Frontier Communications (Nasdaq: FTR), West Virginia's largest telco, on Tuesday said it is concerned about how the state's Broadband Development Council is going to dole out $3.15 million in broadband service grants next week.
These new grants are designed to help other service providers deliver service to about 2,600 rural residential homes in the state.
One of the telco's main concerns is the cost per household to construct facilities to deliver broadband service to mainly rural residences.
According to a report in The Charleston Gazette, the average cost per household is $1,200, $500 more than other federally-funded broadband expansion programs such as the Connect America Fund (CAF) and the Broadband Stimulus program.
The higher cost is related to the fact that the areas these funds will help serve are remote. One proposed broadband project in Pocahontas County would cost about $10,000 per household, for example.
"Clearly West Virginia taxpayers have an interest in the prudent use of their funds," said Dana Waldo, senior vice president and general manager for West Virginia at Frontier, who also serves on the Broadband Council. "Cost should be a concern."
Waldo added that these grants could potentially discourage other service providers from making their own private investments to upgrade their facilities to support broadband access in more rural areas.
"State code cautions that the council should respect market forces and avoid duplicating or displacing existing service or getting involved in projects where companies will serve the market in the reasonably near future," he said.
However, Lee Fisher, a Braxton County farmer and fellow Broadband Council member, said the telco's disagreement should not prevent the board from awarding these grants to Frontier's competitors.
"The council was put in place to determine how to get service to these people," he said.
Fisher added that the West Virginia law and the council rules don't set a per-household limit on roll out costs. Also, the state's broadband construction costs are higher than other states given its largely rural nature.
"The per-household cost is always going to be higher because you don't have many urban areas, and you don't have as many households to put into the bottom of the equation," Fisher said Monday. "You just don't have as many people in West Virginia."
The grants will provide funding for 14 projects. Out of that group, 12 will be used to build out wireless-based broadband, while the other two would provide DSL-based broadband services.
Frontier itself has been a staunch advocate of expanding broadband service to rural areas, including West Virginia, via a mix of its own private funds and government grants.
In November, Frontier was reimbursed $29 million for making broadband and wireline telephone network upgrades in West Virginia. This comes on the heels of plans where it would start delivering up to 25 Mbps DSL services to 405,000 West Virginia residential and business customers. Eligible business customers would be able to get up to 40 Mbps speeds.
With an even larger footprint to serve following its acquisition of Verizon's rural lines, Frontier also accepted a $71.9 million subsidy from the FCC's new Connect America Fund (CAF) to upgrade facilities in its territory to provide broadband DSL service to an additional 92,876 households.
- The Charleston Gazette has this article
Frontier to get $29M for West Va. network upgrades
Frontier Q3 revenue declines as it narrows its residential, business subscriber losses
Wilderotter: Frontier will decentralize marketing spending
CenturyLink, Frontier protest Portland, Ore. wireline tax hike