FCC Ruling Extends Broadband to Rural Areas

The creation of a fund specifically intended to improve rural Internet service seems like it would be a good thing for Alaska.  But the decision is less-than-popular with Alaska’s telecommunications companies.

Slow Internet and outdated wireless data coverage are facts of life for many Alaskan communities.

That might be about to change though.  Last week the Federal Communications Commission dedicated a $4.5 billion dollar subsidy fund to providing broadband and 3G access in rural areas.

In the past, the Universal Service Fund was used to subsidize rural telephone usage.  Now the FCC has renamed it the Connect America Fund and expanded its mission to ensuring broadband access in remote areas.  Here’s FCC spokesperson Mark Wigfield.

“These reforms are designed to get affordable, robust broadband to areas of rural America that need support to get that.  Where without support there wouldn’t be a business case for a private company to do that.”

Currently, only 75 percent of Alaskans have access to what the FCC considers broadband Internet, mostly in Anchorage, Fairbanks and Juneau.  The ruling requires telecommunications companies to upgrade Internet service for the remaining 155,000 residents in order to continue receiving subsidies.

Many companies oppose the decision, saying it takes vital funding out of the state.  In 2010 Alaska telecoms received more than $200 million in subsidies through the Fund.  By some estimates they stand to lose three-quarters of that money over the next five years under the new plan.

One of the biggest concerns raised by companies is how they will pay off infrastructure investments that were made to support telephone service while accommodating the additional expense of providing broadband.  Adak Eagle Enterprises is the telephone provider for the Aleutian community of Adak.  Chief Operations Officer Andilea Weaver says the ruling puts her company in jeopardy.

“Right now, we don’t even know where we’re going to be 3 years from now.  Our forecast, based on this ruling, is that we won’t even be in business.”

Weaver says the FCC hasn’t taken into account the technological hurdles that make service in rural Alaska expensive.

“They don’t understand that there is no fiber in the ground that connects Adak to Anchorage.  It’s all backhaul from satellites.”

She says the ruling means purchasing more satellite bandwidth with less funding. In particular, she bristled at a new spending cap of $3,000 a year per line.  In 2010 Adak Enterprises received almost $17,000 in subsidies per line to operate their network.

FCC spokesperson Mark Wigfield says the ruling does take areas like Adak into consideration.

“You know we also recognize that some areas are very costly to serve.  So there is a waiver process that we provided for areas where costs are really going to be above and beyond that benchmark.”

And Alaska Senator Mark Begich says the final ruling strikes a balance of accountability and opportunity.

“The FCC I think feels better about how the money will be deployed in the most difficult and expensive areas and the companies are being responsive by recognizing that we’ve got to move some of the resource from the urban areas to the more rural areas where we really need to get this broadband backbone built.”

So far only a 7-page executive summary of the ruling has been released.  When the final document is published in coming weeks, it’s expected to be more 500 pages long and will likely address in much greater detail how the program is going to affect Alaska’s telecommunications.

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