CHARLESTON, W.Va. -- West Virginia may have to return more than $2.5 million in leftover federal stimulus funds from a statewide high-speed Internet expansion project that has been plagued by allegations of mismanagement and reckless spending.
The National Telecommunications and Information Administration recently declined to approve the state's plan to award the remaining stimulus funds to Citynet, a Bridgeport-based Internet provider.
Citynet wants to use the federal funding -- along with $7.2 million of its own money -- to set up nine "GigaPop" facilities in West Virginia that would funnel data and connect to the national Internet "backbone" in Columbus and Pittsburgh.
To help purchase equipment, Citynet also would use a $1.9 million credit from Cisco Systems, which has agreed to take back about 100 oversized Internet routers that the state bought from the company in 2010 but never used.
"We believe that Gov. Tomblin would prefer that these residual monies be put to use in West Virginia to address our broadband shortcomings, rather than sent back to the federal government," said Citynet CEO Jim Martin.
The state has until Dec. 31 to spend its remaining stimulus funds -- or send them back to the feds. State officials and Citynet are now scrambling to provide additional information about the Citynet project to the federal agency. They believe the NTIA still might approve the project.
"I can't speak for NTIA, but they have not denied the project yet," Gale Given, chief technology officer for West Virginia state government, said in an email to the Gazette-Mail.
Frontier Communications, West Virginia's largest Internet provider, opposes Citynet's project. The Communications Workers of America union also has objected.
"We have questions whether the project may be duplicating an [Internet] network that's already there," said Elaine Harris, a union spokeswoman.
In late October, House Speaker Tim Miley wrote a letter to U.S. Sens. Joe Manchin and Jay Rockefeller, urging them to support Citynet's project. Citynet has said the project will increase Internet speeds and lower the cost of subscribing to broadband service.
"Regrettably, it is my understanding that Frontier and the Communications Workers of America are actively trying to dissuade those in Washington from approving this project," Miley wrote to Manchin and Rockefeller.
Frontier has declined to comment on the Citynet project. The company has asked that the state use the leftover stimulus funds to bring high-speed fiber-optic cable to additional public facilities across the state.
"Should the state have access to any remaining federal funds, we hope those resources would be used to support projects that comply with [federal broadband grant program] guidelines," said Frontier spokesman Dan Page.
Harris confirmed that union lobbyists have spoken to state and federal lawmakers about the Citynet project.
"We have a right to raise questions," she said. "We have a right to object."
Federal officials initially approved Citynet's project in early September.
The state technology office revised the proposal and asked for the federal agency's OK a second time in late October. On Nov. 12, federal officials notified the state that Citynet's revised proposal had multiple shortcomings.
The state had neglected to provide information about plans to return routers to Cisco, according to NTIA's letter.