Citynet CEO Jim Martin asked state lawmakers Monday to authorize a comprehensive audit of a $42 million fiber-optic cable network that Frontier Communications built with federal stimulus funds in West Virginia.
The state initially asked Frontier to install 915 miles of fiber to hundreds of public facilities across the state, but scaled back the project to 675 miles. Nonetheless, the state plans to pay Frontier the entire $42 million.
Frontier has charged the state about $57,800 per mile for fiber construction. Martin said his Bridgeport-based company and other Internet providers install fiber for about $30,000 a mile in West Virginia.
"We encourage someone to go in and conduct a complete audit of this and make sure we did get what we paid for," Martin told a joint House-Senate technology committee Monday.
After the meeting, Legislative Auditor Aaron Allred declined to comment on whether his office was reviewing the fiber construction project.
Earlier this year, the Legislative Auditor released scathing reports about the state's use of federal stimulus funds to buy oversize Internet routers and build an emergency communications tower network. The state tapped a $126.3 million federal grant for the fiber, routers and towers.
"We've already had a 'routergate,' we had a 'towergate,' we don't need a 'fibergate,'" Martin said at Monday's meeting at the Capitol. "Let's get in front of this thing now and make sure we pay it right so we don't look bad after the fact."
Gale Given, the West Virginia government's chief technology officer, defended Frontier's charges Monday. Given said the state expected to pay Frontier $47,200 for every mile of fiber installed, but wound up spending $57,800 - 22 percent more than budgeted.
"It's somewhat higher," she said, adding that some companies charge as much as $100,000 per mile to erect fiber in rural areas.
State lawmakers invited Frontier executive Dana Waldo to speak at Monday's interim meeting, but Waldo was out of town and unable to attend, a company spokesman said.
Delegate Nancy Guthrie, D-Kanawha, asked whether House and Senate leaders could compel Waldo to answer their questions and Martin's allegations at a future legislative meeting.
"I thought Mr. Waldo was going to be here today. We asked him to be here today," Guthrie said. "That's not a light request. We're a legislative committee.
"We're running into a brick wall that's either purposefully being put up, or we're really incompetent," Guthrie continued. "At this point, we need to compel testimony if we can."
Frontier spokesman Dan Page declined to comment on Martin's accusations Monday, but Page released a four-page letter that rebuts much of Martin's criticism.
Frontier said federal grant stipulations required the company to pay government-contract "prevailing wages" to workers who installed fiber. The higher wages increased the project's cost by $7.5 million, or $11,000 per mile on average.
The state also required Frontier to complete $2.4 million in extra work to get the fiber into public facilities, such as schools and libraries, the company said. Legal fees added another $500,000 to the project's cost, Frontier said.
In previous letters to state officials, Martin has alleged that Frontier may have inflated the total fiber mileage by installing unneeded spools of fiber at public facilities.
In its release - titled "Myths vs. Reality" and distributed to the media and state lawmakers Monday - Frontier said the project included 100 feet of "maintenance coil" at every site, or about 12 miles of fiber in total across the state.
Also Monday, Martin alleged that Frontier built the $42 million fiber network in such a way that competitors, such as Citynet, can't use it to bring high-speed Internet service to residential and business customers.
"At the end of the day, that fiber is not useful to any other providers but Frontier," Martin said.
He said Frontier installed short fiber segments - less than 2,000 feet on average - to public facilities.
The fragmented "last-mile" network runs fiber "tails" from public facilities to street-corner telephone poles, he said. The network doesn't connect the public buildings to each other, or back to Frontier's "central offices," telecommunication hubs where other broadband providers could access the network.
"The only fiber that was built went from the school out to the pole and stopped," Martin said. "The challenge is, we still have to have to buy services from Frontier to get there, and their rates are so high it makes it unaffordable for a company to get into a rural market."
In its news release, Frontier said it offers discounted prices for competitors that want to hook up to the "open-access" network.
Given said Frontier officials notified her that the company is negotiating with "six or seven" Internet providers that have "expressed interest" in tapping into the stimulus-funded fiber. Given said she didn't know the names of the companies.
Lawmakers noted that a Nov. 22 report prepared by state officials and sent to the federal government said Frontier wasn't negotiating with any companies that provide Internet service.
"At the time that report was put together that was probably correct," Given said. "There weren't any in negotiations. Since then, we've learned there are six or seven in negotiations."
Reach Eric Eyre at firstname.lastname@example.org or 304-348-4869.
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