FRANKFORT – KentuckyWired, the new statewide network of fiber optic lines that will carry high-speed broadband into every single county of Kentucky in an effort to serve government locations, is running behind schedule with the first phase.
The first phase of the project, which includes Frankfort, Louisville, northern Kentucky, and areas of rural southeastern Kentucky, are now anticipated to be completed by the first quarter of 2019.
Total completion of the entire project has been pushed from fall 2018 to 2019 because of significant delays in reaching pole attachment agreements with AT&T and Windstream, who owns majority of the utility poles necessary to construct the network, particularly in central and eastern Kentucky.
On Monday, lawmakers serving on the Budget Review Subcommittee on General Government, Finance and Public Protection heard that agreements were finally reached with the companies.
This project is a public-private-partnership (PPP or P3) formed by a consortium of partners including the Kentucky Communications Network Authority (KCNA), Macquarie Infrastructure Developments, LLC, First Solutions P3, Inc and Ledcor. Ledcor will also be responsible for operating and maintaining the KentuckyWired network to ensure its flawless operation over the next 30 years.
Financing for the $324.4 million project is composed of three parts:
– General fund bonds ($30M) which are being used to purchase the bulk of the materials to build the fiber network. – Federal grants from the Appalachian Regional Commission ($23.5M) which are focused on building priority network segments in southeast Kentucky. – Private funds for construction ($270.9M)
Kentucky Wired is designed to have the capacity and ability to serve other public sector organizations, like public libraries and public school districts. It will be an “open access” network, which means cities, partners, businesses or other groups may acquire access.
KentuckyWired will not be providing “last mile” services, or the lines that run to individual homes or businesses. That service will be performed by local internet providers.
Chris Moore, the executive director for the Kentucky Communications Network Authority says that the biggest issue with delays was an under count of the different owners of the poles.
“They anticipated that a lot of them would be public right-of-ways, not privately owned, and of the privately owned, they miscounted thinking that a lot of them were owned by electric utilities and other entities, but it turns out that a lot more of them were owned by AT&T, and Windstream,” Moore said.
The project plan calls for construction of over 3,000 miles of fiber optic cables throughout the state. Under the project plan, over 1,000 network operating and managing sites will be connected throughout the commonwealth with 85 percent of the fiber optic cables being attached to telephone poles, and 15 percent of the cables running underground.
Moore told members of the committee on Monday that construction of network has been ongoing since the P3 contracts were finalized in September 2015.
“Construction of key infrastructure to the SOAR region of southeast Kentucky and to the Golden Triangle, Frankfort, northern Kentucky, Louisville, is the first priority,” Moore said. “In order to serve the state government’s needs, we must build to the seat of government, Frankfort, and bring the central Kentucky area online to connect to the internet.”
In an effort to minimize costs and engage private businesses, Moore says that KCNA is committed to partnering with Kentucky’s telecommunications service providers, local municipals, and rural electric cooperative companies to leverage existing infrastructure.
“We recently signed a Strategic Agreement with Cincinnati Bell to partner on construction costs in northern Kentucky,” Moore said. “This agreement will save approximately $3 million in project construction costs.”
In addition to the construction of the network, KCNA is supporting communities in eastern Kentucky as they become ready for a future that includes expanded broadband service.
“We have awarded contracts for Community Broadband Planning and Training Services to support community fiber planning in eastern Kentucky,” Moore said. “We are also partnering with the East Kentucky Concentrated Employment Program (EKCEP) to help businesses and communities grow e-commerce jobs.”
Thirty-year bonds were issued to finance the project. Payments from the commonwealth, called Availability Payments (AP), will repay the bonds and other project costs. Moneys that state government agencies and institutions pay today for network and internet services to various service providers will be re-purposed to fund the AP requirement.
The AP requirement reaches approximately $28.5 million before annual escalation.
The first payment of $28,000 was made in July and monthly payments will be due for the remainder of the term of the contract.