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Frontier, Citynet debate broadband grant
[December 26, 2010]

Frontier, Citynet debate broadband grant

Dec 26, 2010 (The Dominion Post - McClatchy-Tribune Information Services via COMTEX) -- Citynet and Frontier Communications have made their cases to the state Broadband Deployment Council -- but opinions issued by the National Telecommunications and Information Administration (NTIA) and the state attorney general may make their arguments a moot point.

Citynet said afterward it remains undaunted, though.

At issue is a $126 million federal broadband stimulus grant to the state for Frontier to extend broadband service to 1,064 "anchor institutions" -- public safety agencies, public libraries, schools, government offices -- with more than 2,400 miles of fiber optic lines.

The grant also includes 12 microwave towers and a highspeed connection from the Green Bank Observatory to WVU.

In separate presentations and subsequent, sometimes heated, debate, Frontier and Citynet made their cases for and against the grant.

Citynet President and CEO Jim Martin repeated his argument that the state plan of servicing more than 1,000 separate points isn't the best way to build an Internet backbone to extend service to the state's unserved and underserved areas.

"We could actually steer that money, still implement the project as it's been presented, but find some additional efficiencies ... and build a network that could truly benefit West Virginia," he said.

The challenge, Senior Vice President Mike Friloux added, is the high cost of getting service to isolated areas across mountainous terrain. Government funding is needed to build the "middle mile" network -- an electronic interstate highway system -- so private companies can then build the "last mile" links to the communities.

Other states are developing middle mile network plans along these lines -- particularly the Mid-Atlantic Broadband Cooperative, which serves south-central Virginia.

"We see policies working well across the country and want to move them forward in West Virginia," he said.

"To really make it work and bring down economic barriers requires federal or state funding," he said. Otherwise, the private sector has to carry the capital costs to build miles and miles of connections, and wrap them into its pricing.

"Either we're going to move broadband forward in the state of West Virginia or we're going to leave the status quo in place, and I think there's credible arguments on both sides." Saying the grant largely serves Frontier's interests, Martin concluded, "We hope that this council will take a more proactive position and get involved in this grant and ask certain questions." Frontier Senior Vice President and General Manager Dan Waldo countered that Frontier does in fact have a middle-mile network already in place, and showed maps to make his point.

The company is committing more than $300 million of its own, without the state grant and contract, to extend service to the unserved and underserved communities in the state -- more than 400,000 households by the end of 2011.

And it's upgrading its service speeds from 3 megabits per second (mbps) to 6 mbps systemwide.

"Frontier is bringing this technology, this investment, to West Virginia first," he said. "How many times do you hear that? ... We are going to move this state from one of the least connected to one of the most connected states in the nation. When we're done, this will be a model for any state in the nation." Martin and Frontier President Ken Arndt also argued costs. Martin said Frontier charges competitors 10 to 20 times the average national rate to tap into their lines. He just wants a level playing field to allow competition.

Arndt countered that Frontier will abide by terms and pricing of access subject to NTIA review and appeal procedures.

Council member Lee Fisher echoed Martin's concer ns. "My concer n for truly rural West Virginia is that companies will get into these debates and hide behind contracts and hide behind tariffs." Tariffs in this case aren't taxes, but published access rates approved by the Public Service Commission.

Three factors, though, appear to work against any changes to the grant.

Mike Todorovich, principal investigator for the grant, is charged with making sure it complies to federal rules.

"We cannot deviate from the way the grant is written," he said.

The state attorney general issued a letter saying the council's powers are defined by the Legislature, and allow the council to have a say only in funding channeled to its account. The NTIA grant was awarded to the governor's office and is out of the council's purview.

In response to a letter of protest from Martin, the NTIA wrote to him that the grant conforms to NTIA requirements, his objections are unfounded and the grant will go forward as is.

Martin said that despite those letters, Citynet fully intends to argue that the grant doesn't do the best public good.

He will contact Frontier to obtain access rates to its lines, and will file a complaint with the NTIA if they are excessive.

He said the council hadn't been fully apprised of all the issues, and was glad both sides could make their points and enhance public awareness.

Outgoing Commerce Secretary Kelley Goes, who chaired the council during her tenure, said the state has a timeline to spend the grant money: 66 2/3 percent by February 2012, and 100 percent by February 2013.

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