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11/17/2010
Citynet Renews Attack on Broadband Plan

by George Hohmann, The Charleston Daily Mail (11/17/2011).

An outspoken critic of the state's $126 million broadband plan hurled a new salvo against it on the eve of a meeting of the West Virginia Broadband Council.

Jim Martin, Citynet's president and CEO, released an in-depth report on Tuesday that is based on conclusions he and his staff have drawn after spending hundreds of hours analyzing documents they obtained from the state under Freedom of Information Act requests.

"The state represented it would build a 'middle-mile' network reaching 700,000 homes and 100,000 businesses, and it would be this great new superhighway and do all the things the federal government is seeking," Martin recalled. "But afterward, Citynet and others got to look and it looks like it is a windfall for Frontier Communications only."

Frontier, which bought Verizon's wire line business in West Virginia on July 1, holds the contract to provide state government with telecommunications services.

"When you peel back the skin a little more you see it's not about an open network or data superhighways, it's about covering the state's capital cost to extend its network into state agencies," Martin said. "At the end of the day there's no reduction in prices to those agencies, no true benefit being provided."

The state's alleged failure to build a true middle-mile network "is going to be pretty devastating" in an era when broadband has become a necessity like water and roads, Martin said.

"We'll never get big companies to come to West Virginia because they can't get affordable broadband and their employees won't either," he charged. "We're in the business. We rely on Frontier for a lot of our infrastructure. When we go to a business and say we can provide a service for $8,000 a month when they can buy the same service in Pittsburgh for $500, it is embarrassing. Without competition, that will never change.

"We'll ultimately prove this was a complete sham and didn't benefit anybody," Martin said. "We're here. We're not going anywhere. We totally recognize this is going to be a long battle unless the Broadband Council or the new governor or the next governor does something."

Mike Friloux, Citynet's executive vice president of business development and a member of the state Broadband Council, said, "Jim's concerns are growing, they're not shrinking. I'm hopeful that at some point lights will come on and people will start making progressive policy."

Martin used the e-mails obtained from Citynet's Freedom of Information Act filings to construct a timeline leading up to and following the U.S. Commerce Secretary Gary Locke's February announcement in Wheeling that the state would receive a $126 million grant.

"If you go through the timeline we expect you will find the same things we found - there was a lot of back-and-forth, then a few phone calls, then silence, then the granting of the award," Martin said.

The National Telecommunications and Information Administration or NTIA, which oversees the grant program, "had a lot of challenges with the state's grant," Martin said. "They didn't see that it met the requirements that they put forth. When you read the material you see there are challenges. In December the tenor of the questions changed. Then silence. So the question we have is, how can the NTIA have so many questions and all of a sudden there's a press conference in Wheeling and it's said that this is the model plan?"

Tom Susman, president of TSG Consulting, is a consultant to Citynet. Susman was director of the Public Employees Insurance Agency during the administration of Gov. Bob Wise. "If you look at the e-mails you'll see that on some technical questions, the state has to go to Verizon, the incumbent carrier at that time," he said. "Then Verizon would give the answer, which the state would send verbatim. It's odd the state doesn't have its own engineers. When I was in state government I did not rely on a vendor to tell me what was in a contract. I relied on my attorneys."

In one e-mail, the state "went to Frontier to ask Frontier what their involvement would be with the grant," Susman said. "Really, the state should be telling Frontier because the state is the purchaser of services. It looks like the vendor is in charge, not the purchaser, and nothing good happens when the vendor is in charge."

Citynet had applied for a broadband grant but it was rejected.

Asked who would own a middle-mile system in a perfect world, Friloux said, "The state should have stepped up to the plate, knowing the importance of broadband and that it is now beyond being a 'nice to have.' The state should have tried to create a state-sponsored cooperative or facilitated a cooperative network for anybody in or out of state to use to facilitate lower-cost competition.

"An example is the Mid-Atlantic Broadband Cooperative in southern Virginia. It's a shining example of what state government can do to take a proactive stance to solving this challenge."

Martin said, "If you've got a cooperative, everybody has skin in the game and agrees on a fair price. It levels the playing field for everybody."

In March Citynet and several other telecommunications providers unsuccessfully asked the Broadband Council to put a hold on the state's broadband deployment plan.

On Sept. 9 Citynet asked the NTIA and the federal Recovery Accountability and Transparency Board to suspend the state's grant. Martin said Citynet has not received a response from either agency.

Sen. Jay Rockefeller, D-W.Va., was instrumental in getting a portion of federal stimulus money dedicated to broadband deployment. On Oct. 27 he praised then-Gov. Joe Manchin for writing "a fabulous grant," dismissed Citynet's criticism as self-serving, and said there are no questions in his mind about the grant.

"The game is over," Rockefeller said in October. "The NTIA has already looked at this and approved it. It's gone through Commerce in a broader sense. The FCC, they've signed off. It's a done deal."

The Governor's Office is the official recipient of the grant. In October Manchin recalled how the grant application was formulated. "We looked at the application and put together a plan designed to maximize our efforts to get broadband into every nook and cranny in the state," he said.

"There have been some concerns," Manchin acknowledged. "We had to do what we thought would help the most people. Companies would not go to some areas without us."

No one in the Governor's Office was immediately available for comment Tuesday afternoon.

Dana Waldo, senior vice president and general manager of Frontier Communications in West Virginia, said Tuesday, "Mr. Martin is just regurgitating all of his allegations about the NTIA grant to the state of West Virginia. He provided no new information Tuesday and is obviously pre-empting an opportunity for the NTIA to respond formally to his allegations."

Martin said he still wants to put a hold on the state's grant "and reallocate the money in a fashion that's truly beneficial to West Virginians." He also wants "to try to educate the general population, both residential and business consumers, on how broadband works, how to make it accessible to everyone.

"We're going to be on this for however many years it takes," Martin vowed. "We're going to hold the state accountable for every single dollar they're spending. At the end of the day we will show that no jobs were created, there's no benefit to the citizens of West Virginia. Hopefully we'll show this was all about Frontier."

Susman added, "And it also will move the discussion so the next resources spent will be spent on developing true middle mile."

Said Friloux, "We hope."

The state Broadband Council is scheduled to meet at 9 a.m. today in conference room 6A of Building 6 at the Capitol Complex.

Contact writer George Hohmann at business@dailymail.com or 304-348-4836

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