Unless legislation letting the V.I. Public Finance Authority issue bonds to cover required matching funds passes promptly, the territory could lose out on nearly $70 million in federal dollars and a government-owned, profit-generating state-of-the-art fiber optic network, according to its proponents.
Lobbying in advance of committee hearings on the broadband bill next Tuesday, members of the board of directors of the V.I. Next Generation Network spoke with the press Friday afternoon, emphasizing the benefits of the project and to urge haste.
Last summer, the federal government awarded the territory American Recovery and Reinvestment Act grants of nearly $70 million to build a core fiber ring network on all four islands, renovate and build new public computer centers, and train V.I. residents for educational and economic development.
The V.I. Government has created an entity within the V.I. Public Finance Authority; the V.I. Next Generation Network (viNGN,) to build the network, and submitted legislation authorizing the PFA to refinance $42.5 million in bonds, with $15 million for cash matching funds. On March 24, the Legislature voted to send the measure back to committee for more consideration, to the dismay of viNGN board members and project proponents.
According to viNGN President Julito Francis, the project is "sort of in a holding pattern" until or unless the legislation is passed, and if the territory cannot meet matching requirements and spend the money on time, the federal funding might be lost and the whole project scuttled.
"We have major requests for proposals about to hit the street; we have to engage in major contracts by the end of this month," he said. "If we don’t have funding in place, we cannot enter into contracts and cannot meet the federal milestone of expending $31 million by the end of June."
While concerned about timing, Francis said he was "heartened" that the Legislature had moved up committee hearings from an original date of April 15, to April 5, and that he hoped it was a sign the Legislature might move quickly.
Francis said he found concern over the bonding "ironic," because over the long run, the new government-owned company will generate revenue, and over the short and medium run, will not affect the V.I. budget.
"All of the figures clearly show none of this will affect the general fund, and all of the debt service will be paid for by viNGN," he said. On top of that, the government will save millions of dollars per year in internet service by owning its own backbone.
"A case in point: The University of the Virgin Islands spends $218,000 per year for microwave broadband between campuses. That goes away." The government of the Virgin Islands pays three to four million dollars per year for internet access too, and adding the new system to the territory’s infrastructure should create competition and lower the cost, while increasing bandwidth, he said. "We should save up to 80 percent," Francis said.
Board member Peter Schultz, one of the inventors of fiber optics and a full time V.I. resident since 2001, talked about the massive bandwidth upgrade the network would provide.
"We talk about wireless, and it can give good rates of speed over short distances, but only fiber optics can handle the volume and speed necessary over long distances," he said. He had just checked his internet speed over a wireless cellular network, and found he was downloading at 0.5 megabits per second, and uploading at 2.4 megabits.
"That is pathetic," Schultz said. "It is better than dialup, but nowhere near what fiber would give. With fiber, you could get gigabits per second to your home, not half a megabit."
Schultz emphasized the size of the federal grant, saying the territory received the "largest stimulus grant given for any broadband project,"
Schultz also talked up how the project would improve public internet access.
"One of the benefits we derive from this is 51 public computer centers, with 745 work stations to be available to the general public," Schultz said. The stations would be in public libraries, community centers, senior centers and Boys and Girls Clubs, he said.
In earlier Senate hearings, some senators took exception to Francis’ salary of $170,000 as viNGN chief executive officer, arguing it was excessive at a time of fiscal austerity, and more than senators or heads of government agencies are paid. ViNGN board member Alfred Boschulte defended the salary Friday, saying it was actually on the low end for similar private-sector positions.
"This business will probably have more than $100 million in assets, so compared to similar positions … salaries ranged upwards of $250,000, with the lower end in the $150-175,000 range," he said. Because of the nature of the project, it "requires a significant technical background and of course the ability to manage a large enterprise," Boschulte said. "The job is really a combination of CTO (Chief Technical Officer) and CEO."
So what happens if the Legislature does not approve the bonding measures?
"If the Legislature votes this down, I have no choice but to go to the federal government and say the (matching) money is not here, and that will kill the project," Francis said. If that happens, there will be a scramble by other states and territories to get the money instead, Schultz and Boschulte said.
"Remember, there were winners and losers in getting these grants," Boschulte said. "They are following this very closely, to see what happens here."
