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Citynet already placing fiber-optic networks

Internet service provider gets preliminary OK for $7M loan

By Megan Workman, The Sunday Gazette

CHARLESTON, W.Va. -- Citynet has already started to install fiber-optic networks in West Virginia as part of the Internet service provider's plan to bring faster broadband services to the state in a multi-year project, the company's CEO said Thursday.

Jim Martin said the Bridgeport-based company already has invested $20 million in its first phase of the statewide project.

Martin and Citynet Chief Financial Officer Todd Dlugos attended the monthly West Virginia Economic Development Authority meeting Thursday to get preliminary approval for a $7 million loan that will help finance the project.

Martin said Citynet plans to spend up to an additional $15 million -- including the $7 million loan -- in the first phase of the five-phase project.

The first phase, which should be completed in two years, will focus on the north-central part of West Virginia because it is "a dense fiber optic network," Martin said.

"Citynet recognizes the broadband challenges West Virginia faces, and its primary challenge is lack of infrastructure," Martin said. "Citynet has a vision to build new infrastructure throughout West Virginia but, initially, we're going to focus on the north-central area."

Martin said Citynet has been "silently doing this for the past year." Citynet has already constructed 40 miles of fiber-optic networks of the 130-mile route planned for phase one.

Some of that fiber has been installed at the Bridgeport Public Library, as previously reported by the Gazette.

The state used $7,400 in federal stimulus funds to bring high-speed fiber to the Bridgeport library -- part of a $126.3 million statewide broadband expansion project.

However, the library couldn't afford to pay for the new fiber line -- built by Frontier Communications -- and didn't want to wait years for the state to fix its e-rate contract, so the router was passed onto the city of Bridgeport and installed at a data center owned by Citynet.

The router now serves all city departments -- including the public library, fire department, police department and a cemetery -- on a separate fiber network built by Citynet. The router also will run the city's phone system.

Because Frontier owns the stimulus-funded fiber network, Citynet had to install its own fiber line to the library and charged $800 -- nearly 10 times less than what Frontier billed the state under the federal grant.

The average Internet residential customer in West Virginia today gets broadband speeds of 1 megabit per second, Martin said. Businesses get 3 megabits per second, he said.

EDA members voted to give preliminary approval to the $7 million loan. It will be up for final approval next month.

With the new high-speed infrastructure, Citynet's plan is to bring 1 gigabit per second to West Virginians, 1,000 times the current speed, Martin said.

"The only way to achieve that is to invest in infrastructure in fiber-optic networks," Martin said.

Citynet's plan is similar to the Google Fiber project, he said.

Google Fiber -- launched as a test in Kansas City, Kan., last month -- is "ultra high-speed broadband networks . . . that will deliver Internet speeds more than 100 times faster than what most Americans have access to today with 1 gigabit per second, fiber-to-the-home connections," according to its website.

However, Citynet currently is installing the fiber-optic networks to benefit businesses, Dlugos said.

"We are predominantly focused on businesses initially because there is a faster return with businesses," Dlugos said. "Economic development comes through business investments."

Residential customers won't see high-speed broadband services until up to five years from now, Martin said.

In an email sent after the meeting, Martin said, "This is a unique opportunity to bring next-generation [fiber to the premises]-based solutions to our business community, which is becoming increasingly more dependent on affordable high-capacity broadband services."

Because West Virginia is ranked 52nd of 56 in U.S. states and territories for broadband speed, Martin said, it makes sense to do this now.

One challenge in West Virginia is the state's small population and rugged terrain, which has made it a challenge for competitive broadband services to come here, Martin said.

"Our broadband costs in West Virginia are 20 times neighboring states because of lack of infrastructure and competition," Martin said. "Our goal is to cut broadband costs by 90 percent."

Martin said Citynet has hired independent contractors during the construction period.

He couldn't say when the project would reach the Charleston area but did say the state capital is "more challenging to build in, because we have to tear streets up and more."

In other business Thursday, EDA members:

The loan will be used to purchase equipment in the Scott Aluminum plant and increase the staff from 35 to 48 workers over the next three years.

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