State commission rejects two offers to buy the statewide communications network

The company had bids valued at $57.4 and $44.5 million

DES MOINES — A state commission unanimously rejected two offers to buy the statewide communications network Wednesday, leaving the fiber-optic network under state control for the immediate future.

“We’re obviously disappointed that they were summarily rejected,” said Mike Eggley, chief operating officer for Iowa Network Services. The West Des Moines telecommunications company submitted the only two bids to buy the 25-year-old network.

The company made one bid it valued at $57.4 million and another it valued at $44.5 million based on its evaluation of the network. But the Iowa Telecommunications & Technology Commission valued INS’ bids much lower, at $12.7 million and $1, respectively. The differences were based primarily on how accounts determined annual losses and cash-flow for the network. Iowa Network Services thinks the network loses $36.1 million a year, but state officials say the operation has no loses.

“We haven’t decided what our next step will be,” Eggley said. Both the governor’s office and the Legislature have a chance to consider the company’s bids.

The Iowa Communications Network consists of 8,661 miles of fiber cable. It was built in the 1990s with federal money using public transportation right-of-way and is based in the Iowa National Guard's command center.

ICN Executive Director David Lingren declined to say how much he specifically thought the network was worth, but he said money wasn’t his only consideration in rejecting the two offers.

“The public safety and security issue is actually the dominant issue,” Lingren said. He said during times of large-scale emergencies, such as the Boston Marathon bombings or the Oklahoma tornadoes, networks can overload and fail.

“What’s important about the ICN with its public safety, security and tying in health care, is we have dedicated secure bandwith that cannot be impacted by any increase in volume,” he said.

Lingren said he wasn’t surprised the state received only two offers because the bid documents required that current ICN users would pay roughly the same amount for services that they do now and public funds couldn’t be used to buy or lease the system.

“It’s not equipped to be a commercial telephone company,” he said.

Still, Gov. Terry Branstad or lawmakers might disagree.

“Governor’s office staff will be meeting with ICN officials to review the commission’s recommendation in detail. The governor will take the commission’s recommendation into consideration. As always, the governor and lieutenant governor will welcome input from stakeholders and other interested parties,” Branstad spokesman Tim Albrecht wrote in an e-mail.

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