broadbandA planned statewide middle-mile broadband network in Kentucky that originated from a state government initiative has come under fire from opponents. And a proposal for a similar network in West Virginia also has encountered opposition.

The experiences in the two states illustrate the perils of government involvement in the construction of broadband networks.

State-Funded Broadband Networks: Kentucky
According to a report from local media outlet Lexington Herald Leader, the Kentucky network, dubbed KentuckyWired, aims to link all 120 counties in the state, with the hope that broadband providers would then be able to build a business case for deploying faster Internet to individual homes and businesses in those counties. The state has invested $30 million and issued $232 million in tax-exempt bonds and $57 million in taxable bonds for the project, the Herald Leader reports.

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Construction already has begun on the network through a public-private partnership between the state and Macquarie Capital. The agreement calls for Macquarie to operate the network and give the state a 75% cut of the revenue. The expectation was that Macquarie would pay off the bonds and earn a return on investment over 30 years.

More than 1,000 state offices and schools were expected to be key anchor tenants for the network, and the offices and schools were expected to cut their communications costs considerably and get faster Internet in comparison with what they can now get from incumbent carriers.

One of the incumbents is AT&T, which has protested the state’s process for awarding school Internet service contracts. And the Kentucky Telecom Association, which represents 15 rural broadband providers, has expressed concern that KentuckyWired will duplicate existing infrastructure.

If Macquarie does not get – or does not get to keep – the contracts to provide service to the government offices and schools, the likely result would be litigation that could be costly to taxpayers, the Herald Leader reports.

Will West Virginia Network Get off the Ground?
In West Virginia, Republican State Senator Chris Walters plans to introduce a bill that would create a publicly funded $72 million broadband network in the state, reports local media outlet Charleston Gazette Mail. Walters told the Gazette Mail that the bill calls for the network to be self-sustaining financially and that costs could be covered through a bond issue and federal grants.

The network would enable West Virginia to diversify its economy, Walters said. “This is how West Virginia becomes competitive in the 21st Century,” he told the Gazette Mail.

But the incumbent carrier – in this case Frontier – is opposing the legislation. Frontier, the largest broadband provider in the state, told the Gazette Mail that it has its own 9,000-mile network and doesn’t need the one that Walters proposes. A Frontier exec also questioned whether anyone else would use the network.

Another network opponent is the Communications Workers of America union, which says the network would duplicate existing facilities, the Gazette Mail reports.

I don’t have enough details about the Kentucky or West Virginia projects to weigh in on advocates’ claims or opponents’ concerns. But as states and local communities increasingly recognize the importance of broadband to the economy, we’re likely to see more proposals for publicly funded networks and public-private partnerships, along with continued opposition to those projects.

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