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West Virginia Broadband Stimulus Money Flush: $22,000 Routers Sit Unused for 2 Years

As Stop the Cap! first reported last summer, the state of West Virginia is embroiled in a growing scandal over how the state spent more than $126 million in federal institutional broadband expansion funds it was awarded in 2010.

Sources inside two small community libraries and a regional government office collectively contacted Stop the Cap! this week warning that some of the targets for broadband funding including schools, government offices, and libraries have been handed world-class broadband networks they cannot operate without ongoing support not included in the grant.  With little chance of funding, many institutions will be unable to pay the monthly service rates and maintenance fees charged to keep the networks running.

“We are getting a Hummer network on a Kia operating budget,” one community library official tells Stop the Cap! “The network sounds great, but in our case we have to find the money to pay the bill to run it every month, and that money is hard to find in a library with five outdated public terminals.”

Another source tells us installers left more than one library with equipment nobody knew how to operate.

The Cisco 3900 router series

“They installed it over the course of a few days and just left, and nobody here knows how it works,” the librarian tells us. “We’ve quietly gone back to our old Wi-Fi system until we can figure these things out. We don’t even have their phone number.”

At a library in Hurricane, librarian Rebecca Elliot said workers who showed up to install the router didn’t leave behind instructions or a user manual either.

“I don’t know much about those kinds of things,” Elliot told the AP. “I just work here.”

While the original purpose of the grant was to “improve broadband” in the Mountain State, the funding came with significant restrictions that targeted the money exclusively for institutional broadband networks that do not serve individual residences or businesses. While West Virginians languished with some the country’s worst broadband service, state officials were green-lighting spending on grossly oversized equipment that institutional users simply don’t need and sometimes cannot afford to operate.

Martin

One critic, Jim Martin, president of business broadband provider Citynet said last summer the state gave preferential treatment to Frontier Communications to construct networks that ultimately favored them as the logical choice of service provider, but left small institutions with service bills they can never hope to pay.

“Where is the accountability,” Martin asked this week.

His fears appear to be justified. This week, a consulting firm has been hired by the state to audit how more than $126 million in taxpayer funds were spent after reports in the Charleston press brought news the state paid millions to deploy equipment to facilities that did not need any service improvements.

The Charleston Gazette reports it found 366 unused routers valued at more than $22,000 each in storage.  They have been there for two years.  In fact, at least $24 million was spent on routers designed to be used by large corporations or universities that were installed in libraries and public safety centers with just a handful of personal computers. Experts say a basic retail router priced at $50 could have provided more than acceptable service to these locations.

West Virginia’s state Commerce Secretary Keith Burdette on Monday admitted, more than two years after the state won the grant, now might be a good time to hire a consultant that does not work for a company trying to sell the state broadband equipment or services.

Despite the suggestion the state designed its network improvements based on the recommendation of equipment vendors, Burdette sought to move on and avoid “finger-pointing” and “dwelling on past decisions.”

Burdette

“I don’t want to spend a lot of time on things we cannot change,” Burdette told the Gazette. “If we made mistakes, then we need to look at how do we take lemons and make lemonade.”

“That’s the most expensive glass of lemonade in the history of West Virginia,” replies our source inside a regional government office. “Imagine what that money could have done extending broadband service to the homes and businesses that do not have it today.”

Our source says the state government is engaged in classic “butt-covering” with the announced state audit.

“Of course the report will blame people lower down in government while leaving the oversight failure for another day,” he tells us. “What’s a hundred million in taxpayer money, right?”

Burdette and other state officials might have listened to the state’s own Office of Technology, whose administrator warned that the routers — the Cisco series 3945 — “may be grossly oversized.”  Other state and library officials also questioned the purchases.  Burdette said the state should have hired a consultant before purchasing the equipment and launching the expansion project, which will not deliver a single broadband connection to any resident or business in the state.

Martin said in 2011 the entire grant process was wrong-headed from the beginning.  Martin says the state should have spent the money on a stronger middle-mile network to boost capacity for everyone in the state.

Now West Virginia is in a hurry to spend the remainder of the grant award — an undetermined amount — before the grant spending expiration date is reached. Unspent funds must be returned to the federal government.

State officials promise they will find a home for every unused router by the time the stimulus grant expires. That could leave a rural county sheriff’s office with a router designed to serve a minimum of 500 concurrent users in a facility with fewer than a dozen aging personal computers.

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Currently there are 8 comments on this Article:

  1. Scott says:

    $22k spent per Cisco router, the state then needs to add in the cost of ownership to run those with require an very experienced network tech, or IT staff certified in Cisco, along with the most expensive support contracts in the industry – but given the way they willingly cooperated with the Cisco vendor to spend millions on this gear they wouldn’t be able to afford the upkeep on, let alone the network costs…

    Even if they had deployed Cisco routers designed for the size of those locations, they clearly don’t have the staffing or budgets for them.

    They should do what a few other states in the past have done after being ripped off by a vendor, blacklist them from any future RFP’s and from the state purchasing system. Make Cisco take back the equipment.

    Go buy some wireless and router gear like Meraki for remote management, or even SOHO equipment like it was stated in the article for a few hundred dollars to cover the whopping 5 outdated pc’s at each location.

    • George Douglas says:

      The vendor was Verizon Network Integration, not Cisco. Cisco sales agents recommended a $487 router when asked by the newspaper what was needed for the application. The person in charge, for the state, should at minimum be fired and probably should be prosecuted for miss use of government funds. There has to be corruption here because he was told prior to the purchase they were grossly oversized. The state should not be allowed to sweep this under the rug. Something criminal was done. Six similar routers run the entire West Virginia state government network.

      • I believe Verizon kicked in some additional routers for free, if I recall correctly, but that probably turned into a grand write-off of equipment they were just storing anyway.

        My personal guess is that the grant administrator/project coordinator for the state was looking at the deadline by which the grant funds had to be disbursed and just went hog-wild on a spending spree.

        I remember last summer they were very concerned about where to spend all the money because designated projects turned out to be redundant and unnecessary so they were in a hurry to find new projects where they could direct funding.

        The grant rules require the money be spent within a specific timeframe, on specific things, with the understanding projects will be completed on a specified schedule. Equipment buys are a quick way to blow through the money, while infrastructure project digs and wiring often get mired in delays because of engineering, permits, weather, and workforce issues.

        I will bet they decided this was a place they could safely allocate some of the leftover money and be assured of delivery before those funds would have to be forfeit back to the government.

        This was a major failure in network planning while the clock was running, and states hate to hand back designated grant money, so they will spend it on just about anything if it means they don’t have to send the leftover money back.

        It’s also an indictment on the federal government’s limitations on where the money could be spent. The federal broadband stimulus program ended up funding a whole ton of middle mile projects which don’t deliver a single new broadband connection to an end consumer or business. A fiber cable running down your street does no good if you, as an end user, are not allowed to hook up to it.

        • George Douglas says:

          A moral rational person would have handed it back rather that wasting 23.5 million dollars borrowed from China. An intelligent person could have made two or three telephone calls and obtained the information needed to discover a $487 router would give a fiber interface and handle
          the traffic at most of the locations. They could have bought a spare for each location and still saved $23,000,000. Since the money was really intended for expanding broadband, any number of vendors could have placed fiber into communities without a broadband connection. I still want to know why the governor has not fired Gianato. The best analogy of what he did is to to compare it to using the HMS Queen Elizabeth as a bass boat. I still wonder why the FBI has taken no interest in this, since it is at least an obvious miss-use of public funds. Of course Verizon gave $2,000,000 in donations to Obama’s campaign. Maybe this is their reward.

  2. Brett says:

    You should look at North Florida Broadband stimulus project, 30 M spent to date and they dont have any customers or network up and running after 2 years, lots of known and unknown allegations, follow the money…. Waste and fraud across the board…I hope that Congress starts looking at the oversight and how this has been administered.

  3. Smith6612 says:

    I wish I could get my hands on some of those Cisco 3900 series units! I’ll certainly put them to good use at locations that do need them, get them configured, and support them. No problem. Not that I don’t deal with Cisco and Juniper driving thousands of Internet-facing servers (Datacenter) on a daily basis.

    I do agree. Wasteful spending. Most Libraries and small locations are perfectly fine with a stable, cheap router with perhaps centralized management and a small 1U or shelf switch. Unless libraries are running multi-hundred megabit connections which I highly doubt, anything out there for small business at the very minimum should work, and work well. Now, whether Cisco’s involvement caused all of that money to go to waste that could have gone to expanding Broadband service (decent, not crap) in West Virginia, who knows. But if it is Cisco’s doing rather than stupidity, I wouldn’t be surprised. Some of their practices make me hold an inner hatred for them and their gear.

    • George Douglas says:

      Cisco had nothing to do with this. Verizon Network Integration is the vendor. Gianato was told five days prior to the contract being signed that these routers were grossly over sized. This is the kind of thing citizens must pursue to stop our state and federal governments from throwing away tax dollars or borrowed money from China. There are people that need to go to jail over this. Why hasn’t the Governor fired Gianato? Why haven’t the 300 stored routers been returned for credit or sold to recover the money? Why does the Obama administration defend this purchase> Could it be because Verizon was a major contributor to his campaign? The FBI needs to investigate this and the people of West Virginia need to be made understand what the current governor has allowed to take place.







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