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Taxpayers will be handed the bill for Kentucky Wired’s costs overruns

By JIM WATERS
Bluegrass Institute for Public Policy Solutions

Thursday, Oct. 5, 2017 — What does a silver bullet cost?

At least $490 million – the figure being thrown around by bureaucrats charged with implementing Kentucky Wired, the ill-advised 3,400-mile statewide broadband network initially estimated to cost less than $350 million to build.

The project – which was supposed to be completed last year and is touted by its supporters as being one of the nation’s largest publicly owned broadband networks – has, according to the Associated Press, already spent $200 million while laying only 19 miles of cable.

No one really knows what the final cost will be for Kentucky Wired.

But this much is for sure: taxpayers will get soaked if Frankfort insists on continuing down this route instead of cutting its losses and running as fast and far away as possible from this gob of greasy pork.

The project was sold to lawmakers by big-spending congressman Hal Rogers and former Gov. Steve Beshear as the “silver bullet” for giving multitudes of poor Kentuckians in Appalachia access to high-speed internet.

Spending nearly a half-billion dollars for a middle mile internet broadband network will do nothing but trespass on private providers’ customer base and even their property by mooching off their poles.

Industry leaders who know vastly more than any bureaucrat and most politicians about building effective broadband networks tell me that a worse mechanism than the approach taken by Kentucky Wired could not be employed if the goal really is to provide high-speed internet to citizens lacking access.

It depends on poaching customers – primarily government entities – from their current private providers and then offering a hope and prayer that local providers will be enticed to build that final mile.

If this project really was about reaching the small percentage of Kentuckians who currently don’t have access to high-speed broadband, Frankfort’s policy would focus on those final miles, which usually are those remote areas that private companies find difficult to reach and break even, much less see profits.

Supporters of big-government broadband in Tennessee claim one third of rural residents in the state lack access yet the Volunteer State is not even attempting to implement anything like Kentucky Wired’s costly flim-flam.

Instead, Tennessee Gov. Bill Haslam signed a bill offering grants and tax credits for service providers who assist in making broadband available to unserved homes and businesses in those hard-to-reach areas.

While no free-market believer endorses $45 million of General Fund money to serve as government handouts, it’s a kilobyte compared to a megabyte of Kentucky Wired-type spending.

Plus, Tennessee’s program ensures people and businesses without high-speed broadband internet access will indeed receive it.

Even if Kentucky Wired gets fully built from Paducah to Pikeville, it in and of itself will not connect a single previously unconnected individual, home or business.

Any access achieved will be because local providers serve their unconnected neighbors by doing the difficult work of laying cable in rough terrain.

Sen. Chris McDaniel, R-Taylor Mill, at a recent legislative hearing compared Kentucky Wired’s rising costs and construction delays to “the big dig in Boston,” the most expensive highway in U.S. history, which ballooned in cost from an original estimate of $2.6 billion to nearly $15 billion and took 16 years to build.

Actually, it’s worse.

When Boston’s tunnel was finished, it at least brought some relief to one of America’s most congested highways.

While the project’s costs and delays were legendary and became the butt of late-night jokes, at least something beneficial to citizens was accomplished.

Also, building roads – unlike constructing broadband networks – is within government’s purview.

Rapid technological changes make it likely that by completion of construction, Kentucky Wired could experience similar types of cost increases yet offer little more than an empty highway.

Jim Waters is president and CEO of the Bluegrass Institute for Public Policy Solutions, Kentucky’s free-market think tank. Read previous columns at www.bipps.org. He can be reached at jwaters@freedomkentucky.com and @bipps on Twitter.

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