Kentucky Hopes To Shake Off KentuckyWired Boondoggle as State Gets Ready for BEAD Funding

Kentucky is one of many states undergoing a baptism by fire as they jocky to take advantage of billions in historic federal broadband grants. The Kentucky Office of Broadband Development didn’t exist a year ago; now it’s tasked with identifying state broadband gaps and managing one of the most complex broadband subsidy efforts ever attempted.

All while shaking off a history of costly state boondoggles.

Kentucky officials last year announced they’d be spending more than $203 million in American Rescue Plan Act (ARPA) funds to shore up broadband access. Now they’re preparing to spend hundreds of millions more courtesy of $42.5 billion in Broadband Equity, Access and Deployment (BEAD) grants made possible by the Infrastructure Investment and Jobs Act (IIJA).

Kentucky Office of Broadband Officials have spent the last few months on a listening tour getting an earful from frustrated state residents angry about high broadband prices, spotty coverage, and sluggish speeds. Kentucky currently ranks 30th nationwide in such metrics thanks in part to monopolization by local cable and phone giants.

Like so many states, the lack of affordable, reliable broadband access was particularly notable during the Covid home education and telecommuting boom, driving a renewed interest in creative broadband deployment alternatives.

Avoiding The Sins Of The Past

Past Kentucky efforts to bridge the digital divide haven’t gone particularly well.

In 2014, state leaders unveiled a bipartisan, $324 million plan to deploy 3,000 miles of new fiber across the state as part of an elaborate public private middle mile partnership. But the plan, dubbed KentuckyWired, wound up being a boondoggle that left Kentucky taxpayers stuck on the hook for $1.5 billion—fifty times greater than the original price tag proposed to taxpayers.

Plans to fund the program using FCC E-Rate funds were scuttled after political opposition by AT&T, who also fought pole attachment requests. Post-project analysis found that the Kentucky Communications Network Authority, tasked with overseeing the project, failed to adequately do so. By 2018, just 735 miles of the network’s 3,200 total miles had been completed.

Kentucky leaders are hopeful that ARPA and IIJA-funded deployments have better luck.  

Last June, Kentucky officials announced they’d be spending $89.6 million to expand broadband access via Kentucky's Better Internet Program. That funding was made possible via the passage of ARPA, which State Senators Mitch McConnell and Rand Paul both voted against.

The $89.6 million in federal funds were split into 46 grants, awarded to 12 internet service providers and local governments across 36 Kentucky counties. More than half of the grants ($49,980,694) were given to Charter Communications (Spectrum), whose anticompetitive behavior spurred the creation of alternative networks in cities like Lexington.

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Other notable award winners included Pennyrile Rural Electric Cooperative ($13,827,320), West Kentucky Rural Telephone Co-op Corporation ($3,365,704), Duo County Telephone Cooperative (3,368,826), and Tri-County Electric ($900,000). Kentucky is home to 26 electric cooperatives serving 1.5 million residents across 117 counties.

State officials say the ARPA funding should expand access to broadband to more than 34,000 Kentucky families and businesses. Grant recipients say they’ll more than match the awards, boosting this round of broadband deployment funding to $203 million.

All grant recipients are required to participate in the FCC’s Affordable Connectivity Program, which provides a $30 per month subsidy for low-income families that jumps to $75 a month for residents in tribal areas.

“High-speed, reliable internet is not just the infrastructure of the future, it’s the necessary infrastructure right now,” Kentucky Governor Andy Beshear said at a press conference. “It’s just as important as roads, bridges. And today is a key part of our plan to build a better Kentucky. And it will be critical to the success of our state’s economy and to future job creation.”

Kentucky officials say the state has $210 million remaining in federal pandemic aid left to spend. Including grant matching and other requirements, Kentucky will spend more than $600 million on broadband—before hundreds of millions more in BEAD funding even arrives.

“We’re going to have the best shot in the history of the commonwealth to provide Internet access to every single Kentuckian,” Beshear said.

Historic Opportunities, Historic Challenges

With ARPA funding well underway, Kentucky state leaders are now shifting their focus in preparation for BEAD funding made possible via the Infrastructure Investment and Jobs Act (which Kentucky state Senators also voted against). But distribution of BEAD funding is currently dependent on the FCC’s attempts to shore up its historically unreliable maps. 

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Fixing the data has required an unprecedented level of involvement by state leaders, many of whom say the process for challenging inaccurate FCC data is an ugly mess that tends to favor powerful telecom monopolies keen on hamstringing competitors.

Meghan Sandfoss, executive director for Kentucky’s Office of Broadband Development, recently told Fierce Telecom that Kentucky has already filed 15,000 fixed availability challenges with the FCC as it positions itself for an as-yet unspecified share of federal BEAD funding.

Late last year Kentucky received $5.8 million in BEAD planning funds to help map broadband, fund its freshly-created Broadband Office, and fund state engagement efforts with unserved, underserved, and underrepresented communities to better understand barriers to adoption.

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Like so much of the country, rural Kentucky residents face the steepest challenges in affordable broadband access. Such regions have been heavily hit by systemic flooding, making reliable access an even greater priority. The problem is particularly dire in the Eastern part of Kentucky, where local providers say expanding fiber can cost upwards of $70,000 per mile.  

The eastern part of Kentucky, consisting of 54 counties included in the Appalachian Regional Commission, faces the biggest obstacles in terms of reliable, affordable access to both fixed and wireless broadband and voice technologies.

FCC data indicates that one in eleven Kentuckians lacks access to any broadband whatsoever. Affordability is also a major obstacle. In Letcher County, the median household income is $30,000 annually and 31 percent of the population lives in poverty. In 2020, 38 Kentucky counties were declared economically distressed by the Appalachian Regional Commission.

“When you’re talking about one or two customers per mile, it’s really hard to make a commercial case for that kind of development,” Sandfoss said. “One of our telephone co-ops…they actually had a mule that pulled fiber up the side of the mountain to get the fiber to the residents. Those are the kinds of obstacles that we’re looking at.”

Kentucky state officials say they won’t know what their share of BEAD deployment funding is until at least June, though they’re expecting up to a billion in new grants. State officials also say they hope to have their state broadband maps completed by June, giving them a better shot at competently utilizing a once-in-a-lifetime funding opportunity.

Header image of Kentucky Derby in 2021 courtesy of Flickr user Don Sniegowski, Attribution-NonCommercial-ShareAlike 2.0 Generic (CC BY-NC-SA 2.0)

Inline image of Thacker-Grigsby Communications receiving $2.3 million ReConnect grant to deploy a fiber network in rural Breathitt County courtesy of photographer Greg Thomas, U.S. Department of Agriculture, Public Domain Mark 1.0