kampis is director of telecom policy for the Taxpayers Protection Alliance