The federal government says the Springfield-based company VTel has defaulted on money awarded to provide cellular phone service in some parts of Vermont.
The state is also waiting for the company to meet the terms of a grant to VTel for cell coverage.
VTel was one of 33 service providers nationally to win federal awards in 2012 under Mobility Fund Phase I to provide mobile phone coverage in unserved areas.
VTel’s $2.05 million was one of the smallest awards given out by the Federal Communications Commission.
It was divided up based on the cost of providing service in 46 Vermont tracts, which are groups of census blocks.
But the FCC says VTel did not meet the terms of the award in 35 of the tracts, which account for $1.7 million of the federal money.
The money was never given to VTel but the company will have to pay the FCC $86,000 for the defaults.
VTel has until March 2019 to provide service in the remaining 11 tracts and the company says it is building in those tracts.
Other recipients have also defaulted on award money.
VTel has also received $116 million in federal grants and loans to help build a statewide wireless broadband system.
Jim Porter, director of the Department of Public Service Telecommunications and Connectivity Division, says in comparison to the broadband funding, the FCC award is small. But he says its unfortunate VTel defaulted on an opportunity to improve cellular service in the state.
The Valley News reported earlier this month that the company has yet to provide cellular phone service in Vermont under either the FCC award or a $2.6 million dollar 2013 grant from the state.
Porter says the state grant is tied to completion of the wireless broadband network.
The federal government says the company has completed the network under the terms of the $116 million in loans and grants, although it’s unclear how much of the system is actually operational.
The terms of the grant agreement with the state stipulate that the company would provide cellular service using its wireless broadband network by the end of 2013.
But the federal government extended the deadline for completion of the network to 2015, so Porter says the state is willing to give VTel until later this year to get the cellular service in place.
“It’s very disappointing that frankly the wireless broadband nor the cellular project are up and running yet but we continue to trust that they are going to be up and running soon,” Porter says.
In an email, VTel President Michel Guite said VTel declined to use the FCC money because of a requirement that the cellular service include the capacity for E911 calls.
He says unlike more common 3G cellular technology E911 is not fully compatible with the 4G LTE technology the company plans to roll out.
To illustrate the complexity of the issue, Guite says “one of the largest 911 operators in the country invited us to step in, to get the integration done, after a giant carrier had spent $85 million and given up.”
Guite did not say when VTel cellular service will be available.