Frontier and Citynet battle to employ WV Senate majority leader

Eric Eyre , Staff Writer

Last week, internet provider Citynet announced a major hire: The upstart company had lured state Senate Majority Leader Mitch Carmichael away from rival Frontier Communications.

With Carmichael in its executive suite, Citynet figured it would have a powerful ally in the state Legislature, where Citynet and Frontier have battled for years over the best way to expand high-speed broadband service in West Virginia.

But on Monday, Carmichael changed his mind and returned to his job as sales director at Frontier. Carmichael had signed an employment acceptance letter with Citynet and worked there three days last week.

“He told us they more than doubled his salary,” Citynet CEO Jim Martin said Monday. “I didn’t think they would throw that much money out there to keep him. That shows how much Frontier hates us.”
Carmichael acknowledged he had a change of heart about leaving Frontier.

“It was a great opportunity at Citynet — I really liked those guys — but at the end of the day, Frontier was very intent on keeping me there,” he said. “They put together a package that incented me to stay.”

Carmichael denied Frontier doubled his salary.

“It’s an enhancement, but it’s not double by any means,” he said. “There are a lot of incentives. It’s a new pay package.”

Frontier said Monday it matched Citynet’s offer but didn’t double Carmichael’s salary.

“Citynet made an offer to one of our employees,” said Frontier spokesman Andy Malinoski. “We simply matched that offer, and the employee chose to stay with Frontier.”

Carmichael said he met with Citynet employees three days last week but technically wasn’t yet on the company’s payroll. “I’m not taking any compensation from them,” he said.

In an interview with the Gazette-Mail Friday morning, Carmichael confirmed he had accepted a job with Citynet as vice president of external affairs. He spoke in glowing terms about Martin and Citynet. He said he held no animosity against Frontier, promising to give the company a fair shake in the Legislature.

By Friday afternoon, Carmichael started to have second thoughts. He called the newspaper and said Frontier had made him a counteroffer to entice him to return. The offer came while he was turning in his company laptop at Frontier’s office in Charleston, Carmichael said.

“They’re making all these counteroffers, and I don’t know how it’s all going to work out,” Carmichael said Friday.

By that time, Citynet already had issued a press release, announcing Carmichael’s hiring. The release included statements from Martin and vice president Chris Morris, extolling Carmichael’s “can-do attitude and work ethic.”

The Gazette-Mail contacted Frontier about Carmichael’s departure Friday afternoon. A spokesman declined comment.
Carmichael told the Gazette-Mail that Frontier’s corporate office in Connecticut was reviewing the counteroffer but hadn’t signed off on it. Carmichael said Friday he would make a decision by Monday afternoon — and he did, deciding to take the salary hike and return to Frontier.

“This is typical Frontier,” Martin said. “Anytime they’re subjected to competition, they have to buy their way out.”

Malinoski said Monday the company does not comment on “human resources” matters.

Two weeks ago, a six-year feud between Frontier and Citynet boiled over.

A federal judge unsealed a lawsuit that Citynet filed against Frontier under the False Claims Act. The lawsuit alleges Frontier misused $40.5 million in federal stimulus funds and built a high-speed broadband network designed to shut out competitors in West Virginia.

Citynet accused Frontier of double-billing, falsifying records and charging for administrative fees not authorized by the federal grant that paid for the statewide broadband expansion project completed two years ago.
“I know this is going to get pulled into the lawsuit, but this has nothing to do with the lawsuit,” Carmichael said last week after accepting the Citynet job. “Jim Martin and I have known each other for years. I have a lot of respect for what he does.”

Martin said Monday he wasn’t aware of any information Carmichael had about the broadband expansion project that would have bolstered Citynet’s lawsuit against Frontier.

Carmichael gave a frosty reception to Martin’s broadband proposals during the legislative session earlier this year.

Martin and Citynet lobbied for legislation that would have created a statewide broadband internet network.

Carmichael sharply criticized the bill on the Senate floor, saying the legislation would discourage internet providers like his employer, Frontier, from expanding existing broadband networks or building new ones.

Despite Carmichael’s opposition, the Senate passed the bill. The House of Delegates declined to take up the legislation. The House has two Frontier executives on its payroll – House Education Committee Chairman Paul Espinosa, R-Jefferson, and Delegate Patsy Trecost, D-Harrison.

“I spoke against investment by the state of West Virginia into a broadband network delivery system, which I thought was better served by the private sector,” Carmichael said last week. “We need a bill to incent the private sector to expand broadband technology services, which are incredibly important.”

Frontier has more than 2,000 workers in West Virginia. The Communication Workers of America union represents Frontier’s rank-and-file employees.

“Frontier’s a big employer, and they do a lot of positive things for the state,” Carmichael said. “I’m not in anyway being negative toward Frontier.”

Even before Citynet filed its lawsuit against Frontier, Martin filed a formal complaint with the feds, alleging Frontier used federal stimulus funds to build a statewide high-speed internet network that benefits nobody but Frontier. Martin also questioned whether Frontier inflated the number of miles of fiber-optic cable the company installed across the state.

In December 2013, former Frontier General Manager Dana Waldo walked out of a public meeting at the Capitol after he accused Martin of misleading state officials and defaming Frontier.

In 2014, Citynet asked the state Public Service Commission to investigate Frontier. Citynet asserted that Frontier refused to lease fiber cable to competing internet carriers, a practice that stifled competition.

Frontier denied the allegation and said Martin had “a history of crying wolf.”

Reach Eric Eyre at ericeyre@wvgazettemail.com, 304-348-4869 or follow @ericeyre on Twitter.