Gov. Brian Schweitzer's recommendation that one firm get $70 million in federal stimulus funds to expand high-speed Internet service is being blasted by Montana telephone companies and regulators, who say the project won't extend new service to underserved areas.

They also say the recommendation to fund construction of a fiber-optic network by Bresnan Communications, a cable Internet and TV firm, is based on false information.

Critics said the Bresnan plan claims to fill gaps on high-speed Internet service, but in reality just duplicates long-distance fiber-optic lines that already exist. It does not increase critical "last-mile" high-speed lines to homes and businesses, they said.

"From our point of view, if Bresnan or anyone else wants to provide broadband connectivity to those areas that are unserved or underserved, great," said Pat Hogan, director of sales and engineering for 360networks, which has 1,800 miles of fiber-optic line in Montana. "But don't take taxpayer money to build a competing network that essentially duplicates what's there today."

Yet officials from Bresnan and Montana's Indian tribes, which will benefit from the project, disagreed.

They said the new broadband network eventually will provide faster, cheaper high-speed Internet service to many rural areas, particularly on Indian reservations, which can use the service to attract new businesses or help local people enhance their own businesses.

"This plays into a much larger economic picture," said William White Tail Feather, director of economic development for the Fort Peck Tribes in northeastern Montana. "If we are able to attract businesses here with our utilities and our telecommunications, they don't feel like they're in the middle of nowhere, so they want to come here.

"When we get paid and have jobs, we spend our money off the reservation, too. It will help those cities around us as well."

Schweitzer's office also noted that he recommended funding for several proposals, but said the Bresnan proposal "does more to bring affordable Internet access to more Montanans."

Federal officials are scheduled to decide by next month which proposals will get part of $4 billion in national stimulus funds to expand high-speed Internet to rural areas.

More than a dozen firms submitted proposals for Montana projects, including Bresnan.

The Bresnan proposal, developed in coordination with Schweitzer's office, is an 1,885-mile fiber-optic network that links Montana's seven Indian reservations, at a cost of $70 million.

Schweitzer's Office of Economic Development issued a "white paper" in August supporting the proposal and on Oct. 14, the governor wrote a letter to the U.S. Department of Commerce, urging it to "fully fund the entirety of the Bresnan Communications application."

His letter expressed support for a dozen other proposals, including several from Montana telephone cooperatives, if money is available - but said the Bresnan plan is "top priority."

Schweitzer's recommendation has ignited a storm of criticism from local telephone cooperatives and firms, which wrote a sharply worded letter Wednesday to the U.S. secretaries of Commerce and Agriculture, urging them to reject Schweitzer's recommendation and the Bresnan plan.

The Montana Public Service Commission, which regulates telephone service in Montana, wrote a similar letter Tuesday, saying the plan is "seriously flawed."

"The digital divide that exists in Montana is a 'last-mile' problem," the PSC said, referring to high-speed lines that go directly to homes and businesses in rural areas. "The concentration of funding for unwarranted Bresnan 'middle-mile' infrastructure overbuild leaves minimal to non-existent resources to address the real digital divide, the 'last mile.' "

Telephone co-ops and firms took particular issue to the administration's "white paper" that said broadband access is not available on Indian reservations and that even basic telephone service is "scarce."

"Nothing could be further from the truth," said Mike Kilgore, general manager of Nemont Telephone Cooperative, which serves rural northeastern Montana, including the Fort Peck Indian Reservation.

Kilgore said Nemont and its companies offer high-speed Internet service to at least a dozen towns on the reservation.

"It would have been nice if (the white paper authors) had contacted some of these rural telephone providers to ask them what they are doing to serve rural areas and the reservations," he said.

Rick Stevens, general manager of Triangle Communications in Havre, said it offers high-speed Internet on the Fort Belknap and Rocky Boy's Indian reservations, and plans to upgrade those services with fiber-optic cable directly to homes and businesses in 2011 and 2012.

Using stimulus money for the Bresnan build-out essentially creates a taxpayer-funded competitor that will take jobs away from established co-ops and telecom firms, offsetting new jobs it may create, the co-ops argued.

White Tail Feather, however, said Internet provided on the reservations by co-ops and other rural telephone companies is often high-priced and substandard.

"When they say they're providing service to us, it's the most basic service for the highest price," he said. "Why shouldn't we be able to own our own infrastructure and provide a little competition?"

Shawn Beqaj, vice president of public affairs for Bresnan in Purchase, N.Y., acknowledged that the project won't create "last-mile" access to homes and businesses.

But he said a "last-mile solution" can't occur before there is an easily accessible and reasonably priced network to link local service to the Internet. This project provides that network, and the next phase is to build the "last-mile" infrastructure, perhaps as wireless or fiber-optic service, as determined by the tribes, he said.

He also said he found it "ironic" that co-ops and rural telecoms are criticizing federally funded competition, when they often get federal assistance to build or expand their networks.

"This is a project to meet a need, a desperate need," Beqaj said. "The incumbent (telephone) carriers have had 100 years of subsidies to meet the needs of the tribes. The tribes do not believe that their needs have been met."