The FCC Sends Billions to Alaska Companies Selling Slow Internet — ProPublica

Arrow Right

Caret

Close

Search ProPublica Search Close<br>ProPublica is a nonprofit, investigative newsroom that exposes<br>corruption. We report in all 50 states and partner with local newsrooms. Our work spurs real-world impact and has received numerous awards, including nine Pulitzer Prizes.

Topics We Cover<br>See All<br>Abortion<br>Civil Rights<br>Courts<br>Criminal Justice<br>Debt<br>Democracy<br>Education<br>Environment<br>Health Care<br>Health Insurance<br>Immigration<br>Labor<br>Mental Health<br>Military<br>Police<br>Politics<br>Pregnancy<br>Prison<br>Racial Justice<br>Regulation<br>Sex and Gender<br>Technology

Our Biggest Series<br>See All<br>Life of the Mother<br>How Abortion Bans Lead to Preventable Deaths

The New Immigration<br>How Recent Arrivals at the Border Have Changed the Country and Its Attitudes

Friends of the Court<br>SCOTUS Justices’ Beneficial Relationships With Billionaire Donors

Slow internet? Read the text-only version.

This article was produced for ProPublica’s Local Reporting Network in partnership with the Anchorage Daily News. Sign up for Dispatches to get our stories in your inbox every week.

Reporting Highlights

Internet Gold Rush: Alaskan companies are getting billions of dollars in public telecom subsidies, yet the state ranks last in internet speed.

Subsidizing a Ghost Town: The federal government pays one company more than $350,000 a year to provide internet to 300 buildings on an island of 80 people.

Operating From Prison: The owner of another company operated his telecom business from behind bars and today gets more than $1 million a year despite faster options for consumers.

These highlights were written by the reporters and editors who worked on this story.

At the beginning of his three-year federal prison sentence for felony tax evasion, Roger Shoffstall lost his telephone privileges when a guard caught him running his small Alaska phone company from behind bars.

He’s lost a lot of privileges over the years. Shoffstall, 75, can’t serve on a federal jury. Unlike most Alaskans, he doesn’t receive an annual Permanent Fund dividend check. And he is not allowed to own a gun.

One thing never changes, however: Each year, the federal government sends his company, Summit Telephone, more than $1 million.

The money comes from a special government subsidy program that Congress created to bring fast, affordable phone and internet service to hard-to-reach places. You help pay for it.

Pull up your latest phone bill and look for a line labeled “Universal Service Fund.” Some phone companies list it as a “Universal Connectivity Charge” or fold it into a “Regulatory Programs & Telco Recovery Fee.” It’s all the same thing: a surcharge added to the monthly bill of phone customers throughout the United States.

The federal government and phone companies don’t call it a tax — but it acts like one. Carriers must currently contribute 37 cents of every dollar of their interstate and international phone revenues to the fund.

In Alaska, where many communities can only be reached by plane or boat, the Federal Communications Commission has given telecommunications companies $4.6 billion in these subsidies since 2016. That’s more than $600 per Alaskan per year. More per resident than in any other state.

Yet after all that spending, Alaska still ranks near the bottom for access to the very land-based, high-speed internet service the money was meant to deliver.

Some communities have yet to be wired at all. In others, fiber-optic cables or microwave towers offer internet with speeds that were recently clocked, statewide, as the slowest in the country. Even with the subsidies, the service comes at a steep price to customers: often hundreds of dollars a month for internet one-tenth what the FCC considers broadband quality.

The federal program has kept money flowing to companies like Shoffstall’s whose operators have troubled pasts. It also gives money to companies like Shoffstall’s regardless of how many people use their services. And fewer and fewer Alaskans have done so since low-earth satellites from Starlink entered the market at better prices. (Satellite internet doesn’t qualify for the subsidy but costs about $90 to $130 per month for download speeds up to 280 megabits per second in the same service area as Summit Telephone. According to Summit’s website, its fastest internet plan in the same region maxes out at 25 Mbps and costs $135 a month.)

We’re Investigating Alaska Internet Companies. We Need Your Help.

Alaskans pay the most for phone and internet but get the slowest service. Please fill out our quick survey to share how much it costs you to get online and what you think of the service.

Share Your Experience

All of these excesses appear to fall within the program’s rules or the FCC’s discretion.

A telecom on the Aleutian island of Adak receives more than $350,000 a year to provide phone and low-speed internet services to 306 buildings, according to FCC records, even...