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Iowa seeking bids to sell or lease statewide fiber-optics network December 13, 2011

Posted by TelUS Consulting Services in CLEC catagory.

Iowa officials have formed a special committee to search out potential buyers for the state’s 8,661-mile fiber network that forms the backbone of its Iowa Communications network. It’s uncertain how much the state could net from the sale. That’s still the $64,000 question if you will. It’s certainly a pretty major undertaking and a number of people within the industry are interested in what happens in the process.

A special committee authorized by Gov. Terry Branstad and the Legislature is formulating bid specifications that will form the parameters by which state officials would solicit offers for the Iowa Communications Network’s (ICN) backbone system and its 8,661 miles of fiber cable by June 30, 2013. The bids will be solicited from private vendors that might be interested in leasing the network or buying it outright.

The RFP Implementation Team is slated to get an estimate of the overall ICN investment when it meets next week – a figure likely to range between $300 million and $400 million given that the initial bonding to construct the network topped $200 million to bring one fiber-optic endpoints to all 99 Iowa counties, Iowa’s three state universities, Iowa Public Television and the state Capitol Complex. Also, the federal government invested at least $95 million for features that include homeland security protections coordinated at the Iowa National Guard command center in Johnston and telemedicine capabilities.

The network’s oversight commission has enlisted the help of Cedar Rapids-based Fiberutilities Group to manage the RFP process, which Lingren said is complicated by the fact that the state pays $1 annually for the right-of-way access that likely would carry at least a $3 million yearly price tag for a new owner or lease. Also it’s unclear whether the hub could remain at the Johnston command center if the network was sold. A buyer or leasee also would be allowed to use the network only to serve existing authorized users and must continue providing all products at a lower overall long-term cost.

I guess this is just another sign that government has no idea of how to manage private enterprise. Let’s hope the restrictions government has allowed to be placed on the facilities does not severely hinder the overall value of the asset or the public will once again be left to carry the brunt of the financial impact.

Joe Buck, NCE

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