State of Iowa Considering Sale of its Fiber Network
Posted on November 28, 2011 3:44pm by Joan Engebretson
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At a time when federal, state and local governments are facing unprecedented challenges in balancing their budgets, an initiative under consideration in Iowa involving a state-owned broadband network could be precedent-setting. As the Quad-City Times reports, Iowa Gov. Terry Branstad has authorized a special committee to formulate bid specifications for the sale of the Iowa Communications Network, a fiber network originally constructed in the early 1990s to support distance learning throughout the state.
"We're going to look at this and see if this is something that makes sense for the taxpayers of Iowa and makes sense for the people who use the ICN system," Branstad told the Quad-City Times. "I believe the ICN is a valuable asset, and we want to see what the bidders feel that it's worth."
An implementation team has been tasked with getting an estimate of the overall investment in the ICN by next week, the Times reports, adding that the figure is likely to range between $300 million and $400 million. The network was created by a bill passed in 1989 –and according to the Times, the initial bonding for the network was $200 million. Since then, at least $95 million more has been invested in the network, the Times report states.
Some of that funding came in the form of a $16 million broadband stimulus grant from the National Telecommunications and Information Administration to modernize the network to provide 10 Gbps points of presence in each of Iowa's 99 counties. According to the NTIA's latest progress report, the ICN upgraded 210 miles of fiber and connected or upgraded connections to 303 anchor institutions during the most recent quarter reported.
Anyone purchasing the network would inherit the ICN's requirement to meet aggressive build-out targets set by the NTIA.
According to the Quad-City Times article, a buyer or leaseholder also would be restricted to using the network only to serve existing authorized users and "must continue providing all products at a lower overall long-term cost." Additionally the Iowa Telecommunications Association, which represents small telcos in the state, has vowed to scrutinize any sale or lease arrangement to make certain it does not negatively affect existing businesses, the Times reports.
With so many requirements and restrictions on the network, it's unclear whether a buyer will emerge—or if one or more buyers do emerge, whether they will be willing to pay the kind of money the state hopes to receive. But whatever happens, I doubt this is the last we'll hear about government entities pursuing the possible sale of government-owned communications network assets.
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