Frontier is facing accusations that the telco overcharged West Virginia $4.7 million in federal grant funds for a $126 million rural broadband expansion project via the FCC’s Broadband Technology Opportunities Program (BTOP).
According to the Office of Inspector General, AP reported that Frontier charged $465,000 for invoice processing fees as "unreasonable" and at least $4.24 million in "unallowable" indirect charges for overhead and administrative expenses.
Additionally, the office said there was "substantive miscommunication" between the state and federal agencies involved in carrying out the BTOP project.
Between 2010 to 2013, Frontier installed 675 miles of fiber reaching what are some of West Virginia's rural areas that have no broadband access. The project also connected 645 community anchor institutions including schools, libraries, healthcare providers and police.
Frontier said its charges were justified and that it fully disclosed all of its actions in regards to the West Virginia BTOP project.
“The Office of Inspector General (OIG) report confirms what Frontier has maintained for years: Frontier was transparent in its dealings with the state of West Virginia on the BTOP project, and independent reviews conducted by an outside accounting firm found Frontier to be in compliance with the grant's terms,” a Frontier spokesperson told FierceTelecom in an e-mail. “Frontier maintains that the administrative costs associated with the project were proper, and the report acknowledges that any reimbursement issues were the result of an honest misunderstanding between the State of West Virginia and the federal grant administrator.”
This is not the only time when Frontier came under fire for its dealings in West Virginia.
In 2016, competitive provider Citynet sued the telco over claims that it abused $40.5 million in federal stimulus funds to build a broadband network that would keep competitors from being able to provide services in the state
At the time, Citynet accused Frontier of double-billing, claiming that it falsified records and charged excess fees not authorized by the federal grant that funded the telco's broadband expansion project it completed in 2014.
Its troubles in West Virginia aren’t just with alleged misuse of federal funds.
Earlier this month, Frontier fired former West Virginia Senate President Mitch Carmichael, who worked as a sales manager after the West Virginia legislature passed a broadband bill that Frontier lobbied heavily against.
The bill, which Carmichael voted for, was passed in April. Frontier dismissed Carmichael in May.
Frontier said in a statement Carmichael’s dismissal was part of a previously announced round of layoffs. In November, the telco announced it would dismiss 1,000 employees across across sales, marketing and product management.