Indiana, Agile Networks Defend $50 Million Communications Infrastructure Lease

“The IFA is continuing to reach out to the various members of the telecommunication industry to address their concerns and further educate them about the transaction,” Huge emailed Thursday. "In addition, many details of this transaction still need to be negotiated between the State and Agile, so there will be more information to follow once the final agreement is completed.” The state is still finalizing the contract; once terms are complete, the State Budget Committee will review the contract, he said. Agile hopes to have the contract finalized and ready for review within weeks, Quillen told us. “Our legal teams and the state’s legal teams are drafting all of the definitive language off of the term sheet, and providing a lot more clarification around process and commercially reasonable rates and market timelines.”

If the pact is approved, Agile will pay the state government $50 million upfront for a 25-year term, including licensing, managing, marketing and maintaining the assets, Quillen said. The government will share revenue from Agile customers using the state infrastructure, he said. Concurrently, Agile plans to invest an additional $30 million in phase one of its Indiana network buildout, giving Agile at least one point of presence in each county in the state, he said. That first phase will take six months to one year after the execution of the state transaction, he said.

The state telecom associations balked at the deal with Agile, in a Sept. 12 joint letter to Huge we obtained. “This agreement defies all previously held legislative and administrative policies,” they wrote. “Large multistate providers will be encouraged to invest in states where government isn’t tipping the scales, and smaller rural providers will find it difficult to exist against a state-supported competitor.” The associations said the government never told them about the “existence of a state-owned fiber network” or that it might be made available to private industry: “Not one time during the months spent examining policies to improve rural connectivity was this network or its potential lease mentioned. This is a significant omission after many months of open dialogue.” Industry understood the deal to be a tower maintenance agreement only, the associations said. “Had the administration been upfront about the nature of this proposal, the industry would have been very assertive in making its opposition, and the many reasons why the state should not take this approach, known.”

All of the state assets were listed in the request for information, and the IFA asked entities to include in their proposals any additional infrastructure that could be utilized, countered Quillen, a co-founder of Agile. The IFA sent the RFI to 16 private-sector entities and posted it to its website, he said. “The idea that it wasn’t an open process or that it was somehow misrepresented is ultimately, 100 percent, just not an accurate statement.” The industry protestors should have read more carefully and asked more questions, he said.

“We understand why Agile networks would think the RFI process was open, because the Indiana Finance Authority directly sent them the RFI,” Indiana Cable Telecommunications Association Executive Director Joni Hart emailed Friday. “However, the IFA neglected to send the RFI to the media, the ICTA, the IBTA, or the 51 members we represent. There was nothing transparent about the INDOT [Indiana Department of Transportation] fiber existing, let alone being part of this transaction. The State never informed ICTA or any of its members that INDOT had placed fiber in the Chicago, Indianapolis, and Louisville [designated market areas] DMA’s. The existence of INDOT fiber was never mentioned by the state during the 18 months our industries worked with state government as part of the Rural Broadband Working Group. INDOT fiber was not included in the state law authorizing this transaction nor in the RFI. One has to wonder how an Ohio company that does not operate in Indiana knew about the existence of the INDOT fiber, while the companies currently providing broadband in Indiana were not privy to this information.”

“The [two] most valuable pieces, namely the exclusive access to the state’s fiber and the oversight of the state’s right of way were added behind closed doors after Agile was selected as the vendor,” emailed Indiana Broadband and Technology Association President John Koppin Friday. IBTA thought it was a tower maintenance contract only, he said. “To say it was transparent is just [plain] inaccurate. Most of this agreement was created between the state and the contractor without the knowledge of any other provider; it clearly gives them a distinct advantage over current companies who have made investments in Indiana.”

The associations claimed the deal won’t help rural areas, despite statements to the contrary in state news releases. There’s no way for the state to require Agile to go to unserved rural areas, and it has announced plans to build only in urban areas, they said.

Quillen said the company seeks to expand its Ohio-based network and operations into rural and urban parts of Indiana. Agile aims to take state assets “that were encumbered by process” and “mak[e] them available in a streamlined way to everybody in the industry,” he said. For example, a tier-one wireless carrier has been trying to co-locate on a state-owned cell tower for about a year and a half, he said. With Agile operating the tower, that process would instead take about 30 days, he said. Agile’s preferred business model is to provide wholesale transport services and partner with other private-sector companies, including top wireless carriers, for the last mile, he said. By extending backhaul, the model will increase network coverage and provide higher speeds to end users in Indiana, he said. Where Agile can’t find retail partners servicing an area, it takes on the role itself, he said.

The firm has tried to be “pretty open and pretty straightforward about what our intentions are," and welcomes conversations with anyone concerned, Quillen said. “Five years from now, the industry is going to turn around and look back at this partnership as a whole, and say … this has really changed the way we leverage and look at utilizing government assets as an industry for the better.”