Kentucky launches private/public partnership for middle-mile network

Kentucky Governor Steve Beshear and U.S. Rep. Hal Rogers announced on December 23 the selection of Macquarie Capital as the Commonwealth's partner in the development and deployment of a state-wide open access middle-mile fiber-optic network. Construction of the network should begin this year and finish in April 2016, the planners expect.

Kentucky Governor Steve Beshear and U.S. Rep. Hal Rogers announced on December 23 the selection of Macquarie Capital as the Commonwealth's partner in the development and deployment of a state-wide open access middle-mile fiber-optic network. Construction of the network should begin this year and finish in April 2016, the planners expect.

The cost of the project will depend on how much existing fiber-optic cable infrastructure Macquarie and its partners can leverage. Macquarie, which was selected after an RFP process the Commonwealth and the Center for Rural Development conducted, has until the end of February 2015 to complete design and cost estimates. However, current estimates of the project's overall costs range between $250 million and $350 million.

Macquarie will foot most of the bill, supported by approximately $30 million in state bonds and $15 million to $20 million in federal grants. The Commonwealth will retain ownership of the network while Macquarie and its team of technology and deployment service providers will deploy and operate the infrastructure. The Macquarie consortium currently includes First Solutions, Fujitsu Network Communications, Black & Veatch, and Bowlin Group.

"We are on an aggressive timeline and believe that the Macquarie team's technical capabilities and history of innovative solutions are the best fit for this important project," said Gov. Beshear. "Kentucky's Internet speed and accessibility have lagged behind the rest of the nation far too long. This partnership puts us on the path to propel the Commonwealth forward in education, economic development, health care, public safety, and much more."

The fiber-optic network will run roughly along Interstate I-75 from northern Kentucky to Williamsburg. Rural eastern Kentucky will be the initial area of focus. Kentucky ranks 46th in the U.S. in broadband availability; 23% of rural areas in Kentucky do not have access to broadband services.

The middle-mile network will pass through all 120 counties in the state. It will connect more than 100 key facilities, including universities, state government buildings, and community and technical colleges.

Once the network is completed, Internet service providers, cities, partnerships, or other groups will be able to connect to the network and build out last-mile broadband access network connections to residential and business customers. Commonwealth planners also expect wireless service providers to leverage the network to improve their coverage.

"Macquarie Capital and its partners are extremely excited about the opportunity to develop this network under the public/private partnership model, bringing together a team of market leading specialists focused on implementing the network as quickly as possible," said Nick Hann, senior managing director at Macquarie Capital. "We believe that this project will be the centerpiece of Kentucky’s long-term economic infrastructure, demonstrating the core principles of value for money and risk transfer to the private sector that will translate into a successful long-term partnership with the Commonwealth."

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