Bevin and Rogers tout completion of first KentuckyWired section

An updated map of KentuckyWired's completed fiber lines at Friday's news conference announcing the completion of the first middle-mile ring

An updated map of KentuckyWired’s completed fiber lines at Friday’s news conference announcing the completion of the first middle-mile ring | Photo by Joe Sonka

Gov. Matt Bevin and Congressman Hal Rogers announced Friday that the first portion of the state’s KentuckyWired high-speed fiber network is now complete, with the project expected to be finished next summer.

The project to build a statewide broadband network was first hatched by Rogers and then-Gov. Steve Beshear in 2014, but has been plagued by delays and cost overruns since its inception, attracting criticism from conservative groups and Republican legislators who called it a taxpayer-funded boondoggle that should be abandoned.

However, Bevin and Rogers struck a very optimistic tone at their event in Lexington — at a conference of county officials from across the state — calling the completion of the first “middle-mile ring” just the first of several significant milestones to come before broadband is available in all 120 counties.

The first ring of the KentuckyWired network connects Louisville, Lexington and Cincinnati, while a key “backbone segment” of the network stretching from Lexington to Somerset is also finished. With the “lighting” of this section, now municipalities and broadband companies can build the “last mile” of fiber from the ring to internet customers, paying for access to that ring.

Rogers told officials in the room that the “Super I-Way” will not bypass any of their counties once it is completed next summer, with “three or four” more of the six rings expected to be finished by the end of this year. Bevin said that 1,600 of the 3,000 miles of fiber in the network had already been laid, with western Kentucky scheduled to have its completed last.

However, there is still a question of whether or not private companies or county governments will pay to build the costly last mile of fiber to connect to such rings, which comes at a cost, and whether enough will do so to create the revenue needed for the state and its private partner to pay off bonded debt.

Gov. Matt Bevin spoke with members of the audience after the KentuckyWired announcment

Gov. Matt Bevin | Photo by Joe Sonka

Taking questions from the audience and the media, Bevin dismissed such skepticism and criticized legislators in the General Assembly who attempted to cut off state funding for the project, though he did not provide any specific details about companies that had plans to build out the last mile. He did add that government sites near the completed ring will be connected to it within three months.

Bevin said the KentuckyWired project is not intended to “compete with the private sector,” but instead seek out private companies like AT&T to partner with in building the last mile.

An examination of KentuckyWired by state Auditor Mike Harmon last year found that despite initially being sold as a project that would cost taxpayers $30 million and have most of it funded through private investment, the state’s actual financial obligations will total nearly $1.5 billion over the next 30 years.

To make the state’s obligation more difficult, Harmon’s audit also revealed a previously undisclosed revenue-sharing agreement in 2015 between the state and the Center for Rural Development (CRD) — a nonprofit tied to Rogers — which could divert a significant portion of future state revenue from the project to that nonprofit.

Under that agreement, CRD would not just receive 100% of the net revenue for connections within KentuckyWired’s three rings of eastern Kentucky, but 50% of such revenue along the “I-75 spine” of the network from Cincinnati to Somerset, which is now complete.

Asked by Insider Louisville what percentage of revenue CRD would keep from the three eastern Kentucky rings and the I-75 spine, Bevin said that he did not understand the question.

However, the governor’s executive cabinet secretary, Scott Brinkman, quickly spoke up to say that he has examined this specific issue and was trying to find a “better approach” to how such revenue was shared, adding that he would “brief the governor in the coming days” about a possible new agreement that would supersede the 2015 one.

Asked how Bevin was able to persuade state Chief Information Officer Charles Grindle — perceived as a skeptic on KentuckyWired’s viability as a state-run project — to support it going forward, Bevin said “it’s not even his decision” and his opinions on the project “are not relevant.”

“(Grindle) is not involved in the (Kentucky Communication Network Authority) project,” said Bevin. “That’s not even in his area of responsibility. So I’m not sure what his comment was, but it wouldn’t be relevant to this situation.”

Andrew McNeil, the director of the Kentucky chapter of conservative political advocacy group Americans for Prosperity, renewed his criticism of the KentuckyWired project in a statement to Insider, calling for the “billion dollar boondoggle” to be shut down.

“Today’s announcement doesn’t change the fact that KentuckyWired is a billion dollar boondoggle, behind schedule and over budget,” stated McNeil. “Not a dime of federal funds from the Center for Rural Development (CRD) has been provided to build this ring. The idea that any taxpayer funds should be diverted to the CRD is based in political cronyism pure and simple. The General Assembly should do right by Kentucky taxpayers and shut the project down.”

State Sen. Chris McDaniel, R-Taylor Mill, one of the main skeptics of KentuckyWired in the General Assembly, told Insider, “I’ll be interested to see when and if they actually begin selling capacity to anyone other than the Commonwealth and if it can break even without general fund support.”

Asked about Friday’s announcement, AT&T’s regional spokesman Phil Hayes praised the work that the company had already done laying more than 1.25 million strand miles of fiber throughout the state, adding that “at this point, we do not see anywhere that KentuckyWired is building where we don’t already have access to extensive fiber inventory.”