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Published: Friday, October 01, 2010
Page: 1A

Gov. Joe Manchin's office has notified federal officials that its plan to build a high-speed Internet network in West Virginia "is in full compliance" with a $126 million stimulus grant being used to pay for the project.

The governor's office was responding to a formal protest filed by Citynet, a Bridgeport-based telecommunications company that alleges the state isn't spending the federal economic stimulus money as the grant intended. Citynet recently told federal officials that the grant solely benefits Frontier Communications, a Citynet competitor.

Manchin disputed the allegations Thursday.

"Through the grant process, the extensive due diligence, and from the date of the award, the state has specifically met all the requirements and guidelines set by the [federal government] to secure this funding," the governor said in a prepared statement. "We will continue to take the necessary steps to ensure the grant is properly carried out."

Citynet President Jim Martin filed the protest with the National Telecommunications Information Administration, which distributes broadband grants.

The governor's office recently sent its response to the federal agency, saying Frontier won't be the only company to benefit from the broadband project. The network also would be open to Frontier's competitors, according to the three-page letter, which the Gazette obtained Thursday.

Martin said Thursday that the governor's response letter has "many shortcomings." Citynet plans to send a follow-up letter to the NTIA, he said.

"This grant should create jobs for the new economy, but it is clear after reviewing the state's response, the current approach is nothing more than corporate welfare for stockholders on Wall Street," Martin said. "This grant should be about Main Street, West Virginia, not New York investment houses."

Martin also alleged Thursday that the state is giving $69 million of the stimulus funds (he previously estimated $40 million) to Frontier to build a broadband network that only benefits Frontier.

"The state of West Virginia is spending $69 million of taxpayer funds for assets that will be built and owned by Frontier," Martin said. "For all intents and purposes, these are taxpayer assets. Simply because the state refuses to take minimal proactive steps to secure ownership [of the broadband network] only demonstrates their continued failure to appropriately serve the citizens of West Virginia."

In the state's letter to federal officials, Pitrolo said the $126 million grant requires Frontier to offer "interconnection agreements" to competitors, so companies, such as Citynet, could tap into the network. Pitrolo concluded that the state has worked closely with the FTIA this year to ensure that it's complying with the terms of the federal grant.

"The facilities have not yet been built," Pitrolo wrote to the FTIA. "If disputes concerning availability and/or pricing arise after a bona fide request, those disputes can be resolved by negotiation between the parties, or ultimately by the FTIA."

In March, West Virginia was awarded $126 million in federal stimulus funds to create a statewide fiber-optic broadband network for all public schools, libraries, health-care facilities, and fire and police departments.

Pitrolo said Frontier is helping to build the network through an open-ended contract awarded to Verizon in 2007. In July, Verizon sold off its landline network to Frontier in West Virginia and 13 other states.

Manchin officials have said a new contract would not be bid out. The state has to use the existing contract to complete the project on time, they said.

"As I've stated before, West Virginia has set the bar," Manchin said Thursday. "Our grant is the first of its kind and is a model for the entire nation, and I'm proud of that fact. I hope the public understands the true significance of this grant and what it will do to support the state's growth."

The Communications Workers of America union, which represents Frontier employees, also recently sent a letter to federal officials. The union supported the governor's office and disputed Martin's criticism.

Martin has alleged that the state's broadband plan would have "disastrous results" and "not a single business or resident will receive any benefit from the expenditure of public funds."

Ron Collins, the union's Region 2 vice president, said Thursday that Martin's allegations weren't supported by facts. The CWA estimates that about 20 jobs are created for every $1 million spent on telecommunications and information technology projects.

"His assertions are completely bogus," Collins said. "There's no way that when you're investing that kind of money, you're not going to need people power. It will definitely create jobs for West Virginia."

Collins also defended Commerce Secretary Kelley Goes, who's in charge of the broadband project.

Martin previously alleged that Goes "lacked leadership" and "has no experience or expertise in broadband whatsoever," according to an e-mail he sent to West Virginia Broadband Council members last month. Martin also insinuated that Goes was doing a "political favor" for Frontier.

Collins called the remarks "untruthful cheap shots."

"Kelley Goes knows this stuff, and she has done an outstanding job for the state," Collins said. "She's committed to the citizens of West Virginia. I don't think there was any other motivation."

Collins said he fears Martin's protest could jeopardize the $126 million broadband project.

"All the parties have to figure out how to get along and do what's right," he said. "The build-out of this project is a critical need for the citizens of West Virginia."

Manchin also reiterated his support for Goes Thursday.

"My confidence in Secretary Kelley Goes and her team has not wavered," he said. "I know they continue to work closely with organizations, agencies and businesses to see that this project is executed thorough and in accordance with all grant requirements."

Reach Eric Eyre at or 304-348-4869.

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