CHARLESTON — Citing deficiencies in reliable internet connectivity in West Virginia, Gov. Jim Justice announced Thursday he is signing an executive order removing a barrier to a high-dollar and “game-changer” investment in broadband.
The Federal Communications Commission established the $20.4 billion Rural Digital Opportunity Fund on Jan. 30, with those funds becoming available during an auction beginning Oct. 29. The program incentivizes private companies to lay broadband fiber in the country’s unserved rural census tracts.
West Virginia is eligible to receive up to $766 million in broadband infrastructure through the program, which identified 121,000 households in the Mountain State that don’t have internet service and are eligible to be connected, Senate President Mitch Carmichael, R-Jackson, said at a news briefing Thursday.
The executive order removes the $50 million regulatory cap on the broadband infrastructure loan insurance program, which gives the state more flexibility to offer performance bonds to companies that bid on census tracts in the state, Justice said.
“The caps must be removed because they are preventing the state from responding to the emergency that we have on hand … that, if we had broadband now, we would be able to be serving our citizens in a lot better way,” he said.
But “before a dollar is spent” on the project, Justice said he will have legislation proposed during the next session to establish future caps. If West Virginia can secure bids, construction is expected to begin in February, Justice said.
The governor said it is a bipartisan effort to get the state organized and fully behind the program.
“Everybody has come together with the ideas. This is anything but a Jim Justice idea in its entirety,” he said. “I just see the beauty in this gigantic deal for West Virginia.”
Del. Daniel Linville, R-Cabell, a member of the state Broadband Enhancement Council, said that, unlike past programs, the key component of the rural digital fund is there are penalties for companies that don’t follow through on their promises.
“If a provider wins the bid on that census block, they are bound to provide service to every single home inside of that census block,” Linville said. “So, if they do not do that, there is a significant and substantial (financial) penalty.”
On top of the potential $766 million the state could receive, Linville said, there is still room for private investment, if companies are willing.
State Auditor JB McCuskey said the program creates a fiscally responsible way for West Virginia to make such a significant investment in one utility.
“What this does is it uses the power of the government not to spend its money, but to make sure that private money is investing where it needs to be invested so that our state can move forward,” he said, “and that we’re leveraging the value of private capital to make incredible infrastructure investments in West Virginia.”
The $50 million in federal CARES Act funding Justice allocated for broadband will be put toward the areas of West Virginia that aren’t eligible under the FCC program, but still remain unserved or lack reliable connectivity.
State officials and legislators at the briefing said the COVID-19 pandemic has spotlighted West Virginia’s digital divide and that, for things like distance learning, telehealth, working from home and e-commerce to be available for all citizens in the future, a project of this scale is needed now.
Senate Minority Leader Roman Prezioso, D-Marion, said that, as a former educator, he believes reliable internet connectivity will help children learn as the pandemic continues.
“We’ve got to provide (our students) with that safe alternative opportunity … or we’re going to lose a generation,” he said, “and we cannot afford to do that.”
Sen. Joe Manchin, D-W.Va., on Friday said claims made by Gov. Jim Justice during a Thursday news briefing were misleading, and the possibility of $766 million flowing into West Virginia for broadband expansion is unlikely to happen.
Manchin said by phone he doesn’t disagree with Justice’s decision to remove the cap, but he said the idea that this move will change the future of the state is not true.
“Don’t play with people like this. We need some good, honest dialogue here and we ought to work together,” Manchin said. “To throw stuff out like that is just so wrong.”
The core issue lies with the maps the FCC uses to show which parts of West Virginia have sufficient broadband connection, Manchin said.
According to the FCC map Justice presented Thursday, the vast majority of households in Boone, Logan, McDowell, Mingo and Wyoming counties have sufficient internet speed and do not qualify for the Rural Digital Opportunity Fund.
Manchin said the FCC knows its maps aren’t accurate, and West Virginians sent more than 1,500 speed tests to the FCC in August disproving it. He said he’s strongly urged the agency to fix the maps before the $20.4 billion rural digital fund is distributed in October.
Statewide, 75% of residents who sent Manchin speed tests would not qualify for the fund, his office said.
“If you can’t get the maps corrected, you’re not going to get any attention to the areas that are really underserved ... we’re high cost, we’re underserved and the maps aren’t recognizing that,” he said.
The rural digital fund is allocated over a 10-year period, and Manchin said he fears the West Virginia counties inaccurately mapped will be locked out of sufficient broadband infrastructure funding for at least a decade.
The billions in rural digital funding will be distributed via a reverse auction — where companies bid for the lowest amount on eligible census tracts across the country and are given 10 years to connect every household in that tract.
Manchin’s office said West Virginia historically does poorly in reverse auctions because of the heightened costs of laying broadband fiber in a state with rugged terrain. For the average price of building one network tower in West Virginia, a company could construct the same tower in Kansas for a fourth of the cost, his office said.
Another problem is that as of Tuesday, zero internet service providers in West Virginia had submitted eligible applications to bid on the census tracts, according to FCC documents.
Manchin’s office said traditionally in order for any kind of significant infrastructure development to occur, a provider must already have a sizable footprint in the state before construction begins — this would lessen the chance of an out-of-state provider bidding on West Virginia’s census tracts.
Providers have until Sept. 23 to submit an eligible application.
Manchin said overall he took issue with Justice’s characterization that $766 million was already on its way to West Virginia. Securing that amount would only be possible if every census tract in West Virginia is bid on at the highest price possible — which is the opposite goal of a reverse auction.
Justice dismissed Manchin’s concerns during a Friday COVID-19 briefing, labeling them as political.
“It’s high time to realize we’ve got a senator who really is putting his political desires above our state,” Justice said.
Manchin said at the end of the day, he doesn’t want to see West Virginians duped into believing the state is set for a monumental broadband project.
“Another false promise by Jim Justice is really what it is, using it as a political ploy two months before the election,” Manchin said. “It makes a one-day splash. What happens in October when the bids go out and we don’t receive any? What’s he saying then?”