9Wants to Know: Stimulus money going to waste in Colorado?

11:05 PM, Feb 7, 2013   |    comments
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DENVER - A $100-million stimulus program designed to connect rural schools and town governments to a fiber optic network is being accused of wasting tax money and putting jobs at risk.

9Wants to Know found EagleNet has been expanding its fiber optic network in small communities where other fiber optic connections already exist.

"They were originally supposed to go where there was not service, or where customers were underserved," said Pete Kirchoff, the vice-president of the Colorado Telecommunications Association.

Kirchoff's group accuses EagleNet of not being upfront about its network plans.


In the small town of Flagler, 9Wants to Know found evidence EagleNet recently installed a fiber optic line where two other lines owned by private companies already exist.

Kevin Felty, the president of the CTA, said it's just one example of how EagleNet is overbuilding its network into places where it's not necessary.

"Plain and simple government waste," Felty said.

The CTA fears once EagleNet connects schools and town governments to its network, smaller companies will lose that business and will have to cut staff or go out of business.

"EagleNet is a threat I see," said Daniel Hollenbeak, who manages five employees at the Agate Mutual Telephone Co-Op.

Hollenbeak believes once EagleNet connects the local school to its network, Hollenbeak's job will be on the line.

"They're trying to come in and take our only community anchor institution from us," Hollenbeak said.

EagleNet is using a new fiber optic line running into Agate that it leases from another company.


While EagleNet has expanded its network into places that already have fiber optic connections, other towns like Silverton, which are in desperate need of the service, haven't been connected.

"We need that technology to reach out to the outside world," Silverton Town Manager Jason Wells said.

Wells said Silverton has been promised EagleNet fiber this year, but he's skeptical it's coming.

The Silverton School District spent money rewiring its 101-year-old school with new technology as it waits for the better fiber optics connection.

"So we are sort of building our mansion in the sky, waiting for the driveway. And that is something that has strapped the community financially," Wells said.

Well funded operation

9Wants to Know obtained spending and payroll documentation for EagleNet executives. The agency, while it is not making a profit and hasn't proven it can be self-sustaining, has the money to spend on numerous business trips and meetings over steak dinners.

Documents show the past two presidents came from education and not the technology field. The most recent president, Randy Zila, made $200,000 a year and was given a $10,000 vehicle allowance because he lived 45 minutes from EagleNet offices.

Zila, was a former superintendent of the St. Vrain Valley School District. He resigned from EagleNet in late 2012 citing personal family issues.

Denise Shorey, the company's first president, made $192,000 and also came from an education background.

Mike Ryan, who just began his role as the new president in January, makes $230,000. He's the first president with a long history of work in the telecommunications industry.

The executive director of Utah's Utopia network, a similar government run operation, makes $140,000 and has twice as many employees to manage.

Confusion about operations

Ryan was unable to answer any questions about EagleNet's past decisions to build fiber in places where it already exists, citing his unfamiliarity with the government company.

9Wants to Know repeatedly asked EagleNet for someone more experienced, but were told Ryan is the best person to answer questions. During an interview, Ryan repeatedly cited his inexperience with EagleNet when asked about potential overbuilding and why some communities haven't been connected to the system yet.

"I don't believe anybody tried to misuse funding here," Ryan said. "I think you had people who had a great idea and that they were under resourced with some of the expertise that they needed."

With the confusion over EagleNet's past decisions and plans, 9Wants to Know has learned some members of congress may push for federal hearings. A Colorado state senator is also trying to get EagleNet audited.

So far, EagleNet has connected approximately 60 government entities to its network. It does not have any plans to connect private households to its network.

While the CTA says EagleNet hasn't been upfront about its network plans, 9Wants to Know did find in its grant application the agency planned to connect 230 government institutions to its network.

Many rural school districts see EagleNet as a blessing and a relief from small telephone companies who have been blamed for not providing fast enough service or who have had long-lasting "monopolies."

(KUSA-TV © 2013 Multimedia Holdings Corporation)

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