FCC Sends Billions to Alaska Internet Providers Despite Slow Speeds

Alaska telecommunications companies have received billions of dollars in federal broadband subsidies over the past decade, even as the state continues to rank among the slowest internet markets in the United States, according to a new investigation by ProPublica.

The report examined how federal programs intended to improve internet access in remote Alaska communities have distributed massive amounts of public funding while many residents still struggle with outdated and unreliable service.

Alaska Received Billions Through Federal Internet Subsidies

According to the investigation, Alaska telecom providers have received approximately $4.6 billion in federal telecom subsidies since 2016 through programs managed by the Federal Communications Commission (FCC).

The money comes primarily from the federal Universal Service Fund, a nationwide surcharge collected from U.S. phone customers to support communications infrastructure in rural and underserved areas.

The investigation found that despite the enormous investment:

Alaska still ranks near the bottom nationally for internet speeds
Some providers continue operating outdated systems
Residents in many rural communities pay high prices for slow service

Investigation Highlights Controversial Cases

One of the most scrutinized examples involved Summit Telephone, an Alaska telecom company owned by Roger Shoffstall, who previously served prison time for federal tax evasion.

The report states that:

Summit Telephone still receives more than $1 million annually in federal subsidies
Some areas receiving subsidies have very small populations
In certain locations, faster internet alternatives may already exist

The investigation also described situations where companies continued receiving support despite providing internet speeds considered obsolete by modern standards.

Alaska’s Geography Creates Major Broadband Challenges

Telecom providers argue Alaska presents unique obstacles that make broadband expansion unusually expensive.

Challenges include:

Vast distances between communities
Mountainous terrain and extreme weather
Villages accessible only by air or boat
Limited fiber infrastructure across rural regions

Industry groups have long argued that federal subsidies are necessary to maintain even basic service in remote parts of the state.

Satellite Internet Increasing Pressure on Legacy Providers

The report comes as newer technologies like Starlink expand rapidly across Alaska, offering significantly faster satellite internet service in many rural areas.

Some critics now question whether federal funding programs are adapting quickly enough to changing technology.

The investigation noted concerns that:

Subsidies may continue supporting outdated systems
Competition from newer providers is reshaping the market
Consumers may be paying more while receiving slower service

Americans Nationwide Help Fund the Program

The broadband subsidy system is funded through fees added to phone bills across the United States.

Customers may see these charges listed as:

Universal Service Fund fee
Universal Connectivity Charge
Regulatory recovery fees

The surcharge currently represents a substantial percentage of interstate telecommunications charges, meaning consumers nationwide help finance rural broadband expansion programs.