Alaska Regulatory Commission Considers Early Termination Of State Universal Service Fund

September 20, 2019 – The Regulatory Commission of Alaska is considering whether to close the Alaska universal service fund early because it “is running out of money.” The fund is currently scheduled to end in 2023. Alaska’s Commission is considering early termination because the fund reportedly “entered 2019 at a deficit, paying out almost $350,000 more per month than it took in.”[1]

Alaska’s state universal service fund was established in December 1998 to promote the efficiency, availability, and affordability of basic universal telephone service in Alaska. It is financed through surcharge fees applied to phone service provided in Alaska. Every year, the Alaska Universal Service Administrative Company calculates the surcharge factor used to fund the program for the coming year and submits the proposed surcharge for review by the Alaska Regulatory Commission.

The Alaska universal service fund grew from $3.5 million in 1999 (with 1.8% surcharge factor) to approximately $27.5 million in 2016 (with a 14.2% surcharge factor at year-end). In 2018, the fund disbursed $29.5 million to Alaska telecom companies.

In August 2018, the Regulatory Commission of Alaska made significant revisions to the fund, including Capping the fund’s surcharge at 10%; Eliminating the State Lifeline and Link Up support programs; Initiating a two-year phasedown of a support program that addressed switching costs for several rural carriers; Revising Carrier of Last Resort and Carrier Common Line support, and freezing that support at historic 2016 values, and eliminating all such support for newly defined “non-remote” areas of Alaska; and Terminating the fund in its entirety on June 30, 2023, with a mandatory comprehensive review two years before the termination date to determine the future of the fund.

The Regulatory Commission of Alaska is consider a number of options for terminating the fund earlier, but has not yet indicated which action it will take.

**********

[1] Alaska’s Telecom Regulator Considers Early End To Fund Used To Boost Rural Service, James Brooks, Anchorage Daily News, (Sep. 12, 2019), https://www.adn.com/business-economy/2019/09/12/alaskas-telecom-regulator-considers-early-end-to-fund-used-to-boost-rural-service/.