Subsidy program seen as important for rural Alaska

Posted: Monday, January 15, 2007

JUNEAU - If Alaskans are worried about a state fund that helps subsidize rural phone service, they've yet to weigh in through any formal channels.

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Administrators say the state's universal service fund is instead widely viewed as necessary in an expansive and sparsely populated state, where communities are small and far-flung.

In fact, it's similar in idea to another state fund, called Power Cost Equalization, which helps subsidize the high cost of power in Alaska's remote villages.

"Alaska is primarily really rural, for example we serve locations that have only 25 people," said Kristi Catlin, president of the Alaska Universal Service Administrative Co., a private firm that manages the state's telephone service fund.

And Catlin adds that the California scenario of rural subsidized areas growing into wealthy suburbs just isn't a possibility in Alaska's outback.

"The high cost portion of the fund is only provided to really rural areas, and there isn't an area that will probably ever change in a way that it will become a suburb or major city," she said.

The Alaska Universal Service Fund program has collected about $19 million in surcharges since its inception in 1999. The charge shows up as 1.2 percent fee on the monthly phone bill.

In 2005, the program collected $3.4 million and dispersed about the same amount to 28 cellular and landline companies.

All 28 companies received a share of $1 million for Lifeline in 2005, which helps defray telephone service costs for 26,000 low-income residents.

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