GCI rival questions whether FCC's Quintillion conditions will keep wholesale prices fair

A day after federal regulators approved GCI's $310 million purchase of Quintillion, a rival Anchorage broadband company began questioning whether the deal's safeguards are enough.

Pacific Dataport met with Federal Communications Commission staff four times from Oct. 21 to 23, according to its notice of the meetings. It told them it was concerned the deal "would further concentrate control of Alaska's critical middle-mile infrastructure, diminish competition, and increase barriers to entry for competing broadband providers."

Quintillion's fiber network runs along the Arctic coast from Prudhoe Bay to Utqiagvik, Wainwright, Point Hope, Kotzebue and Nome. An extension under construction would reach the Yukon-Kuskokwim Delta and Bristol Bay.

It's what the industry calls middle mile, the wholesale line that local internet providers rent to connect their customers to the rest of the world. Higher prices for that service could lead to higher prices for homes and businesses, the FCC said.

GCI is already Alaska's largest communications company and its largest seller of middle-mile service. In some places it's the only one with land-based lines, the FCC said in its Oct. 20 order.

The agency found GCI likely has "some degree of market power" and that the purchase may increase it. It concluded several factors would likely offset that risk. Replacing some of GCI's microwave links with fiber should lower costs, it said, and Starlink and other satellite services are adding competition. GCI also made commitments that the FCC made conditions of approval.

GCI has to honor Quintillion's existing contracts for the life of the system, with inflation increases allowed only in limited cases starting three years after closing. On those routes, it must offer access to wholesale customers at "just and reasonable" rates, and for five to seven years it must send the FCC copies of larger contracts.

The prices in contracts already in place count as "just and reasonable" for at least four years after closing, the order says.

Pacific Dataport questioned whether the conditions would produce "genuinely fair, reasonable, and competitive rates rather than perpetuating existing market disadvantages." It raised concerns about "excessive wholesale middle-mile pricing in Alaska" and questioned whether there is meaningful oversight to make sure GCI keeps its commitments.

Alaska Communications had asked the FCC to block the sale or guarantee rivals access, backed by an economist's analysis suggesting prices could rise. The FCC denied that petition, noting the economist hadn't accounted for savings from the merger. Pacific Dataport called the petition "very strong" and questioned the denial.

At two of its meetings, Pacific Dataport handed out pages of public comments from an April Facebook post about the deal, which it said offer "a genuine glimpse into what Alaskans think" about it.

The notice raises questions but doesn't ask the FCC to change anything. Pacific Dataport also used the meetings to press on other issues, including delays in federal E-Rate funding for rural Alaska schools and libraries. It argued the government shouldn't pay a monthly subsidy for a home that has chosen Starlink.