JUNEAU — Alaskans who have landline telephones will see a small break on their bills in the new year as Alaska reduces a fee that has been used to fund infrastructure projects and subsidize phone service for low-income Alaskans.
In August, the Alaska Regulatory Commission voted to cap the Alaska Universal Service Fund surcharge, which has been collected on every landline telephone bill since 1999. The change becomes effective Thursday.
“Most people won’t notice, but there will be a decrease in that one — you know how many line items are on a phone bill,” said Christine O’Connor, executive director of the Alaska Telecom Association, an industry group.
For a telephone customer paying $19 per month for baseline phone service, as Alaska Communications subscribers do in Anchorage according to commission figures, the surcharge will drop from $3.61 to $1.90 per month. In 1999, when AT&T Alascom and the Anchorage Telephone Utility charged $9.76 per month for a landline according to commission archives, the surcharge was just $0.19 per month.
Federal law prevents states from regulating most aspects of cellphone and internet service, but landline telephone service is still regulated at the state level. Starting in 1999, Alaska began collecting a surcharge on every landline telephone bill. Money from that surcharge was intended “to be used to ensure the provision of long-distance telephone service at reasonable rates throughout the state and to otherwise preserve universal service," according to the regulation.
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The fee was initially modest — a surcharge of 1.9 percent that raised $3 million that first year. But as Alaskans dropped their landlines in favor of cellphones, the surcharge rose: to 9.5 percent in 2011, 11.5 percent in 2016 and 19 percent this year, according to figures provided by the state regulatory commission.
With the surcharge quickly rising, the commission asked the telecom industry to come up with a proposal that would fix the problem. The solution was a cap of 10 percent and an end to the program entirely in 2023. In addition to the cap on the surcharge, which begins this week, some of the programs funded by the surcharge will end.
In recent years, the surcharge has been used primarily for infrastructure improvements and technical matters like phone switches, but the state also used it to provide pay phones in remote areas and subsidize the phone bills of poor Alaskans.
“That will impact the Lifeline (program),” said Grace Salazar, a spokeswoman for the regulatory commission, talking about the changes to the surcharge.
Lifeline is a federal program under which low-income Americans can apply for subsidized phone service. In Alaska, 26 companies provide Lifeline access. This year, the federal government offered a subsidy of $9.25 per month. The state contributed another $3.50 per month. Alaskans are also eligible for a $25 federal subsidy intended for people living on tribal land.
“The order clearly says they are eliminating Lifeline linkup and support programs in their entirety. Of course, there’s still federal support,” Salazar said.
In Alaska, an average of 32,453 people used Lifeline support last year, and the state had the highest participation rate in the country (judged by the proportion of people who were eligible).
GCI, the largest lifeline provider, has “a little more than 21,500 wireless Lifeline customers,” spokeswoman Heather Handyside said in a statement emailed by spokesman Josh Edge.
For those Alaskans, “GCI will absorb $2.50 of the cut. GCI’s wireless Lifeline customers see an increase of $1 to their bill,” Handyside wrote.
He added that the company is offering Lifeline service better than the federal government requires: Its mobile data limit is 4 gigabytes per month, up from 1 GB.
Alaska Communications spokeswoman Heather Cavanaugh declined to release her company’s number of lifeline subscribers but said the company will absorb the entire cost of the cut.
An AT&T spokeswoman said that the company supports fewer than 2 percent of Lifeline customers in the state, and days after the Daily News contacted the company about the issue, it announced to regulators that it is ending participation in the Lifeline program in Alaska.
Anyone receiving Lifeline service from AT&T can go to another company, it said.
Correction: An earlier version of this article incorrectly reported the name of Alaska Communications' spokeswoman. Her name is Heather Cavanaugh, not Carpenter. In addition, the article has been updated to clarify the source of the statement from GCI. It came from Heather Handyside through spokesman Josh Edge. Information about an additional $25 federal subsidy intended for tribal lands has also been added.