W.Va. at risk of losing $2.5M in stimulus funds, Citynet says
CHARLESTON, W.Va. -- Citynet CEO Jim Martin urged West Virginia government officials this week not to surrender more than $2.5 million in leftover federal stimulus funds from a statewide high-speed Internet expansion project.
Citynet hopes to use the federal funding -- along with $7.2 million 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.
The state had until Tuesday night to spend its remaining stimulus funds -- or send them back to the federal government.
"[West Virginia] is at risk of losing millions of dollars," Martin said Thursday afternoon.
Twelve days ago, Martin asked Gov. Earl Ray Tomblin, and U.S. Sens. Joe Manchin and Jay Rockefeller to contact federal officials about the Citynet project. Martin also notified Tomblin, Manchin and Rockefeller that the federal government needs to extend the Jan. 31 deadline for the state to use up the remaining stimulus funds. Citynet would need several weeks to complete its project.
Martin said Thursday he hasn't heard whether the National Telecommunications and Information Administration, the federal agency that oversees the broadband project funds, has given West Virginia an extension. Federal officials previously have twice extended deadlines.
State lawmakers are expected to ask questions about the status of Citynet's proposal and the leftover stimulus funds at a joint House-Senate interim technology committee meeting Sunday night.
Gale Given, West Virginia government's chief technology officer, has been invited to speak about the broadband project. Given said Friday that the state hadn't heard from federal officials about the Citynet project.
Bridgeport-based Citynet has said the GigaPop facilities would provide West Virginia with direct connections to the national Internet system, lowering broadband subscription prices and increasing download speeds for residential and business customers in West Virginia.
The state would buy and own the equipment. Citynet would operate the network.
To help purchase equipment for the project, Citynet also would use a $1.4 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.
If the feds don't approve the Citynet project, the $1.4 million Cisco credit would be used for equipment unrelated to broadband, Martin said.
The excess funds for the Citynet project would come from a $126.3 million federal grant that the state received in 2010 to expand high-speed Internet.
The project has been plagued by allegations of mismanagement and reckless spending.
Last February, the state Legislative Auditor released a scathing report, finding that state officials wasted at least $7.9 million -- and up to $15 million -- on oversized Internet routers.
Last month, state Senate President Jeff Kessler urged federal officials to "promptly act favorably" to approve Citynet's project.
"While progress has been made with regard to broadband access, West Virginia still has tremendous room for broadband access improvement," Kessler, D-Marshall, said in a letter to federal broadband officials. "Given the limited federal and state resources available...it is essential that we invest every available dollar that we can to improve broadband services in West Virginia."
Frontier Communications, West Virginia's largest Internet provider, has opposed the Citynet project, saying the proposal doesn't meet federal broadband grant guidelines.
Frontier installed 675 miles of fiber-optic cable to public facilities in West Virginia as part of the statewide broadband expansion project. Frontier charged the state $40 million for fiber construction.
Martin has asked that the Legislative Auditor review Frontier's invoices.
"Considering the report issued by the Legislative Auditor that reported the misspending of millions of dollars in other parts of the program," Martin said, "I would like to encourage leaders in the Governor's Office and Legislature to ask the auditor to thoroughly review the remaining invoices prior to paying them to avoid additional waste."
Reach Eric Eyre at firstname.lastname@example.org or 304-348-4869.