Citynet: Citynet denies vendetta, intensifies attack on Frontier

By Eric EyreCitynet says its federal lawsuit against rival Frontier Communications has nothing to do with a vendetta - and everything to do with corporate greed and public corruption.In its latest court filing, Citynet alleges West Virginia officials and Frontier squandered federal stimulus funds, made a "litany of misrepresentations" to the federal government and failed to build the type of broadband network that would have "fostered economic growth and prosperity for generations to come.""The case is about the misuse of federal funding that had the potential to provide an incredible opportunity to the citizens and businesses of West Virginia," said Citynet CEO Jim Martin. "Despite the fact that West Virginia received the largest grant award nationwide, the state rankings for broadband are actually worse than before this project was implemented."Last month, Frontier asked a federal judge to dismiss the federal lawsuit, arguing that Citynet had taken part in a six-year vendetta to discredit the state's broadband expansion project that upgraded broadband internet service at schools, libraries, health clinics and other public facilities. The project was completed two years ago.Frontier, West Virginia's largest internet provider, has alleged that upstart Citynet was out for revenge because the federal government rejected Citynet's request for broadband funds in 2010 - and instead awarded funds to the state of West Virginia and Frontier. Federal officials also have dismissed Citynet's protests against the broadband project."Citynet's latest filing does not change the fact that its complaint is frivolous," said Andy Malinoski, a Frontier spokesman. "As Frontier has stated many times before, Citynet has repeatedly failed to persuade the federal government that its claims have merit. Frontier will continue to fight these baseless claims of a disgruntled competitor."In a recent filing, Citynet asks U.S. District Court Judge John T. Copenhaver to reject Frontier's motion to dismiss the case, saying West Virginia's high-speed internet project was a disaster from the get-go.On their application for federal funds, state officials misrepresented to the federal government the type of broadband network Frontier planned to build in West Virginia, Citynet asserts.The application promised an "open-access middle-mile network" that linked public facilities to Frontier's "central office" hubs, where competing internet providers could hook up to the network and serve customers in rural markets.The words "middle mile" appeared 67 times in the state's application for federal stimulus funds, according to Citynet's recent filing. The application also states, "The request is for middle-mile only."Yet Frontier constructed a "last-mile" network that linked public buildings to utility poles, essentially shutting out other internet providers from using the network, Citynet alleges.The state paid Frontier about $40.5 million to build the fiber network."Recognizing that their investment in West Virginia could be jeopardized, Frontier intentionally misused [federal broadband] funds to protect their control of the rural markets in West Virginia," Martin said.West Virginia officials also failed to disclose that Frontier would have gone ahead and built the fiber network, even if the feds hadn't awarded grant money for the project, according to the recent filing. Citynet cites documents that show Frontier planned to spend $279 million to upgrade facilities in West Virginia - with or without the stimulus funds.A Frontier executive sent an email to state officials in 2009, saying that Frontier had completed about 90 percent of a statewide middle-mile project. The state's application for federal funds asserted no middle-mile network existed in West Virginia."These misrepresentations led to the grant being awarded for the sole benefit of Frontier," Citynet's lawyers wrote in their latest filing.Bridgeport-based Citynet also disputed Frontier's assertion that it could charge the state for the broadband project's overhead costs. The indirect expenses totaled more than $5 million. Citynet said Frontier failed to negotiate an indirect cost rate and did not include the extra costs in the project's line-item budget -missing requirements that should have prohibited Frontier's reimbursements.Citynet also alleges Frontier inflated the number fiber miles it built in West Virginia by attaching extra replacement fiber - called maintenance coil - to utility poles. Industry standards call for 100 feet of coil for every mile of fiber.Citynet says Frontier repeatedly hanged more replacement fiber than it should have. At the Fairview Public Library in Marion County, for instance, Frontier installed 250 feet of fiber cable to a building and spooled 697 feet of extra coil, Citynet alleges."This case is about recovery of funds that were illegally obtained," Martin said. "Frontier and the state will be required to provide detailed documents demonstrating what was actually constructed using the federal stimulus money."Reach Eric Eyre atericeyre@wvgazettemail.com,304-348-4869 or follow@ericeyre on Twitter.