FCC weighs new ways to set prices for rural Alaska clinics' internet and phone service

The Federal Communications Commission is rethinking how it prices the phone and internet service it subsidizes at rural health clinics, in a program whose money goes almost entirely to Alaska. Public comments are due Wednesday.

In the 2025 funding year, which ended in June, the Rural Health Care Program's Telecom Program committed about $276 million to Alaska health care sites and about $9.5 million to the rest of the country, according to USAC data. The Alaska money covered about 200 sites in roughly 180 communities. GCI Communication Corp. was the provider on about $242 million of it.

The program pays the difference between what a carrier charges for service in a rural area and what similar service costs in the state's cities. How that rural rate gets set is what the FCC wants to change.

Carriers are supposed to justify rural rates first by pointing to what they charge other customers for similar service. When they can't, they submit a cost study itemizing what it costs to provide the service. In Alaska, only 34 of 340 approved requests in the 2025 funding year relied on those commercial rate comparisons, the FCC wrote in its notice. The rest used cost-based rates, including previously approved ones the FCC has let providers reuse since the 2024 funding year.

The FCC says cost studies, meant as a rarely used fallback, have become burdensome and common. It is asking whether to trim what they must include and whether to offer alternatives, all three based on suggestions from GCI: letting carriers use the wholesale rates they charge other carriers, permanently allowing previously approved rates, or projecting a rate from approved rates for faster or slower service.

The agency also flagged a risk. Because networks improve and prices generally fall over time, it wrote, older rates "may overcompensate providers relative to current market rates." An order accompanying the notice again lets providers reuse previously approved rates, this time for the 2027 funding year.

The notice also asks whether backup connections should be treated differently. The FCC gave the example of a clinic paying for pricier C-band satellite service as both its primary and backup connection when cheaper low-Earth-orbit satellite service could handle the backup, and asked how often that happens. Other proposals would create a list of eligible services and set performance targets to speed up funding decisions.

Comments are due Sept. 30 and reply comments Oct. 30. They can be filed through the FCC's Electronic Comment Filing System under WC Docket No. 17-310.