Year in Review: Telecoms

GCI cuts capital budget, Quintillion lays fiber as broadband expands
  • After lobbying hard for a budget fix that included using Permanent Fund earnings, GCI announced it would cut capital expenditures by 25 percent next year when the Legislature failed to find a solution. (Photo/Andrew Jensen/AJOC)

The state’s lack of budget solutions has dug into telecommunications growth.

General Communications Inc. is cutting 20 percent to 25 percent of its planned capital project spending next year in light of the State of Alaska’s failure to implement a fiscal plan during its 2016 marathon legislative session.

This implies 2017 capital expenditures of $158 to $168 million compared to previous plans for up to $210 million in spending.

GCI President and CEO Ron Duncan has been an outspoken supporter of plans such as those put forward by Gov. Bill Walker and approved by the state Senate to restructure the Permanent Fund to use earnings to pay for state government.

The House failed to have a floor vote on the Senate bill, leading Walker to veto $1.3 billion in state spending, including $666 million from Permanent Fund Dividends to reduce this year’s check from more than $2,000 to $1,022.

Duncan is the founder and one of the co-chairs of Alaska’s Future coalition, which has organized a campaign to encourage legislators to approve a fiscal plan and for the public to support such a plan.

GCI spokesman David Morris said the company doesn’t plan on shedding employees as a result of capital expense reductions, but acknowledged things can change.

The capital expense cut at GCI will dig into statewide utilities construction. According to forecasts by the Institute of Social and Economic Research at the University of Alaska, private spending for utilities construction in 2016 will total $459 million.

GCI accounts for nearly half that amount.

 No. 2: Quintillion starts laying offshore Arctic fiber

Wireline wholesaler Quintillion’s plans for an intercontinental subsea fiber system connecting Asia and Europe evolved in 2016.

The company sets the project into three phases, each of which representatives said are independently viable financially.

The first phase connects an undersea fiber system from Nome to Prudhoe Bay with an existing terrestrial fiber line running north from Fairbanks. The second will entrench a subsea line from Nome spur to Tokyo, while the third lays line from Prudhoe Bay to London.

Ships from France began laying the subsea cable for phase one in mid-July and continued through October.

Rather than sell directly to customers, Quintillion hopes to draw Alaska’s telecommunications providers to the fiber system. Companies like GCI or Alaska Communication, representatives said, should see the value of fiber over less robust platforms built and used internally.

Along with Cooper Investment Partners, Alaska Native organizations Arctic Slope Regional Corp., and Calista Corp. bought into the Alaska portion of the project, previously led by Canada’s Arctic Fibre. Now the project is entirely Alaskan.

Costs have shifted since the project started.

Previously estimated at $250 million, Quintillion vice president of external relations Kristina Woolston can only say now the project is a “considerable investment.”

No. 3: Rural broadband continues to expand

Rural internet connectivity grew in 2016. Broadband networks and provider contracts for Alaska’s largest telecommunications companies are slowly expanding in rural markets, focusing on large contracts with federally funded Alaska Native organizations and municipal customers.

GCI announced on June 21 the addition of 10 new Northwest Alaska villages into its now-completed TERRA network. Buckland, Kiana, Noorvik, Selawik, Koyuk, Elm, Golovin, White Mountain, Stebbins and St. Michael will now have access to internet connection speeds far faster than 6 megabits per second standard in many rural Alaska communities, which is well beneath the FCC benchmark of a minimum 25 megabits per second.

TERRA is a hybrid of broadband cable and microwave transmitters in stretching from Southwest to Northwest Alaska. The expansion is the second this year to build on the existing system.

The TERRA-Northwest project extends from Nome to Kotzebue. The Southwestern portion of TERRA began upgraded June 8 with new microwave radio networks from Levelock to Bethel — which allows 3G wireless data service in 28 communities in Southwestern rural Alaska villages, including Aniak, St. Mary’s, and Marshall.

GCI already has operating contracts with the Northwest Arctic Borough School District, Norton Sound Health Corp., and Maniilaq Association, an Alaska Native health and social services organization.

Outside the North Slope and away from the areas of coverage provided by the TERRA project, Alaska Communications is supplying Alaska Native health providers with coverage in Southcentral.

Alaska Communications representatives confirmed on June 21 that the company has drawn up a new five-year contract with Kodiak Area Native Association following the expiration of a previous three-year contract.

The Federal Communications Commission will help Alaska Communication with rural broadband buildout with money from the Connect America Fund Phase II, granting $19.7 million a year for the next 10 years.

 

Updated: 
12/21/2016 - 1:27pm

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