A project to bring high-speed broadband to underserved parts of the state through a government-owned fiber network has been touted as a way to bring jobs to the state and help citizens by officials who have had a hand in crafting the plan. However, some are expressing skepticism about the price tag and details behind the KentuckyWired project announced last year.
In the article below, the Kentucky Chamber’s Bottom Line will examine both sides of the issue.
Kentucky Congressman Hal Rogers of Somerset has worked with many state officials in recent years to advance his home district of eastern Kentucky through the creation of the Shaping Our Appalachian Region (SOAR) summit, where the concept of the KentuckyWired broadband project was born.
Rogers said when he and Gov. Steve Beshear decided to hold a summit to find innovative ways to help revamp eastern Kentucky, broadband was an idea he felt needed to be examined in order to move the area forward.
“I took this idea to the governor and the leadership of the state legislature and they were sold. It required no selling. Because this will give us the capability with broadband, high speed, high capacity cable, we will be able to recruit businesses,” Rogers said.
The Kentucky Congressman said the broadband cable should help attract new types of businesses the state has “never dreamed” of having before as well as help the individuals in eastern Kentucky by providing this new resource.
Kentucky Wired has been announced as a public-private partnership (P3), the biggest one on the nation, and will be financed through about $30 million in state bonds and $15 to $20 million in federal grants as well as a multi-million dollar commitment from Macquarie Capital of Australia. The contract between the state and Macquarie is between $250 million and $350 million. Rogers said the project could not be done without the private investment.
As for how it will affect the economy of the state and eastern Kentucky, Rogers said it will help boost multiple industries and allow them to work better together (at 4:30 in the interview below).
“If you can dream it, we can do it. And I think this cable will give us the capability to dream big dreams, outside the box. We have got to think anew, this is a whole new world in which we find ourselves,” Rogers said.
Watch the full interview with Rogers below:
But not everyone as confident about the success of the project. David Williams of the national nonprofit Taxpayers Protection Alliance told the Kentucky Chamber’s Bottom Line the deal has been made for the KentuckyWired project without transparency and he feels the taxpayers deserve to know what they are getting out of the project.
“We don’t know the details. This is like buying a house and not knowing the details of your mortgage but signing the paper and then finding out what the terms are, what the interest rates are, after you sign the deal. It’s too late at that point. And that’s what we are just saying listen, pump the breaks on this. Let’s just take a step back, let’s see what’s is in this contract, the exposure to the state, to the taxpayers,” Williams said (at 4:30).
Williams also mentioned the 30-year timeline of the project pay off set by the government, stating that the state may be paying for an outdated technology before the end of that timeline.
“That’s why the private sector needs to take the lead in this because if they fail, they only fail for their business model, they don’t fail the taxpayers,” Williams said, noting the example of Google laying down fiber in different cities across the country and the possibility of it coming to Louisville (discussion starting at 10:00 in the interview).
When asked if he was concerned about the idea of technology changing before the end of the project’s timeline, Rogers told the Kentucky Chamber he believes the contract will be a good deal in the long run.
“Well, you have got to be careful with it of course but I think we are on good grounds here. The investment that Macquarie is making, I think it is a good investment for them and at the same time it is a great investment for us, for the public, because we are going to get a service that we could not otherwise afford,” Rogers said. “The length of the contract was of course negotiated with Macquarie and the state, basically. So I am not in a position to argue with that term nor either to know whether it is a good deal or not. But I think it is.”
Williams also shared concerns about privacy, price to consumers and taxpayers and more with government-owned broadband. There have also been failures with similar projects in other states, Williams said.
“In Utah, Google bought that [broadband] system for $1. It cost them $40 million to build the system in Utah, they lost $10 million and they wanted to sell it. So they sold it to Google $1 so now they are $30 million in the hole because they couldn’t figure out how to make it work,” Williams said (at 10:30 in the interview). “And this Australian company that is coming in had this proposal in Utah to change everyone $20 a month on their electricity bill to pay for the system. These are people that weren’t even using the internet or subscribing to the system that have to pay $20 a month for the system. That’s a huge red flag for the people of Kentucky.”
Hear much more from Williams in the full interview below: