October 12, 2018
Arbitrary cuts introduce uncertainty, jeopardize future investment
ANCHORAGE, AK October 12, 2018—GCI, the leading provider of connectivity in rural Alaska, disputes the FCC Wireline Competition Bureau’s recent decision to reduce federal support for rural health care providers in the state. The decision exceeds the Bureau’s authority and is based upon unreasonable and unexplained interpretations of FCC decisions and rules.
Over the past several months, GCI has worked to respond to a FCC inquiry about the costs and related rates to serve rural health care providers using GCI’s satellite and TERRA networks. The services were all competitively bid, with the health care providers required by FCC rules to select the most cost-effective communications provider. Alaska has multiple facilities-based communications providers capable of serving the entire state. Under the Universal Service Fund’s Rural Health Care (“RHC”) program, the health care providers pay only the “urban rate” for such services. The difference between the urban rate and GCI’s rates for high-cost rural locations is paid by the RHC program.
During this process, GCI provided the Bureau full and complete justification for its rural rates, which had heretofore been approved annually since the RHC program’s inception in 1997. This week the Bureau unilaterally decided to reduce the $105 million in support payments sought by GCI for Funding Year 2017 by approximately $28 million. The decision means that GCI will not be compensated for services that have already been delivered to rural health care providers.
“GCI strongly disagrees with the Bureau’s decision,” said GCI President and COO Greg Chapados. “The decision ignores the fact that our services are competitively bid in a competitive market. It also fails to provide any compelling explanation of the methodology behind the reduction in support payments. It does not even set forth the specifics of the methodology.”
GCI believes that the Bureau exceeded its authority in issuing its decision and intends to pursue all available remedies.
“We do not believe that the decision is supported by statute or the FCC’s rules,” said Chapados. “The decision is inconsistent with industry practices, sound economics, public policy, and prior audits conducted by USAC, the FCC’s universal service administrator.”
Over the past ten years, GCI has invested hundreds of millions of dollars to bring modern communications services, including mobile wireless and terrestrial broadband, to rural Alaska. Most notable is the TERRA network, a massive hybrid microwave-fiber network that delivers high speed terrestrial broadband service to 45,000 Alaskans in 84 rural communities scattered across an area the size of the state of Texas.
“The Bureau’s decision jeopardizes a decade of remarkable progress in rural Alaska,” said Chapados. “The arbitrary reduction in payment for services already provided will create uncertainty for any communications provider considering an investment in rural Alaska.”
GCI provides data, wireless, video, voice and managed services to consumer and business customers throughout Alaska and nationwide. Headquartered in Alaska, GCI has delivered services for nearly 40 years to some of the most remote communities and in some of the most challenging conditions in North America. Learn more about GCI at www.gci.com. GCI is a wholly owned subsidiary of GCI Liberty, Inc. (Nasdaq: GLIBA, GLIBP). Learn more about GCI Liberty at www.gciliberty.com.