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07/13/2011
State could have up to $40 million in unspent broadband stimulus funds

By Eric Eyre, The Charleston Gazette

CHARLESTON, W.Va. -- A federal stimulus project to expand high-speed Internet in West Virginia could wind up with $30 million to $40 million in unspent grant funds.

After receiving a $126 million federal stimulus grant last year, the state announced plans to lay more than 2,400 miles of fiber optic cable across West Virginia. Now, state officials are talking about installing about 900 miles of fiber, and the project could be scaled back even more. 

Also, state officials initially promised to use the grant money to bring high-speed broadband to 1,064 "community anchor institutions" -- schools, libraries, health care facilities, public agencies and fire stations. However, more than 300 of those public facilities, the state has since discovered, already had high-speed fiber connections.

"There's a ton of money leftover," said Citynet President Jim Martin, a vocal critic of how the state is spending the stimulus funds. "It's money unaccounted for."

At a meeting Wednesday, Broadband Deployment Council members learned that the state plans to spend up to $35 million to bring broadband to the 1,000 public facilities (or $35,000 on average per site), $30 million for equipment and $30 million for wireless towers.

That would leave $31 million of the $126 million unspent. An extra $6.5 million also would remain on the table, if the state doesn't extend fiber to any more than 700 public facilities.

Jimmy Gianato, the state's homeland security chief, said his office recently identified 330 additional "replacement locations" -- higher education facilities, schools, health departments and state-owned hospitals -- that could be eligible for the project. Next week, the state plans to send a list of those sites to the National Telecommunications and Information Administration, which is administrating the $126 million grant, for approval, Gianato said.     

The state must complete all broadband expansion projects and spend the grant money by February 2013. Gianato said it's too early to say exactly how much money will be left over, if any.

"We're still in the very early stages of deployment," Gianato said. "It's just like anything you build: You're going to have one cost, but then you find out you have another cost. If we see we're going to have funds leftover, we're going to look at other options." 

Broadband Council member Lee Fisher said the council should notify the governor's office about the expected leftover funds so they're not wasted.

"There's millions of dollars," Fisher said. "I don't want to see the money spent for the sake of spending money. I think the state would be remiss in not using the money in a reprogramming way to help the state become more [broadband] connected."

Martin said the state should "rework the grant" and start building a "middle-mile" broadband network that Citynet and other telecommunications firms could tap into. Martin has repeatedly criticized the state for not using the federal grant for such a network. State officials have rejected his proposal.

To date, the state has used the stimulus funds to bring fiber optic cable to 12 locations -- mostly libraries and fire stations. Another 102 sites have received the go-ahead to start construction, and 74 more locations have requested approval. 

Martin said the state is allowing Frontier Communications to extend its fiber optic network short distances -- less than 100 yards in some cases -- to the public facilities. The limited distance doesn't allow Frontier's competitors to tap into the network, he said. 

In Bridgeport, the state recently paid Frontier $7,000 to extend 900 feet of fiber optic cable to the local library. Martin said it typically costs about $20,000 to extend a mile of fiber.

"They're building all these little tails," Martin said. "It's going from a pole to a building. They're building these little pieces of fiber that aren't going to benefit anyone but Frontier."

Martin noted that the state's initial promise to install 2,400 miles of fiber has dropped to 900 miles, and he expects the number to decline even more.

"I wouldn't be surprised if we're going to wind up with 300 miles of fiber at the end of the day," he said.

State officials said it's too early to determine how many miles of fiber cable will be installed.

"A lot of this is still being designed," said John Dunlap, a project coordinator. "We could end up with 1,500 miles or 500 miles."

Martin said the public institutions that get access to the fiber optic network being built with the stimulus funds will have to buy broadband service from Frontier.

"The state facilities will be locked in perpetuity to buy from Frontier," Martin said.

Frontier rejected Martin's criticism Wednesday.

"Mr. Martin is a broken record, repeating allegations that have been refuted by everyone involved with this critical project," said Dana Waldo, senior vice president for Frontier's West Virginia operations.

Martin also criticized the state for using the federal funds to bring high-bandwidth fiber cable to small public facilities, such as libraries, that have less than a dozen computers and don't need faster Internet speeds.

"They may not even be able to afford the higher bandwidth," he said. "There's no value to any of this to anyone but Frontier." 

Martin said the state purchased 1,064 broadband routers last year without ensuring there was a place to put them. The routers cost $20,000 each.

"They're Lamborghini routers," Martin said, referring to the expensive Italian sports car. "These sites already have routers." 

Gianato said the state would distribute all of the routers. Many of the 300 sites that already have fiber connections will still receive new routers, he said.

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