If you think your monthly internet bill is high, try $233,817. That’s how much Nome Public Schools in Alaska is charged for its 700 students, according E-rate data gathered by nonprofit EducationSuperHighway.
A steep price like that is not unheard of for rural districts in Alaska—and some people worry it might only get worse.
GCI, a broadband provider in the state, is slated for purchase by Colorado-based Liberty Interactive in a deal that could amount to nearly $1 billion. Local Anchorage-based telecoms, Quintillion and Alaska Communications, along with community groups and state representatives, have asked the Federal Commissions Commission to halt the sale. Among a number of cited complaints, opponents say that the deal could price out competitors, creating a monopoly that may perpetuate high bandwidth costs or even increase the price schools are paying.
The argument is tethered to two massive fiber infrastructure projects, one set up by Quintillion, and another the TERRA project by GCI. In a letter submitted to the FCC this summer, Alaska Rep. Zach Fansler claimed that part of the TERRA project is government funded, but smaller telecoms providers might not be able to afford access to the fiber if GCI is bought out by Liberty.
“The FCC subsidies in Southwest Alaska have funded the infrastructure that makes up GCI’s TERRA project, yet costs have not gone down. Before e-rates, schools in the region are paying hundreds of thousands of dollars a month for state-mandated broadband internet access,” the Alaska Democrat wrote. “The FCC is directly subsidizing GCI which, without competition in places like Bethel and the Yukon Kuskokwim Delta, is free to charge whatever it likes with little oversight.”
In an interview with EdSurge, Fansler added that his personal concern is less about the possibility of a monopoly, and more about having an out-of-state provider making decisions about what schools and communities must pay.
“I want to make sure that people who make decisions understand rural Alaska and we have a [internet provider] that takes pride in serving rural Alaska,” he said. “I want to make sure that in the switch we don’t get lost in the shuffle.”
GCI is playing down concerns about what the deal might do for rural customers. In its own filing the company said “the transaction is in the public interest because it ‘will result in GCI becoming more stable and will not result in any countervailing harms,’” Government Technology reports.
But some rural community and schools leaders disagree.
Government Technology also reported that Vivian Korthuis, chief executive of the Association of Village Council Presidents (AVCP), submitted a letter to the FCC about the GCI-Liberty deal. According to the article, Korthuis “questioned high costs that continue to be charged AVCP [sic] even though the TERRA Southwest… was supposed to bring costs down.”
In his letter to the FCC, Fansler highlights Nome Public Schools as an example of exorbitant prices that schools can bear if costs for unchecked and are uncompetitive. Shawn Arnold, superintendent of Nome Public Schools, echoed the concern. He says GCI has provided “excellent” service for his his district but believes they are being charged 65 percent more for their 40Mbps connection than what other service providers charge. His district plans to switch to DRS, which will be operating using the Quintillion fiber, this December.
“For us [the sale of GCI] does seem like a game changer. The real thing we need is to have competitors and receive bids that we can look at to lower cost and provide faster, more reliable technology,” Arnold tells EdSurge.
The superintendent explains that most of the bandwidth costs his district faces is covered by government programs such as E-rate and the Alaska Broadband Assistance Grant (BAG). “Without these [programs], we would not be able to to afford anywhere close the bandwidth we currently have, which is only 40 Mbps as it is,” Arnold wrote in an email.
Fansler’s letter detailed that Nome Public Schools previously paid $305,000 per month for GCI but after switching to the new provider were on-track to pay $95,000 per month. Arnold, however, said those numbers are no longer accurate. He would not share their new prices, which have yet to take effect under a new contract with DRS, but said they are “a significantly lower cost” for “a comparable service.”
There’s another wrench in the mess: Arnold claims the amount Nome pays for out of pocket for its internet service still will not change much even despite the cost reduction. Instead, he says the government programs subsidizing their bandwidth costs will experience the savings.
“It’s a national issue but something we really feel in rural Alaska,” Arnold continues. “We are held to the same standards to innovate as a district with easier or improved access, but there is nothing being done to lower the cost in those rural areas.”
According to Government Technology, GCI officials expect the transaction to be approved by the FCC at the end of the year.
