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10/13/2010
Citynet Asks Feds to Suspend $126M Stimulus Grant for W.Va. Broadband Expansion

By Eric Eyre, The Charleston Gazette (10/13/2010).

Citynet CEO Jim Martin urged federal officials Wednesday to suspend a $126 million economic stimulus grant that Gov. Joe Manchin's office is spending to expand high-speed Internet across West Virginia.

Martin alleged a "breakdown of West Virginia leadership," calling the state's broadband plan "regressive in nature," "indefensible," and "a complete waste of taxpayer money."

He was responding to a letter sent by the Manchin administration to federal officials last month, defending the use of the stimulus funds.

"The state's response clearly highlights why the federal government needs to suspend the award until there are major modifications to the plan," Martin said. "It is clear from the state's letter that little will be done with the federal taxpayer funds to increase the availability of adequate and competitively priced high-speed infrastructure in West Virginia. The current approach will cost the state future job growth."

Manchin administration officials said Wednesday they have spoken on a weekly basis with federal officials, who have "raised no concerns about the grant."

"The state has and continues to follow all rules of the grant and will continue to proceed as planned," said Manchin spokeswoman Jama Jarrett.

Citynet first challenged the state's use of the stimulus money last summer in a protest letter to the National Telecommunications and Information Administration, which distributes broadband grants.

Martin alleged that the state is using $69 million of the funds to help Frontier Communications extend its broadband network to state agencies. Those agencies subsequently would have to pay Frontier for high-speed Internet service.

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

In response to Martin's complaints, Manchin's legislative liaison, Jim Pitrolo, sent a letter to federal officials on Sept. 30, saying the state was spending the stimulus funds exactly as the grant intended.

Martin fired back in a follow-up letter to the feds this week, saying state officials are trying to "hide behind procedural compliance," while ignoring "glaring conflicts and misrepresentations."

He said Manchin's office is "clearly unable to defend its broadband program on the merits" and the administration's response was "wholly incomplete, inaccurate and inadequate," according to the eight-page letter sent to federal officials.

"Verbal messaging aside, the executive office of West Virginia is not concerned with addressing the needs of West Virginians," Martin said in the letter.

Martin said the state has made "blatantly false" claims about its broadband plan. He said the plan will not bring high-speed Internet to 700,000 homes and 110,000 businesses, as state officials have asserted.

Martin said the state's plan only benefits state agencies - and Frontier.

"In fact, the plan provides no direct benefits for the businesses or community institutions in West Virginia," he wrote.

State officials have insisted that the network would be open to Frontier's competitors.

Martin sent a copy of his letter to the federal Recovery Accountability and Transparency Board, which monitors stimulus spending. He said the federal government "may be our last hope for bringing broadband sanity to West Virginia."

West Virginia ranks 48th in the nation for broadband availability.

Martin said the $126 million broadband grant should be suspended immediately.

"The citizens of West Virginia deserve transparency and accountability from their public servants, and this is even more true given the magnitude and importance of the need for broadband enablement in our state," Martin said Wednesday. "I was born and raised in West Virginia, and I am aware of the consequences this program could have for West Virginia in terms of job growth and competing for high-paying 21st century jobs."

Manchin officials countered that their broadband expansion plan is receiving "nationwide recognition."

"The National Telecommunications and Information Administration refers to West Virginia's award as a showpiece grant," Jarrett said.

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

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