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02/18/2015
W.Va. bill to build $78M rural broadband network advances

By Eric Eyre, The Charleston Gazette

A West Virginia Senate committee advanced legislation Wednesday that aims to expand affordable high-speed Internet service to rural communities across the state.

The bill (SB459) would authorize the construction of a state-owned 2,600-mile fiber network that Internet providers could tap into. The companies would still have to build their own fiber lines to customer homes. The new network would cost about $78 million and provide faster Internet speeds and new service to rural parts of the state.

"We are building an interstate highway of fiber," said Sen. Chris Walters, R-Putnam, the bill's lead sponsor. "The government isn't selling that fiber to households. The government is just building an interstate any company can get on to, and [Internet providers] will build the ramps off it … the offshoots to the households."

Frontier Communications, West Virginia's largest Internet provider, opposes the bill.

A Frontier executive told senators Wednesday the project could jeopardize the state's bond rating and leave taxpayers on the hook. Under the bill, the state Water Development Authority would issue bonds to pay for the "middle-mile" fiber network that would link rural communities.

"As this bill is written, the debt service on the bonds falls to the discretion of the Legislature to make appropriations from the general fund," said Kathy Cosco, a Frontier lobbyist and external communications director. "If the network doesn't make enough revenue to pay back the bonds it will ultimately be up to the state and its taxpayers to repay the debt."

Cosco said Frontier and other Internet providers already have built similar fiber networks in West Virginia.

"Our concern is that the construction of a state-owned middle-mile network will be duplicative of the existing network infrastructure and come at significant risk to the taxpayers," Cosco said.

But Citynet CEO Jim Martin told lawmakers that Frontier doesn't allow competitors to use its fiber network.

"We can't get to those rural markets," Martin said. "Right now, there's only one player [Frontier] at the table, and they don't make their network available to others to get in there."

In 2010, West Virginia received $126.3 million in federal stimulus funds to build a "middle-mile" high-speed Internet network, but the state — with the federal government's blessing — wound up building a "last-mile" network that brought fiber to individual schools, libraries and other public buildings.

"We were all hopeful when the state received a $126 million network, but at the end of the day, it didn't do anything for broadband in West Virginia," Martin said. "There was no middle-mile built, so here we are today trying to find funds to build a network and get into those rural markets."

Under the bill, WVNET, a state Internet-services agency that primarily serves colleges and universities, would manage the state-owned fiber network. It would take about three years to build the network.

"This is like water, sewer, roads," said Dan O'Hanlon, who heads WVNET. "The state comes in and helps provide that infrastructure so that businesses don't have to build it for themselves."

The project would create about 1,300 jobs, according to a study by West Virginia State University's business school.

Gale Given, West Virginia state government's chief technology officer, told senators that she wasn't included in discussions about the project. Given suggested the state conduct a "gap analysis" of existing broadband networks before sinking money into an $78 million project.

"Perhaps, this network is necessary, but perhaps only half of this network is necessary," Given said. "I would like to see more facts before I jumped into that business."

The Senate Transportation and Infrastructure Committee voted unanimously Wednesday to advance the broadband expansion bill to the Finance Committee.

"It will open up many new markets in West Virginia," Martin said. "In the rural markets right now, there's no competition."
 

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