Last week it was the city of Seattle looking to unload a public fiber asset, and now apparently it is the state of Iowa according to an article in the Quad City Times. A special committee authorized by the Governor and the Legislature is putting together a process by which the state would solicit offers for the Iowa Communications Network.
The network, whose snapshot to the left I cribbed from an agency presentation, stretches to all corners of the state for 8,861 miles of fiberoptic cable. It was initially built in the 90s, but recently won some stimulus funding that it is currently using to build out further and hook up those anchor institutions.
The network mostly serves the education vertical, and has been seen as a competitor by other operators in the state rather than a partner. Just what this fiber is worth is another matter. Actually, I think the number one issue is the underlying meaning of this little quote from the Quad City article:
A buyer or lease-holder 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.
Seriously? Buy fiber that you’re not allowed to hook anyone else up to? Well, that’s going to bring down the price a heck of a lot I think, unless that ‘only’ turns out to be mistaken.
Perhaps I shouldn’t say ‘unload’ in this context – these assets haven’t necessarily underperformed like some recent muni-fiber efforts. Actually it’s probably a combination of budgetary constraints and recent valuations of fiber assets. That valuations have pulled back somewhat since summer probably hasn’t registered with lawmakers yet, but perhaps by the time they finish figuring out how to sell it we will see a resurgence.
Actually, you know how state governments sometimes like to temporarily plug budget holes by ‘selling’ a toll road or something to a pseudo-independent group – it could just be that sort of thing.
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Categories: Government Regulations · Mergers and Acquisitions · Metro fiber
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Iowa has it’s own form of corruption. What the plan undoubtably is that they will sell the network with the restrictions to a crony of Governor Branstad with the restrictions (the network serves schools and state institutions) and then in a couple years the restricitions will be discovered as unfair and against free-market principles and be removed. The buyer will be an Iowan connected to the governor.
Our state network is preparing to spend a whole lot of taxpayer money to connect less than 50 CAI’s. What a wasted since independent telco’s could server every one of these places today.
http://www.thonline.com/news/iowa-illinois-wisconsin/article_79c9d47a-0ffb-11e3-98ce-001a4bcf6878.html
You can’t expect to sell something at a fair market value when the buyer isn’t able to use it under fair market conditions.