Federal Communications Committee Chairman Tom Wheeler touted the benefits of government-sponsored Internet networks during a tour of Kentucky on Monday, noting he was “proud to say that all Americans have participated in building this network” during a stop in rural Jackson County.
The broadband network created there, using $50 million in federal stimulus funds and capital from the People’s Rural Telephone Cooperative that operates the service, has download capabilities of 1 gigabit per second, the speed standard that’s the buzzword for politicians looking to invest millions in taxpayer money into laying fiber-optic cables to service out-of-the-way rural areas.
“Folks like me, who live in Washington, D.C., ought to be making sure everybody in this country is connected,” Wheeler told the crowd gathered at the PRTC’s conference center. “We can’t have fiber haves and fiber have-nots.”
A movement is afoot in the Bluegrass State to ensure no fiber have-nots, a nine-figure plan that critics warn will crowd out the free market and sink taxpayers.
Former Democratic Gov. Steve Beshear signed KentuckyWired into law last fall. That plan calls for the use of $30 million in state taxpayer funds and $23.5 million in federal tax dollars, combined with $280 million in bonds, to create a 3,400-mile fiber-optic network to be built and operated by the Australian-based Macquarie Group. Macquarie would provide broadband service to at least 1,100 government facilities as part of the deal.
Current Republican Gov Matt Bevin said Friday he wants to scale back the plan for now and focus on the poorer eastern region of the state, calling the original plan “somewhat untenable” after a board meeting of the Shaping Our Appalachian Region initiative.
“There weren’t enough dollars nor was there an ability to do that as effectively as anyone would have liked,” Bevin said. “My intent is to see it come back more to its original intent, and let’s start there.”
That plan, from Republican U.S. Rep. Hal Rogers, chairman of the House Appropriations Committee, would wire eastern Kentucky. Beshear wanted to take the project statewide.
Bevin said he still does, too, but is worried about the funding.
“We do,” he said. “We would love to be the model for the nation, but let’s walk before we run.”
Bevin pledged to work with private telecommunications companies on KentuckyWired.
The PRTC network serves residents in Jackson and Owsley counties, a third of whom live below the poverty line. Median household incomes are half the national rate.
PRTC CEO Keith Gabbard said about two-thirds of the cooperative’s 7,000 customers subscribe to the network,
where $36 per month gets a download speed of 6 megabytes per second and an upload speed of 1 mbps. For $100, customers get 100 mbps download/5 mbps upload.
How rural is the area? There are only about seven customers per mile of service line, and 30 percent of the service area is contained within a national forest.
Gabbard argues that’s one reason government intervention is needed in eastern Kentucky.
“In areas like this, if we don’t have some help it will never happen,” he told Watchdog.org “We’re certainly trying to use that money wisely.”
The cooperative is slowly rolling out the 1 gbps service, and the company’s marketing team told Watchdog it is still in the testing phase, with a handful of residential customers getting the service for free during the beta period.
The initial price will be $299 a month, but PRTC hopes to lower it in the coming years. Gabbard told Watchdog it’s not integral that the cooperative get plenty of gigabit customers to pay back the $18 million in loans it still owes on the project.
“We’re not counting on getting 10 to 15 percent gigabit customers to pay the loan back,” he said.
“Gigabit is more valuable in name than reality,” he added. “It’s really cool to say you can provide it, but 100 megabits per second will service most of our customers.”
That sentiment makes David Williams, president of the Washington, D.C.-based Taxpayers Protection Alliance, wonder why municipal networks are being built with gigabit capabilities.
“It is good to see that people are finally admitting that gigabit service is truly a shiny object that governments shouldn’t be distracted by,” he told Watchdog. “Taxpayers shouldn’t be forced to pay for a service that is unneeded or unnecessary.”