GCI rival takes Quintillion price worries to FCC chairman's office after approval

An Anchorage internet company took its objections to GCI's $310 million purchase of Quintillion to the office of Federal Communications Commission Chairman Brendan Carr on Tuesday, two weeks after the FCC approved the deal.

Quintillion owns the only fiber link connecting Alaska's Arctic coast to the rest of the state, a 1,176-mile system reaching Prudhoe Bay, Utqiagvik, Wainwright, Point Hope, Kotzebue and Nome. Competing internet providers can buy long-haul capacity on lines like it to reach rural communities, called middle-mile service. Once GCI owns the line, competitors that buy capacity on it would be buying from GCI.

Pacific Dataport, which sells Starlink and Eutelsat OneWeb satellite service and advertises middle-mile service, questions whether the FCC's conditions will keep that fair. Its vice president of government affairs and strategy, Shawn Williams, met with Keelin Ferris of Carr's office, according to the company's notice of the meeting. The company questioned whether the conditions would yield "genuinely fair, reasonable, and competitive rates rather than perpetuating existing market disadvantages."

The company made the same case to staff for Commissioners Trusty and Gomez in October.

The FCC approved the sale Oct. 20. It found that GCI likely has "some degree of market power" over wholesale middle-mile service, but concluded that two things would likely substantially offset the risk: lower costs from replacing some of GCI's microwave links with fiber, and competition from low Earth orbit satellites.

The approval came with conditions. They treat existing Quintillion contract rates and terms as just and reasonable for the length of each contract or four years after the deal closes, whichever is later. Inflation adjustments can't start until at least three years after closing, and only if inflation tops 5%. On certain routes, it has to offer wholesale access on just, reasonable and not unreasonably discriminatory terms.

The FCC also turned down a petition from Alaska Communications, which had asked it to block or restrict the sale unless rivals got guaranteed access at regulated prices. Pacific Dataport called that a "very strong Petition to Deny." It also questioned the FCC's rejection of what it called a recommendation from economist Hal J. Singer, who argued in a declaration for Alaska Communications that GCI would gain the incentive and ability to raise Quintillion's wholesale rates to its retail rivals. The FCC said Singer didn't consider possible cost savings from the deal.

GCI and Quintillion argued in their reply comments that the deal would create three new network rings and back up a fourth, including a fiber ring protecting service from the Yukon-Kuskokwim Delta to Bristol Bay.

The company also raised delays in federal E-Rate funding decisions for rural Alaska schools and libraries, which the company said leave providers delivering broadband without approved funding. And it urged changes to the Universal Service Fund, including no monthly subsidy for a home that has chosen Starlink.

Challenges are still possible. Anyone challenging the FCC's order has until Nov. 19 to ask for reconsideration or review. As of Thursday, the FCC's licensing database still listed the transfer as "pending consummation," meaning the sale hadn't closed, and showed no such request.