Senate rushes rural Internet bill through for Sen. Hoffman, pushing cable over satellite technology

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To ensure rural communities don’t miss a pending grant deadline from the federal government, the Alaska Senate rushed a bill through on Monday that increases state spending to rural school districts that buy old-school broadband service from companies like GCI. The next stop is the governor’s desk.

School districts will qualify for higher speed Internet with the state-federal program because the legislation increases reimbursements to buy 100 Mbps per second of speed from providers of fiber-optic internet services. The current program only reimburses for 25 Mbps. The state’s portion of the federal E-Rate program, is nearly $40 million.

The FCC’s E-Rate Program makes telecommunications and information services “more affordable for schools and libraries.  With funding from the Universal Service Fund, E-Rate provides discounts for telecommunications, Internet access, and internal connections to eligible schools and libraries,” according to the FCC.

House Bill 193 scraped up the original wording of the failed Senate Bill 140 and repurposed it into a House standalone bill. SB 140 had become a vehicle for the National Education Association to shove massive amounts of education spending into the budget and the education industry tried to bully the spending through by saying rural internet was at risk. SB 140 was ultimately a hot mess that was vetoed by the governor because of the recklessness of the spending contained in it.

The core legislation in SB 140 — now in the House bill — is important to Sen. Lyman Hoffman of Bethel, who is a paid board member of Bethel Native Corporation, which has in the past gotten contracts for GCI to do the fiber optic work in the region; BNC is the company that is first in line to get the new contracts as well, which puts Hoffman in an ethical compromise, having voted for his own family’s self-interest. He did not recuse himself from voting on the legislation.

Hoffman was the sponsor of SB 140, which was the focus of legislative drama for most of a month. He also carried House Bill 193 in the Senate.

During the vote on Monday, the only senator voting no on final passage was Sen. Mike Shower of Wasilla, who questioned why the state is investing so heavily in fiber technology and is not making sure the program technology neutral.

“To use the terminology of a former president, ‘Let me be clear,’ I support where this is going. There’s no doubt we need the rural internet speeds so we have opportunity for people in rural Alaska. One hundred percent behind it,” Shower said.

He pointed out that the expansion of the grant program to 100 Mbps supports one chosen technology, “before we had other options that might be faster, cheaper, etc. And quite frankly, if you look at this from a kind of a strategic perspective or military perspective, you always want the backup to the backup. I’m not against looking at how we might have layered options, too,” with fiber optic cable and satellite internet redundancies.

“You might even have geosynchronous not just LEO,” Sen. Shower said. “There’s multiple things here that can work.”

Shower’s amendment to ensure technical technology neutrality failed, with only he and Sen. Shelley Hughes voting for it.

Why wouldn’t legislators want to add the technical neutrality amendment? That is the multi-million-dollar question.

In fact, many rural residents are now using Starlink satellite broadband to get the speeds they want, and it comes at a much cheaper price than what is charged by fiber providers.

But Hoffman ignored those alternatives and emphasized how much money would come from the federal government with passage of the bill. He said it was for the children. He also pointed out that the $40 million comes with a match that “if all the schools participate would benefit those communities to the tune of a little more than $350 million.”

The state and federal government, thus, will pay the broadband cost that can be as much as $60,000 a month for some village schools.

The $350 million that would come from HB 193 ($40 million from the state) would add to the approximate $300 million already coming from other federal government universal service funds program (E-rate for school, high-cost residential subsidies, rural health care subsidies etc.) That creates an artificial price floor that ultimately hurts Alaskans’ pocketbook.

This is often what happens when the government gets involved to make things better, rather than let the private sector compete.

It’s the Cobra effect — the economic parable of government’s unintended consequences. In India, when the government wanted to get rid of poisonous cobras, it paid a bounty for them. That incentivized people to breed cobras and then turn them in for money. Some of the cobras escaped and that led to an increase in cobras. The Cobra effect is an incentive that has an unintended and undesirable result opposite the intentions of its designers.

In the case of broadband subsidies, the Cobra effect is that by pouring money into the system, companies are incentive to set the price higher.

The technology battle is evidenced by companies like ASTAC, which provides service to Atqasuk, Nuiqsut, Point Hope, Utqiaġvik, Wainwright, Anaktuvuk Pass, Kaktovik, and Point Lay. ASTAC has been advertising promotions to buy back Starlink equipment if people switch to fiber optic service, which is dramatically higher in the long run than satellite. See the promotion at this link.

An example of how much internet costs in rural Alaska can be seen in this promotion from ASTAC.

“In partnership with Quintillion, ASTAC is now offering to buy back Starlink equipment as you switch to the amazing new plans! Bring us your old Starlink equipment, and we will apply a credit immediately to your account. Sign up today and get $500 INSTANTLY added to your account and clear out the equipment you no longer need,” ASTAC says in its promotion.

There are 23 schools already using space-based internet, said Sen. Shelley Hughes. The cost difference is extraordinary.

Last year, one school in the Lower Yukon School District was paying $44,000 a month for broadband through GCI Terra. This year, Microcom, connected with Starlink satellite service, came in with a bid. GCI lowered the cost from $44,000 to a $25,000 bid, hoping to beat out Microcom.

But Microcom came in with a $2,500 bid — one tenth of the cost of the next lowest bid, and 1/17th of what it cost the school the previous year with GCI.

“We’re all doing our taxes right now, and it’s good to remember that when we talk about federal dollars, those are coming out of out pockets as well. When we’re paying $400 million for internet serving 20,000 students, that’s $20,000 per child per year,” Sen. Hughes said. She pointed to a FCC report released last week that shows the cost of rural school internet in Alaska is an average of $203 per megabit per second, while in Utah, the cost is 29 cents per megabit per second.

31 COMMENTS

  1. Hopefully the Governor will veto this wasteful legislation. And Hoffman gets called out for his obvious conflict of interest.

  2. Satellite could be implemented today and is extremely reliable. Cable is now ancient technology, even cable companies are moving to land based wireless for reliability.

    Please do your research. We’re in the 2020’s now.

  3. The federal government, whom we all pay taxes to (for most of us income tax), is around $35 trillion in debt. And our elected federal officials gloat about bringing home the bacon to Alaska, and most of our elected state legislators are still only too happy to accept it as the free money it isn’t. Then we wonder why Biden wanted to hire 90,000 IRS agents, tax unrealized gains etc in order to pay our massive federal interest payments. And all for internet service available at massively reduced rates compared to what this legislation promotes. All because legislators cannot bring themselves to just say no to massive federal deficit spending.

    Thank God for Senators Shower & Hughes noted positions in the article.

  4. The Hoffman crime family of Bethel strikes again. Anyone living in the Bush with the last name of Hoffman should get a one way ticket to federal prison.

  5. This is a campaign money deal, I’ll bet that’s what is going on in the corrupt senate. Cable is expensive and has proven unreliable in the past.

  6. Some heavy lobbying for that one without a doubt. GCI has invested so much money into their brick and mortar systems. The satellite system though is already showing to be more reliable and less expense at ‘face value’ for dependable more affordable service. Yet on the flip side what is to keep a satellite from being blown out of the atmosphere in a terrorist attack? Just thinking speculatively. The old school technology is likely more secure from that perspective.

  7. Everyone off grid in the Bethel area has access to the same service we have access to in Anchorage via starlink. This is just another example of our rotten criminal legislature looting tax revenue to pay off friends and special interests.

    • Exactly 💯‼️

      Our Village school wants it, yet the School Board in Bethel won’t let Villages get Starlink, instead we pay homage to the Hoffman criminal syndicate.

  8. Where is the Attorney General in all this???

    First off Hoffman lied on his Declaration of Candidacy, as to his residence. The Division of Elections covered his backside. Hoffman lives in Anchorage and for the record so does Bryce Edgmon and his wife.

    Apparently as long as you feed the State Union for decades, your safe from State law applying to you.

    Isn’t it wonderful that now, one day after the Bailout for GCI, they’re no longer cancelling their email service????

    Our country is $34 TRILLION in debt and this is one of the dumb reasons why.

  9. Ya, Why choose Starlink with a much lower cost and portability, when you can oil the CORRUPTION MACHINE IN JUNEAU! THIS OUTCOME SHOWS THE IMPETUS OF “MUST PASS” CORRUPTION BY “THE UNICOCK’S” TO REPAY FAVORS!

  10. Choosing to dig up the tundra to bury the fiber? I thought that wasn’t climate friendly? A more affordable, earth friendly option in a federal hot zone pushing Bidens climate agenda policies and destroying Alaska – now they approve digging up the tundra for this when a wireless system is available to the customer premise? It’s a malarkey! They’re so. Full of it, this is not governance, Hoffman is not a King – I didn’t vote for him or anyone on any native corporation board or the Alaska Federation of Natives. The fact Hoffman is on the legislature and the native corporation should not be allowed – limiting options for everyone else. It’s beyond nepotism, it’s defrauding the public and government which is a crime beyond awful to stop people developing yet force them through an illegal interlocking directorate to pay hundreds of dollars for a system that is not the most efficient or effective or affordable? We need to reorganize this ancsa anilca anthc afn Alaska native health board stuff, these leaders or abusing their power and not governing in a way in accordance with laws, tenets or regulation and are seriously operating at their own detriment. Making organizations like NANA, Bethel Native and Norston Sound Healthcare or organizations as such have publicly certified elections – the feds have given Alaska management of those organizations, they do everything else why not have Alaska public office commission manage our elections like they do for the state? It’s the only way to clean this mess up! Sincerely, an ANCSA shareholder with a BIA certificate of blood – whatever’s that is in today’s world!

  11. I read somewhere that a teacher was complaining that it took 3 days for a student to take a test because the internet was so slow. I wonder why he could not print out the test and have the student take it with a pen or pencil. In many circumstances it doesn’t seem the internet is helping teachers. Maybe they should get back to preparing and teaching in ways that don’t require it.

  12. Assuming it cost $10,000 to buy, ship, install, and pay for a year of the business internet plan: the legislature could have bought 4,000 starlink units for high speed internet in schools across the state. Every school in the state could have been hooked up in less time than new fiber optic can be laid to hook up a single village school.

  13. And we still do business with them………..
    ahttps://www.justice.gov/opa/pr/gci-communications-corp-pay-more-40-million-resolve-false-claims-act-allegations-related-fcc

  14. No roads , no infrastructure and no access . What if the cable breaks ? Stupid and huge conflict of interest for Hoffman to be voting on it . StarLink is both way cheaper and far better product . This like running a telegraph cable back in the twenties . StarLink is the only way to go in the villages as on the other side of river where there’s no cable , you still have starLink . Heck you can take it to sumner fish camp ! Caribou camp ! Safety issue as well in a remote dwelling away from the wire .

    I did the math for one of cable run villages . You could give 10,000 individuals Star-link for five years almost instantly for what is would cost the village of 300 for hard wire cable . And they have wait a couple of years and all the hardware would be obsolete in five years and have to be replaced .

  15. Morons. keep increasing the federal debt, and our own. Folks this is the mentality thats bankrupting this country. Well when food is a problem as well as heating your home maybe everyone will rethink all of this idiocracy.

  16. Follow the money on who is to gain if this rural intenet bill passes and does not get vetoed. It’s not all about best bang for your buck, it’s more about certain legislators lining their pockets as fast as they can and as often as they can before getting called out on it or if serious enough, arrested on corruption/bribery charges by the feds. History continues to repeat itself over and over in Juneau and Hoffman contineus to get re-elected by his constituents. They deserve the representation they voted for.

    Comparing UTAH to RURAL AK for internet costs is comparing apples to oranges since UTAH has more options/competition for your internet service provider dollars as well as more infrastructure and is so much cheaper than RURAL AK. That is the cost of living in the “bush” in rural Alaska.

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