Kentucky Governor Steve Beshear http://governor.ky.gov and U.S. Representative Hal Rogers http://halrogers.house.gov have announced a new public-private partnership to develop a robust, reliable, fiber, backbone infrastructure to bring high speed internet connectivity to every corner of the Commonwealth.
Macquarie Capital Group www.macquarie.com, a global investment firm, was chosen as the private sector partner to invest private capital to design, develop, build, and operate the network. The group will aggressively market the availability of high speed broadband to existing and new last mile providers.
Macquarie will begin work immediately on phase one to design the overall statewide system. The design and cost estimates are due by the end of February 2015 with construction for the first segments expected to begin in the summer and be completed by April 2016.
The total cost of the project will depend upon the ability to leverage existing infrastructure versus deploying new routes which will be determined during the design phase. Overall the project is estimated to cost between $250 million to $350 million and be supported by approximately $30 million in state bonds and $15 to $20 million in federal funds.
Eastern Kentucky will be the first priority region for the project. Kentucky’s Center for Rural Development http://centertech.com will seek federal grant funds to invest in the eastern Kentucky segment of the network and partner with the Commonwealth for 30 years to serve the region. When completed more than 3,000 miles of fiber will be in place across the state. This middle mile fiber infrastructure is key to reaching much of Kentucky’s large rural population.
This new Super I-Way is the cornerstone of the “Shaping Our Appalachian Region” initiative called SOAR www.soar-ky.org. SOAR’s mission is to diversify the economy in eastern Kentucky with fast tracking telemedicine in the mountains and adding high tech advancements in education.
There are several advantages for states to develop Public-Private Partnerships or P3s as the private partners bear substantially all the development and operational risk of the project. Also, there are built-in incentives to deliver on-time and on-budget.
Once completed, the Macquarie team will operate the network utilizing high performance standards and incur financial penalties if these standards are not met. In addition, there is an opportunity to generate and share revenues which will flow back to the Commonwealth.
As for the Commonwealth, the partnership will make access to broadband more affordable for government, businesses, and communities. Also, the system will be “Open Access” which allows the private sector to lease or buy portions of the broadband fiber. That access will promote competition and new internet service providers and at the same time lower costs.