FCC's Broken Internet Subsidy Program
· news
The $4.6 Billion Question: Who’s Profiting from America’s Broken Internet Subsidy Program?
The Federal Communications Commission’s (FCC) Universal Service Fund has been doling out billions to telecommunications companies, supposedly to bring high-speed internet to rural areas. But a closer examination of the numbers reveals a disturbing pattern of inefficiency and possible abuse.
Roger Shoffstall, 75, lost his phone privileges as part of his sentence for felony tax evasion. What’s remarkable is that despite being incarcerated, his company, Summit Telephone, still receives over $1 million annually from the FCC. This has been ongoing for years, with no apparent impact on Shoffstall’s ability to serve his customers.
Alaskans pay some of the highest prices in the country for phone and internet services yet receive some of the slowest speeds. In fact, Summit Telephone is not alone in raking it in from the Universal Service Fund. Alaska telecoms have received over $4.6 billion since 2016 – more than $600 per resident annually.
The massive investment expected to yield better results has instead left many communities without access to high-speed internet. Those that do have it often pay hundreds of dollars a month for speeds barely meeting broadband quality standards. The FCC’s own data puts Alaska at the bottom for access to land-based, high-speed internet service.
Companies like Summit Telephone are rewarded by the Universal Service Fund regardless of their performance or usage rates. This means they receive millions from the government even if only a small number of people are served.
GCI, Alaska’s largest telecom and biggest recipient of subsidies, is particularly egregious. Despite being fined $466 million for alleged fraud related to the same subsidy program just two years ago, it continues to receive massive payouts from the FCC. The settlement did not admit guilt or concession of wrongdoing, raising questions about the true nature of this deal.
Executives claim that Alaska’s geography makes it one of the most challenging regions to serve in the country. While this may be true, it doesn’t justify the astronomical costs and poor service quality for residents. Christine O’Connor, executive director of the Alaska Telecom Association, argues that without subsidies, rural Alaskans would have no access to internet services at all.
However, satellite internet providers like Starlink offer comparable speeds at significantly lower prices – around $90 to $130 per month. This raises questions about why government-funded companies are still receiving millions while struggling to deliver quality service.
The FCC is currently weighing proposals to overhaul or potentially sunset elements of the subsidy program. It’s time for a hard look at who’s really benefiting from this program and whether it’s serving its intended purpose.
Reader Views
- EKEditor K. Wells · editor
The FCC's Universal Service Fund is essentially a blank check for telecom companies to skim off billions in subsidies while delivering subpar service to rural areas. What's striking is how little scrutiny this program receives despite its staggering price tag. The article highlights egregious cases like Summit Telephone and GCI, but it's equally disturbing that the fund's lack of transparency makes it impossible to know exactly where all this money is going. Without real reform, this boondoggle will continue to drain taxpayer dollars without yielding meaningful improvements in rural internet access.
- ADAnalyst D. Park · policy analyst
The FCC's Universal Service Fund has become a shell game, with billions diverted from intended recipients to telecoms that have little incentive to improve service. What's striking is how easily these companies can extract funds without any tangible accountability or metrics tied to performance. It's a vicious cycle where the more they're paid, the less incentive they have to innovate and expand coverage. The FCC needs to break this logjam by introducing stricter standards and transparent reporting – anything short of that would only perpetuate this broken system.
- RJReporter J. Avery · staff reporter
The FCC's Universal Service Fund is supposed to be a safety net for rural communities, but it's clear that billions of dollars are being squandered on companies like Summit Telephone and GCI. The real question is what happens to this money when it disappears into the pockets of telecom giants? Is some of it lining the coffers of politicians who have ties to these companies? We need more transparency in how this program is administered, not just a few scattered investigations into individual cases.