Citynet CEO Jim Martin has asked state officials to stop paying Frontier Communications for fiber-optic cable construction that the company completed as part of a $126.3 million high-speed Internet expansion project in West Virginia funded by the federal stimulus.
The state owes Frontier about $26 million. The telecommunications firm installed 675 miles of fiber cable to public facilities across West Virginia. Frontier has completed the project, but the bulk of the company's bills haven't been paid.
"We recommend that the state not spend any more taxpayer money or pay outstanding invoices on the [broadband project] fiber until a complete audit of the fiber build is conducted," Martin said.
At a meeting last week, state lawmakers raised questions about Frontier's fiber construction costs. Frontier is charging about $62,000 for each mile of fiber - about double the cost of similar projects elsewhere in West Virginia.
Company officials blamed the higher costs on legal fees and a federal requirement to pay construction workers union wages.
Late last week, Martin sent a letter to the state government's chief technology officer, Gale Given, urging her to halt payments to Frontier. Martin also requested copies of Frontier's invoices.
Citing "industry experts," Martin said Frontier might have billed the state for more fiber mileage than the company actually built.
Martin recommended that state officials inspect more than 600 public facilities where Frontier installed fiber.
Last week, Martin released photos that show Frontier's fiber cable spooled up atop a telephone pole at one of the sites in Harrison County.
"A physical review of every site should be undertaken to measure the actual length of fiber and ensure that the large coils that have been placed both inside and outside the [facilities] are not counted as part of the actual build," Martin said. "Counting the coils would clearly inflate the number of miles constructed."
Martin also called on state officials to release Frontier's detailed engineering maps, which would show "start points, end points, splice points and length of fiber."
Dana Waldo, who heads up Frontier's West Virginia operations, told legislators last week that the company has turned over the maps to the Office of Technology.
"As with other private business contracts, Frontier, or any state contractor, should also provide a detailed breakdown of the material costs, engineering costs, make-ready costs, legal costs and auditing costs on each and every [broadband] fiber route that was constructed," Martin said.
Frontier spokesman Dan Page said Friday he hadn't received a copy of Martin's letter, which also was sent to Sens. Joe Manchin and Jay Rockefeller, both D-W.Va., Gov. Earl Ray Tomblin, state Senate President Jeff Kessler and House Speaker Tim Miley.
"If the letter requires a response," Page said, "we'll communicate with those who received it."
A spokeswoman said the Governor's Office is reviewing Martin's letter and allegations.
In 2010, West Virginia received $126.3 million in federal stimulus funds to expand high-speed broadband service.
As part of the project, the state budgeted $42 million to run fiber cable to "community anchor institutions" - schools, libraries, jails, health clinics, county courthouses, State Police detachments, 911 centers, planning agencies, health centers and other government buildings.
Frontier inherited a contract from Verizon to build the fiber. The state initially asked Frontier to build 900 miles of fiber, but later scaled back the project to 675 miles.
In his five-page letter to Given, Martin alleges that Frontier executives have misled state officials about the project. Waldo told lawmakers last week that Frontier built an "open-access" network that other telecommunications firms, such as Citynet, could tap into and serve business and residential customers.
Waldo said Frontier has negotiated a "handful" of agreements with competing companies that plan to use the fiber. Waldo did not name the firms.
In his letter, Martin cites a state report that says Frontier has signed "zero" such agreements. The state filed the report with the federal government in late August.
Martin said it's highly unlikely that any of Frontier's competitors will ever get to use the stimulus-funded fiber.
"It is not economically or technically feasible for any other providers to make any use of the [stimulus-funded] infrastructure, as installed by Frontier in West Virginia," Martin said in his letter to Given.
"As a result, the community anchor institutions will continue to have no choice with regard to who provides their broadband service, and the state will have no choice but to continue to pay the exorbitant rates being charged by Frontier."
Martin, whose company operates an 8,000-mile fiber network, made similar allegations in 2010. A federal agency overseeing West Virginia's $126.3 million broadband expansion project rejected his criticism.
Last month, Frontier objected to the state Office of Technology's plan to award $4 million in leftover stimulus funds to Citynet. The Bridgeport-based company wants to set up nine "GigaPoP" facilities in West Virginia that funnel data and connect to the national Internet "backbone" in Pittsburgh and Columbus. Citynet's proposed project remains in limbo.
Reach Eric Eyre at email@example.com or 304-348-4869.
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