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01/06/2014
Debate continues on broadband costs

by Dave Boucher
Daily Mail Capitol Bureau Chief

CHARLESTON, W.Va. -- State lawmakers still aren't satisfied with explanations from state officials and Frontier Communications about costs of a massive project aimed at increasing access to broadband Internet in West Virginia.

State Chief Technology Officer Gale Given, a representative from Frontier Communications and other state technology representatives provided maps and more information about the Broadband Technology Opportunities Program grant to a joint legislative Committee on Technology.

The maps, and responses about the costs of the 675-mile project, weren't exactly what lawmakers wanted.

"I still have some unanswered questions about why we were paying $62,000 a mile," said Sen. Bob Williams, committee vice chairman.

Frontier received $42 million to help construct the fiber network in the project. Citynet and other providers accuse Frontier of misusing the money to try and prevent other providers from receiving any.

Jim Martin, Citynet CEO, wants to use an extra $2.5 million in federal stimulus money for other facilities that would connect to the national Internet "backbone," according to the Sunday Gazette-Mail.

The state officially needed to use that money by the end of 2013, Given said Sunday.

They asked for an extension Dec. 17 and have yet to hear anything back from the federal government.

"I'm still hopeful, but I don't really have anything good to base that on," Given said.

Administration of the $126.3 million federal grant - intended to provide fiber connectivity, Internet routers and communications towers throughout the state - continues to face scrutiny.

A report from the legislative auditor determined the state overpaid when it spent $24 million on routers that were typically far too large for their intended locations. A different legislative audit found the state sidestepped purchasing requirements when it spent millions on the communication towers portion of the project.

Last month, Delegate Nancy Guthrie, D-Kanawha, and other lawmakers asked Givens for engineering maps that provide very specific information about the fiber network. The maps would show exactly how many miles of fiber were built and give the details needed to allow other Internet providers to connect.

Given did not provide engineering maps at Sunday's meeting. She said she assumed they exist at Frontier, and the National Telecommunications and Information Administration doesn't require that the state keep the maps.

Guthrie also questioned why Dan Page, Frontier's communication manager in West Virginia, didn't appear before the committee last month.

Frontier distributed a four-page memo with information about the project after the meeting, and Mark McKenzie, a Frontier representative, spoke Sunday.

He said he was working on getting some of the engineering maps to Guthrie. He also told lawmakers the average per-mile cost for such a project is $45,000 to $50,000.

Last month, Given said the state came in at about $57,000 per mile.

"Looking at apples to apples, we were about 22 percent over what we expected," Given said Sunday.

The Frontier memo put costs at the $62,000 per-mile sum Williams mentioned, but Frontier and the state say that's misleading.

Echoing the memo, McKenzie pointed to several issues Frontier says led to higher costs: $2.5 million to connect the "Community Anchor Institutions" - schools, government buildings and similar destinations for fiber - to the actual network. That cost wasn't initially part of the proposal, McKenzie said.

The company also spent an additional $500,000 on legal costs. An unexpected "substantial amount of rock" in the Cheat Mountain area increased costs of connecting West Virginia University and the National Radio Astronomy Observatory in Greenbank, McKenzie said.

Like the memo, McKenzie did not mention how much extra money the rocky terrain required.

Paying "prevailing wage" - an average hourly wage based on pay for similar local private work - to Frontier and contract workers also added $7.5 million.

McKenzie mentioned the prevailing wage requirement for the non-Frontier workers specifically and said other providers don't use union labor that requires paying prevailing wage.

Last month, Given told the committee she assumed prevailing wage costs were included in original estimates.

Williams, Guthrie, Sen. Chris Walters, R-Putnam, and others repeatedly asked about why the cost was higher than expected.

Given said early NTIA audits did not show the money was misspent.

"They were (the NTIA's) dollars, and I think we have to rely in some degree on their audit," Givens said.

More audits are taking place right now, Given said. A different state technology official said some preliminary findings of a state audit are expected as soon as this week.
 

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