An Australian-based investment firm will build and manage a 3,000-mile network of fiber optic cables across Kentucky that state officials say will improve broadband access and cellphone service in some of the country's most impoverished areas.
Democratic Gov. Steve Beshear and Republican U.S. Rep. Hal Rogers said Tuesday they believe it to be the first contract of its kind in the country. While officials estimate the project will cost between $250 million and $350 million, taxpayers are slated to pitch in about $40 million while the rest will come from private sources. Kentucky will own the network, but the Macquarie Group and its partners have a contract to build it and operate it for 30 years.
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"In today's economy, high-speed broadband is as essential to a community as water or electricity," Beshear said.
While most Kentucky households have access to the Internet, only about half of them use broadband service, a high-speed Internet connection capable of carrying lots of information to many people at once. Kentucky ranks 46th in the country in broadband availability, with most of the void in rural eastern Kentucky where the mountainous terrain and sparse population have made it unattractive to Internet service providers.
"The cable levels those mountains," Rogers said. "Our goal is to ensure people will not have to leave home for good-paying jobs."
Eastern Kentucky, along with its Appalachian brethren in West Virginia and Pennsylvania, has long been the cultural center of the nation's coal industry. But it has also been the face of the country's poverty problem. Several eastern Kentucky counties rank among the poorest in the nation, according to U.S. Census data.
Kentucky's political leaders have long looked at technology as the answer to the region's economic problems. But Tuesday's announcement appears to be the first major effort to build a network capable of sustaining high tech companies in the region.
"This is a beacon of hope," Rogers said.
The project will be built in two phases, with the first concentrating on eastern Kentucky and scheduled to be completed in the spring 2016. Phase two will encompass central and western Kentucky and should be completed by fall 2016.
At first, the network will primarily benefit state offices, public schools and universities. But the state plans to lease the network to private companies, making money for the state. In Tuesday's news conference, Beshear seemed to be making a sales pitch, saying the network would allow businesses to compete globally and health care entities to collaborate and share patient information.
"But only if they use it," Beshear said. "We're going to build the system and we're going to make it available. But it's up to our businesses, our communities and our educational institutions to take advantage of this opportunity."
Four companies bid on the broadband project, but the state only considered two of them. The Macquarie Group is the project's lead developer and is responsible for the project's long-term financing. Other companies are also involved, including the Bowlin Group, a fiber-line contractor based in Walton. It's executives include Jack "Goose" Givens, the former University of Kentucky basketball star who led the team to the NCAA championship in 1978.