by Shawn Williams
Well, it’s finally here. Customers in rural Alaska are checking the mail and setting up their Starlink. What this means for rural Alaska residents is obvious – faster broadband and lower prices – but what does it mean for rural Alaska telecoms?
Competition is good. It drives innovation, encourages efficiency, and keeps your marketing department on their toes. The fact competition in rural Alaska was almost non-existent is noteworthy. Nearly all broadband customers are price sensitive if the speed and quality of service are comparable. Simply stated, residents will go to the provider with the lowest price for broadband. (Just look at the effect big box stores and Amazon Prime had on Alaska’s hometown retailers.)
The FCC sends nearly $400M a year to incumbent Alaska telecoms for user subsidies (USF Alaska Plan, E-rate, and Rural Healthcare) and since 2020, the USDA ReConnect program has awarded $322M for new fiber build-outs. In the last 6 months, the NTIA Tribal Broadband Connectivity program delivered $290M for new fiber build-outs in Alaska villages. Over the last five years, that’s $2.6B. The fiber-based telecoms have always shared that the high cost of laying and maintaining fiber and microwave in rural Alaska has justified higher retail pricing in those areas. At a recent symposium, one provider put their middle mile expense at 83% of costs.
Starlink on the other hand, was awarded $885.5M (over ten years) by the FCC – then their award was canceled. That didn’t stop Elon Musk from marching forward (using his own money) into the hard-hitting world of licenses, permits and a very healthy fiber lobby. Based on reports, thousands of Starlink terminals are arriving throughout the state, even before the constellation is fully commissioned. And there’s more direct-to-consumer competition coming with Amazon’s Kuiper, Telesat’s Lightspeed, and China’s GalaxySpace promising to cover the globe with affordable broadband.
Back to rural Alaska. Residents statewide can now get fast broadband, after buying the Starlink dish for about $650 delivered. A new market entrant with ubiquitous coverage and impressive broadband means that every single broadband provider in Alaska, regardless of technical capabilities, is now playing on a level playing field. The new, written-in-the-sky standard for broadband in rural Alaska is a minimum of 25/3 for a maximum $110 per month and sometime in Q1 2023, Starlink will likely be participating in the FCC’s Affordable Connectivity Program, bringing that cost down to $35 for qualifying households.
The federal government should not be limiting low-cost middle mile solutions when it comes to serving broadband in rural Alaska, yet the FCC, NTIA and USDA all do. Congressional direction has maintained technology neutral awards, but regulations at the agency level ignore those requirements by including technical requirements. This limits service providers to terrestrial backhaul, thereby unnecessarily increasing costs and limiting connectivity.
When it comes to the telecoms operating in rural Alaska, the paramount focus should be thinking creatively and getting middle mile costs as low as possible, ultimately meeting Starlink’s price and performance. One easy way to achieve this is by taking advantage of the new satellite middle mile covering Alaska and hybridizing existing microwave and C-band satellite networks. LEO (like the OneWeb Network) and/or GEO HTS (like the Aurora Network) can be added to any network in any community. Alaska telecoms must adapt, utilize new satellite technology, and truly compete – just like Elon.
Shawn Williams is the VP of Government Affairs and Strategy for Pacific Dataport in Anchorage. He’s a 40-year resident of Alaska, the former Assistant Commissioner of Commerce for the State of Alaska, and a member of the Karuk Tribe of California. He’s earned a BA in Economics at the University of Alaska, Anchorage and an Executive MBA in Strategic Leadership at Alaska Pacific University.