November 12, 2018
Seeks to have arbitrary cuts to rural healthcare funding reviewed by full Commission
ANCHORAGE, AK - GCI, the leading provider of connectivity in rural Alaska, submitted an appeal to the Federal Communications Commission (FCC) on November 9 citing its objection to the recent Wireline Competition Bureau (Bureau) decision to reduce Rural Health Care (RHC) program payments to the Alaska carrier by 26% for services already delivered to rural customers in 2017.
The decision to reduce GCI’s support payments came after a November 2017 Bureau request for GCI to justify its rural rates. GCI provided, as it has in the past, detailed information that demonstrated the rural rates are competitively bid and less than charged to others in a deregulated market. Almost a year later the Bureau, using an unknown methodology, rejected GCI’s rate justification which resulted in the reduction.
GCI argues that in making its decision, the Bureau unlawfully decided legal questions which can only be answered by the full Commission.
“GCI has invested hundreds of millions of dollars over the past decade to help bridge the digital divide in rural Alaska,” said GCI General Counsel Tina Pidgeon. “The FCC has been a steadfast partner in these efforts which is why the abrupt reduction was so unexpected and puzzling. Absent Commission review, the Bureau’s decision will fail to provide GCI and other carriers with adequate guidance to establish rural rates going forward and will be a disincentive to Alaska carriers.”
In its Application for Review, GCI noted that the Bureau’s decision, based upon a flawed interpretation of fact and law, imposes arbitrary limits on competitively bid market rates and injects uncertainty for businesses considering investment in sparsely populated rural areas where costs of telecommunications deployment are significantly higher than in urban areas.
GCI’s appeal seeks review of the Bureau’s decision by the full Commission on the basis that the Bureau:
- Unlawfully misinterpreted existing rules and regulations for determining rural rates,
- Applied an economically and legally unsound cost model and rate of return,
- Violated elemental principles of administrative law,
- Exceeded the Bureau’s authority,
- Set rural rates in violation of existing regulations , and
- Unlawfully applied a new approach to rate setting without providing GCI fair notice in advance.
GCI also believes the Bureau’s decision threatens the viability of the RHC program and rural Alaska by:
- Prescribing a rate setting methodology for 2017, 2018, and 2019 that requires annual recalculation of rates, but contains no explanation of the methodology used by the Bureau,
- Failing to provide the guidance that rural health care providers and carriers need to calculate rural rates and to structure bids going forward,
- Contradicting the Commission’s ongoing efforts to deregulate services and rely on market mechanisms to constrain pricing,
- Requiring use of a cost allocation and revenue attribution methodology that would lead to reduced rural broadband services for mass market consumers, and
- Forcing carriers to reevaluate continued investment in rural Alaska networks.
“GCI has a long and successful record of keeping Alaskans connected and being responsible stewards of the program funding,” said GCI General Counsel Tina Pidgeon. “To ensure that we are able to continue to provide the services our customers count on in every corner of the state, there must be certainty in the Rural Health Care program. Without it, investing in rural parts of Alaska may no longer be viable for GCI or other Alaska providers. We would welcome the opportunity to work with the full Commission to develop a path forward for the Rural Health Care program and appreciate their consideration of our Application for Review.”
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.