Citizens Telephone Coop questioned over its cable TV business

Telephone is easy; it's cable TV that's hard.

A former general manager of the Floyd, Va.-based Citizens Telephone Cooperative (CTC) has raised questions about how the telco is running its Citizens Cablevision subsidiary and why that subsidiary is delinquent in repaying an $8.1 million government loan it got to reach more customers with more services, a story in today's Roanoke Times said.

Jim Newell, general manager of CTC from 1976 to 2001, told the newspaper that, as a current subscriber (and subscribers consider themselves members of the cooperative) he is concerned "that the financial position is not being accurately communicated to the membership" and could lead to a service interruption.

That worry is not justified, replied Gary Sapp, the current general manager, who said that the cooperative has acknowledged a $7.5 million government debt "several times" and knows, "You borrowed the money. You got to pay it back."

The debt began in 2005 when the U.S. Dept. of Agriculture's Rural Utilities Service (RUS) tossed about $8.1 million at Citizens Cablevision to expand high-speed Internet to unserved areas. The subsidiary was required to pay the funds back promptly but hasn't, which caused RUS Administrator Jonathan Adelstein to call Cablevision "delinquent on its loan" in a letter he wrote to Sen. Jim Webb. The letter acknowledged that the cable subsidiary did pay back $581,752 as of April—bringing the total debt to the $7.5 million that Sapp acknowledged.

Sapp emphasized that it's not CTC's debt—even though the coop owns all the stock of Citizens Cablevision—and that RUS itself is partially to blame for the situation because it delayed issuing the funds from 2003, when the application was made, until 2005 when a competitor had set up camp in the Wayne County service area.

"We were almost two years behind," he said, calling the loan program "flawed." Sapp said he wants a debt reduction; RUS has made no counteroffer.

"We're attempting to resolve it," he told the newspaper.

In related news, the newspaper said, Citizens Telephone Cooperative in 2010 won a $9 million grant under the Obama stimulus program to further expand broadband services and is now laying 186 miles of fiber optic trunk lines.

For more:
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