State tally for fiber optics network at $369 million

DES MOINES - The state of Iowa has invested nearly $369 million over the past 23 fiscal years to build, equip, maintain and operate its statewide fiber optics network, according to figures presented Monday to a special panel preparing specifications to sell or lease the system.

Construction costs for three main parts of the Iowa Communications Network topped $245 million, although the state only owns parts I and II of the backbone network, said David Lingren, executive director with the state's Telecommunications & Technology Commission. Overall ICN investments are approaching $320 million and the state spends another $49 million annually for telecommunications and distance-learning services that would be incurred regardless whether they were delivered via the ICN, according to the report on ICN-related state appropriations and allocations.

A special team 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 ICN backbone system and its 8,661 miles of fiber cable by June 30, 2013, from private vendors who might be interested in buying or leasing the network.

Lingren said he expects a recommendation will be made on what should be a minimum bid qualification that interested parties would have to meet in seeking to buy or lease the network.

One stipulation would be that any future owner or leaser would continue to provide services to authorized users at a lower cost, but Meghan Gavin of the Iowa Attorney General's Office told panel members on Monday that such a requirement could be part of a future lease agreement but a new owner would not be bound to only serve the current users unless state law was changed or those terms were negotiated as part of a sales agreement.

Todd Schulz, Branstad's legislative liaison who formerly lobbied for private telephone companies, said any potential buyer or leaser would want to open it up for commercial purposes, otherwise they would not be able to make a profit. He noted that in the past the state has been so restrictive in dictating how the network could be used that no buyers have emerged.

“I think they have to be real careful in the way that they write this so it's salable or somebody can lease it. If they write it in such a way that a business model doesn't work, they'll get no bids on it,” Schulz said after the meeting. “As technology changes, there may be a chance for somebody to buy this network and make money on it and still serve the government uses.”

However, Lingren conceded that opening the network up for commercial purposes likely will be “a very contentious issue” because an ICN sale potentially could create a new entity that would compete with private telecommunications providers.

Branstad has said he believes the network - which 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 - can be transferred into private hands under the right circumstances.