The head of the state agency overseeing the delayed Kentucky Wired broadband project says that the first section of the network could finally be completed sometime in 2019.
The development means that the state could soon begin generating revenue — or at least offsetting costs of the project by providing internet to government buildings and selling connections into the network to private internet providers.
The network will be comprised of six regional “rings” made of fiber optic wire that will eventually connect all 120 counties in the state.
Phillip Brown, executive director of the Kentucky Communications Network Authority, said that the “ring” connecting Louisville, Lexington and Northern Kentucky is on the verge of completion.
“There will be a site migration process that will take a couple months, but we will move quickly to light all the sites on ring 1a as possible,” Brown said.
The Kentucky Wired project has come under fire in recent years because of nearly $100 million in unplanned costs due to delays obtaining right-of-way agreements and permissions to hang fiber-optic cable from privately-owned telephone poles.
The state is also making payments of about $30 million per year to private partners who helped finance the project.
Those payments were supposed to be offset by selling part of the network’s capacity to local internet providers and using the network for state government buildings. Since the network isn’t live yet, the state hasn’t been able to generate any revenue or savings from the project.
Now Brown says that as part of a settlement with the project’s private partners, the state will pay $93 million in costs associated with the delays and shoot for finishing the project in 2020.
“In between July and October of 2020 is the completion schedule our contractors are building to. They are pushing to complete early and we’re encouraged by their progress so far,” Brown said.
Most of the $365 million public-private partnership was financed with a bond taken out by private investors led by Australian firm Macquarie Capital and backed using the state’s credit rating.
Kentucky is required to pay the companies “availability payments” that start at about $30 million per year and will escalate to nearly $57 million in 2045.
In September state auditor Mike Harmon released a scathing report of the project’s structure, which was approved during Gov. Steve Beshear’s administration and ultimately leaves the state on the hook for paying private partners even if the network isn’t functioning.
Harmon criticized Beshear officials for having an unrealistic timeline for completion and planning to use the network to provide internet for school districts across Kentucky, despite warnings that state would be unable to sever its current contract with AT&T.
After an attempt to rebid schools’ internet contract in 2015, AT&T successfully protested, saying that Kentucky Wired had an unfair advantage in the bidding process.
Republican leaders of the legislature threatened to trash the project earlier this year, but shied away after being warned that doing so could hurt the state’s credit rating and lead to even more costs.