CHARLESTON, W.Va. -- The federal government has declined to fund Frontier Communication's $55 million request for economic stimulus money that the company planned to use to expand high-speed broadband availability across West Virginia, according to a federal Web site that tracks broadband grant applications.
In hearings and filings last month, Frontier officials urged the state Public Service Commission to approve its plans to purchase more than 617,000 Verizon telephone access lines in West Virginia, so Frontier could secure federal stimulus funds and expand broadband.
"They had said this was a reason to grant approval, that this would really boost broadband deployment," said Patrick Pearlman, deputy director of the state PSC's Consumer Advocate Division, which is opposing the Frontier-Verizon sale. "They went on about how they're going to get all this money and bring all this, but apparently they couldn't count on the feds."
The Consumer Advocate Division alerted the three-member commission about Frontier's unsuccessful broadband stimulus funding application in a motion filed last week.
Verizon spokeswoman Brigid Smith said Frontier remains committed to spending $48 million to expand broadband in West Virginia if the PSC approves its purchase of Verizon wire lines.
"This commitment to West Virginia was not and is not contingent upon stimulus funding," Smith said.
Frontier also will have a chance to reapply for broadband grant funds during a second round of federal stimulus funding.
In testimony filed with the Public Service Commission last month, Frontier executives said it was unlikely that the federal government would allocate stimulus money to Frontier to expand broadband across Verizon's service territory until the PSC approves the proposed sale.
"This is one of the reasons why we have asked this and other commissions to act expeditiously in their review of the proposed transaction," said Daniel McCarthy, Frontier's chief operating officer.
Stamford, Conn.-based Frontier applied for two stimulus grants that totaled $55 million to provide fiber-optic connections to schools, libraries, nursing homes, rural health clinics, 911 centers and hospitals. A $40.6 million grant was to cover the new territory Frontier wants to purchase from Verizon.
The second grant covered Frontier's existing service areas in West Virginia. Frontier already has about 144,000 access lines across the state.
Frontier also promised to contribute another $29 million in matching funds, if the company received the federal stimulus funding.
"Broadband is essential to our nation's economic well-being and to providing consumers access to vital educational, medical and financial information no matter where they live," Frontier CEO Maggie Wilderotter said in December as part of a press release announcing the company's $55 million grant application.
Several telecommunications companies - Armstrong Cable Services, Comcast Cable, JetBroadband and Suddenlink - that compete with Verizon and Frontier filed comments, requesting that Frontier's $55 million request not be funded. The competitors alleged that Frontier failed to show that its broadband project would help "unserved and underserved areas."
CHARLESTON, W.Va. -- The federal government has declined to fund Frontier Communication's $55 million request for economic stimulus money that the company planned to use to expand high-speed broadband availability across West Virginia, according to a federal Web site that tracks broadband grant applications.
In hearings and filings last month, Frontier officials urged the state Public Service Commission to approve its plans to purchase more than 617,000 Verizon telephone access lines in West Virginia, so Frontier could secure federal stimulus funds and expand broadband.
"They had said this was a reason to grant approval, that this would really boost broadband deployment," said Patrick Pearlman, deputy director of the state PSC's Consumer Advocate Division, which is opposing the Frontier-Verizon sale. "They went on about how they're going to get all this money and bring all this, but apparently they couldn't count on the feds."
The Consumer Advocate Division alerted the three-member commission about Frontier's unsuccessful broadband stimulus funding application in a motion filed last week.
Verizon spokeswoman Brigid Smith said Frontier remains committed to spending $48 million to expand broadband in West Virginia if the PSC approves its purchase of Verizon wire lines.
"This commitment to West Virginia was not and is not contingent upon stimulus funding," Smith said.
Frontier also will have a chance to reapply for broadband grant funds during a second round of federal stimulus funding.
In testimony filed with the Public Service Commission last month, Frontier executives said it was unlikely that the federal government would allocate stimulus money to Frontier to expand broadband across Verizon's service territory until the PSC approves the proposed sale.
"This is one of the reasons why we have asked this and other commissions to act expeditiously in their review of the proposed transaction," said Daniel McCarthy, Frontier's chief operating officer.
Stamford, Conn.-based Frontier applied for two stimulus grants that totaled $55 million to provide fiber-optic connections to schools, libraries, nursing homes, rural health clinics, 911 centers and hospitals. A $40.6 million grant was to cover the new territory Frontier wants to purchase from Verizon.
The second grant covered Frontier's existing service areas in West Virginia. Frontier already has about 144,000 access lines across the state.
Frontier also promised to contribute another $29 million in matching funds, if the company received the federal stimulus funding.
"Broadband is essential to our nation's economic well-being and to providing consumers access to vital educational, medical and financial information no matter where they live," Frontier CEO Maggie Wilderotter said in December as part of a press release announcing the company's $55 million grant application.
Several telecommunications companies - Armstrong Cable Services, Comcast Cable, JetBroadband and Suddenlink - that compete with Verizon and Frontier filed comments, requesting that Frontier's $55 million request not be funded. The competitors alleged that Frontier failed to show that its broadband project would help "unserved and underserved areas."
"Frontier's application had a lot of opposition," Pearlman said.
Congress has allocated $7.2 billion in stimulus funds to improve broadband service across the U.S.
The federal government received 1,400 grant applications during the first round of requests.
Pearlman said the grant money seemed to go to smaller projects that served a distinct area and specific communities.
"This 'let us do the entire state' sort of thing seemed to have been unsuccessful," Pearlman said.
Applicants that pledged more than 20 percent in matching funds also were more likely to receive funding, he said.
In West Virginia, Citynet's $34.5 million request to expand broadband in 25 counties across the state also wasn't funded, according to the Broadband USA Web site, which tracks stimulus funding.
The state of West Virginia also filed a $126.3 million request for broadband stimulus funding. The state's application was still under review, according to Broadband USA. Seven Internet providers are opposing the state's request.
Frontier has previously said it expects to make broadband available to about 85 percent of its West Virginia customers within three years, if the PSC approves the sale. An estimated 40 percent of West Virginia households don't have high-speed Internet access, according to a recent survey.
Frontier plans to buy Verizon's phone lines in West Virginia and 13 other states. After the sale, Frontier would have more residential and small-business wire line customers in West Virginia than in any other state.
Verizon and Frontier expect to complete the $8.6 billion deal by May.
The sale has drawn sharp criticism from the Communications Workers of America, some state legislators and other groups. The West Virginia Chamber of Commerce supports the deal.
Reach Eric Eyre at erice...@wvgazette.com or 304-348-4869.
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