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09/29/2010
Citynet combs through $126M grant records

By Eric Eyre, The Charleston Gazette (09/29/2010).

Citynet executives inspected thousands of pages of documents at the state Department of Commerce Wednesday as part of the company's inquiry into the use of a $126 million federal stimulus grant to expand high-speed Internet across West Virginia.

Citynet President Jim Martin and staff members reviewed stack after stack of correspondence, including state Commerce Secretary Kelley Goes' and Homeland Security chief Jimmy Gianato's e-mail messages and cell phone records.

"It's our goal to determine what really is happening with the office of Secretary Kelley Goes," said Martin, after combing through a stack documents Wednesday afternoon. "We are finding things that are not in line with the way things have been represented to the West Virginia Broadband Council, Citynet and other entities with an interest in this project. Things just don't add up."

Martin has alleged the $126 million in stimulus money for broadband expansion isn't being spent as the federal grant intended.

Martin said the grant money should be used to build a "middle-mile" broadband network that Citynet and other telecommunications' companies could tap into.

Instead, the state is giving $40 million to Frontier Communications, a Citynet competitor, to construct a "last-mile" network that benefits only Frontier, Martin said. The network would run to libraries, schools, health-care facilities, and fire and police departments, which, in turn, would pay Frontier for broadband service.

"Frontier is going to have the state's business forever," Martin said. "No other company will have the money to come in and build the network."

Citynet executives - there were four at the Department of Commerce in Charleston Wednesday - plan to continue to inspect the records through the end of the week.

After combing through a small portion of the documents, Martin said the company already has determined that the state wasn't "shovel-ready" to expand broadband, as the grant required, when it applied for the stimulus funds.

"You had to be ready to go and build," he said, but they're consistently telling the Broadband Council and public that they're still engineering the network post award."

Goes heads the West Virginia Broadband Council, an advisory group established to help increase broadband availability in the state.

Citynet executives also discovered documents Wednesday that show some schools and state agencies do not want to take part in the broadband project "because of the additional expenses they will incur," Martin said.

Citynet started reviewing the homeland security and commerce records this week, after requesting them under the state Freedom of Information Act on July 1. The state questioned the company's initial record request, saying it wasn't specific enough, and that many of the documents were exempt from public disclosure.

"It was a delay tactic," Martin said. "There still is more information that hasn't been provided."

Deputy Commerce Secretary Jon Amores said his office needed time to identify and compile the information for Citynet, and had only four employees to gather the materials.

"The request had to be addressed by two separate agencies," Amores said Wednesday. "We've copied all the documents we think are responsive."

Citynet's document request included:

Any correspondence between Goes and Gianato and Frontier and Verizon executives about the $126 million broadband grant. Verizon sold off its broadband and wire line business to Frontier in West Virginia and 13 other states in July.

E-mails and letters between Goes and Gianato and the National Telecommunications and Information Administration, the federal agency that distributes broadband grants.

Broadband funding correspondence between Goes and Gianato and the offices of Sen. Jay Rockefeller, the late Sen. Robert C. Byrd and U.S. Rep. Alan Mollohan.

Correspondence by state employees with the Department of Commerce and Division of Homeland Security and Emergency Management about the $126 million grant application and how the money is being spent.

Letters and e-mails from Goes and Gianato about Frontier's purchase of Verizon's telephone access lines (used for high-speed Internet) in West Virginia.

Earlier this month, Martin sent out a scathing e-mail about Goes, saying she has shown a "lack of leadership" and has "no experience or expertise in broadband whatsoever." Goes has been put in charge of implementing the broadband project.

In the e-mail, Martin also insinuated that Goes' plan was a "political favor" for Frontier.

Gov. Joe Manchin has defended Goes and called Martin's remarks "personal attacks." Goes has declined to comment on Martin's criticism.

Martin also filed a formal protest letter with the National Telecommunication and Information Administration, or NTIA, saying the state has failed to spend the $126 million as outlined in its grant application. In the letter, Martin called Goes' broadband plan "a complete waste of taxpayer money." The letter also went to the U.S. Recovery Accountability and Transparency Board, an agency that monitors stimulus spending.

Manchin has said the money is being spent as the grant stipulates.

Goes said she plans to respond to Martin's complaints and allegations in a letter to the NTIA. She was still drafting the document this week.

West Virginia, which ranks 48th in the nation in high-speed Internet availability, received the largest single broadband grant distributed by the NTIA. It was the only grant awarded that's meant to serve an entire state.

Bridgeport-based Citynet applied for $34 million in stimulus funds to build a "middle-mile" network, but it's application was rejected. Martin has said his complaint isn't "sour grapes."

Martin said Citynet would release a statement about its findings after completing the records review. The company, which has branch offices in Charleston and Morgantown, has about 100 workers.

"This is about making sure the interests of the citizens of West Virginia are looked after," Martin said. "It's such a complex issue. There are only a select few people who can challenge what the state says.

"We're passionate about West Virginia, and we're trying to do the right thing."

chris dorst | Gazette Photo
Citynet executives (from left) Chief Technology Officer Luther Toney, President Jim Martin, Vice President of Service Delivery Carolyn Barr and Network Engineer Glen Keaton inspect documents at the state Department of Commerce Wednesday afternoon.

Reach Eric Eyre at ericeyre@wvgazette.com or 304-348-4869.

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