Iowa Seeking Possible Buyers of Its Public Fiber
The state of Iowa is looking to sell or lease its fiber network. The government released a detailed request for proposals this month for the sale or lease of thousands of miles of the Iowa Communications Network (ICN), a request that the Legislature called for two years ago. Bids are due April 30, and it wants to “conduct the sale or lease process in a manner which will lead to execution of definitive agreements with the successful offeror to be submitted to the Governor’s Office for guidance no later than June 11, 2013,” according to the accompanying RFP memo (http://xrl.us/bog75d). The bill creating the Iowa network passed nearly a quarter century ago in 1989.
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
"As a privatized entity, the ICN has additional potential,” the 172-page RFP said (http://xrl.us/bog75h). “As a government entity it is limited from engaging in a wide range of commercial activities, including restrictions on marketing efforts, providing retail offerings and providing any type of service to unauthorized entities. Iowa Code chapter 8D, and implemented pursuant to 751 IAC 7.1 defines authorized users of the ICN and excludes the vast majority of private sector entities including all for-profit enterprises. The privatization of the ICN will free it from these restrictions, allowing the ICN to not only offer and market new services to its existing customers but to increase its customer base by aggressively marketing to new customers."
Last Wednesday, the Iowa Telecommunications and Technology Commission, the state agency the network reports to, issued a public notice (http://xrl.us/bog758) that it’s holding an Offeror’s Conference on the RFP this Tuesday in Johnston, Iowa. The commission will welcome public comments and conversation on the RFP during the meeting and will give anyone interested a network operations center tour. The network’s also making a resource room available to potential vendors before the bidding deadline, it said (http://xrl.us/bog76v). The network circulated a press release on the RFP Friday to gain more exposure, which will allow officials to better achieve the maximum value from any potential bidders, Director of Government Relations Jontell Harris told us. The press release mentions that legislation passed in 2011 kickstarted the process, which led to the creation of an RFP implementation team late that year.
The network combines publically and privately controlled elements, the network site said (http://xrl.us/bog74v). It describes an estimated 3,400 miles of state-owned fiber and 5,261 miles of leased fiber connections, cautioning that it can only sell or lease the parts of the network the government owns. Any buyer of the network would face different circumstances, the RFP warns. It notes that as a government entity, the network currently pays no income or property taxes, but any private buyer would have to pay those. “Any buyer or lessee of the ICN must continue to provide all products in use as of bid closing at a ‘lower overall long-term cost’ as required by the legislation,” the RFP added. The RFP describes the network as a quasi-independent entity that serves “state and federal governments, public and private schools, higher education, healthcare facilities, libraries, and courts secure, fast, reliable Internet access” with about 1,200 customers across the state.
The RFP shows the network’s operated at a loss in the years 2007 to 2012, even when factoring in grants, investment and appropriations money. In fiscal year 2012, operating revenue was $31.66 million and operating expenses were $41.49 million. Services include video, voice, data and Internet. In 2012, 61 percent of the network’s revenue came from data service, followed by 22 percent of revenue from its voice service, according to the RFP.
The Iowa Communications Network received a $16.2 million broadband stimulus grant through NTIA’s Broadband Technology Opportunities Program in 2010. The grant’s goal has been “to provide 10 Gbps-capable points of presence in each county, while enabling a system upgrade for as many as 1,000 community anchor institutions statewide to 1 Gbps Ethernet service,” NTIA said (http://xrl.us/bog77q), noting that the community anchor institutions set to benefit “include over 50 libraries, 800 educational institutions, and 1,000 government facilities.” The RFP confirms and the network’s quarterly reports to NTIA indicate it’s on track. The grant activities will conclude by June 30 and bump the network “capacity to a 10 Gbps backbone that reaches all 99 counties in Iowa” and “provide 1 Gbps of symmetrical Ethernet connectivity to more than a thousand education facilities, hospitals, libraries, public safety entites [sic], workforce development sites, and other authorized users throughout the state,” the RFP said.
A fall Iowa Communications Network report adds the caveat that the network won’t necessarily sell or lease anything -- the RFP is moving forward “to complete the necessary due diligence to determine if there is interest from an outside provider to purchase or lease the ICN,” it said (http://xrl.us/bog8ek). The RFP also cautions that the highest bidder may not win the fiber: “Because the interests of the people of Iowa transcend financial considerations, the highest price offered to the government for the ICN may not be successful if it is determined that an alternative offer would better meet the overall objectives of the government.”