Alaska Communications sale wraps busy year in telecoms
The year in telecommunications closed with a major deal as Alaska Communications System Group Inc. agreed to sell its wireless subscriber business and its 33 percent share of Alaska Wireless Network to General Communications Inc. for $300 million in cash.
The AWN transaction closed in 2013, merging the wireless infrastructure of GCI and Alaska Communications while the two companies sold separate retail products.
The two companies reported mixed results as they adjusted to changed revenue streams, and prior to the Dec. 4 sale announcement, GCI reported strong revenue for the first three quarters of 2014, citing the new network as one reason. Alaska Communications revenue was down, although other metrics were stronger and the company did receive initial payouts from the new network.
According to ACS’s and GCI’s 2014 third quarter reports, GCI will add 109,000 wireless customers to increase their subscriber base to about 253,000
Also on Dec. 4, GCI announced a $75 million, unsecured investment by private equity firm Searchlight and that the company CEO Eric Zinterhofer was named to its board of directors.
The two companies also worked to differentiate themselves outside of the wireless market throughout the year.
GCI expanded into the broadcast realm with the acquisition of more television stations. The company in 2013 purchased Anchorage’s KTVA and stations in Juneau and Sitka. The first quarter of 2014 was GCI’s first full quarter owning KTVA, which was the first Alaska station with HD news.
This year, GCI received FCC approval and purchased three licenses in Southeast Alaska — one each in Sitka, Juneau and Ketchikan — all of which were previously held by Colorado-based Ketchikan TV LLC.
The TV expansion contributed significantly to the company’s third quarter performance, primarily due to revenue from political ads.
Alaska Communications expanded its business services throughout 2014. CEO Anand Vadapalli said the company is continuing to focus on strategic growth, including by expanding its fiber network in Anchorage through a partnership to provide service to Anchorage schools. The company has also stopped selling lower bandwidth broadband packages; margins are higher on higher bandwidth packages.
The transition plays to Alaska Communications’ existing structure and strengths in broadband services according to ACS Chief Financial Officer Wayne Graham, who said broadband profit margin can be 50 percent or higher. Vadapalli hopes that focusing on broadband with the addition managed IT solutions will raise company margins without affecting market positioning.
ACS also acquired Tek Mate to enhance its business service offerings.
2. Verizon launches voice service, opens stores
Verizon Wireless made its long awaited full launch into Alaska in September.
The company turned on a complete long term evolution, or LTE, network, including voice over LTE service, or VoLTE Sept. 19, and opened retail stores in Anchorage, Fairbanks, the Matanuska-Susitna Borough, Eagle River and Juneau that same day.
Verizon began working on its Alaska network after purchasing spectrum here in 2010; through the second quarter of 2014, the build out cost was $115 million, according to Verizon Alaska President Demian Voiles.
Exact subscriber numbers were unavailable, but Voiles said that Verizon’s Alaska launch was “record setting” for a company launch.
LTE is currently the fastest available data network, and Alaska was the first place Verizon built a complete 4G LTE network from scratch rather than upgrading legacy networks, Voiles said. Alaska customers got new calling features at the same time those in the Lower 48. With VoLTE, the phones use data to send calls, enabling them to have better clarity.
“I like to look at this as Alaskans get to be on the cutting edge, finally,” Voiles said in September.
The network enables use of the company’s new “Advanced Calling” features, including high-definition voice calls and video calls, both of which work on the company’s regular data network and compatible phones, without needing an additional app. It does, however, require that both the person making the call and the person receiving it be on the Verizon network. Throughout 2014, the company had hundreds of employees testing the Alaska network.
The network includes the Anchorage, Matanuska-Susitna, Copper River Valley, Prince William Sound, Fairbanks, Juneau, and Ketchikan areas, with some of those areas built out by Verizon’s partners — Matanuska Telephone Association, Copper Valley Telecom and Ketchikan Public Utilities.
Voiles said the company is also looking at opportunities to expand into rural Alaska, but middle mile connectivity is the major challenge for that work. Until the launch, Verizon customers in Alaska access Verizon’s network for data services, but roam on other networks for voice calls.
3. Alaska telecoms continue buildouts
Verizon wasn’t the only telecom working on network expansions.
The Alaska Wireless Network expanded its own 4G LTE network this year, including a LTE launch in Fairbanks. Another 100 LTE sites are planned in the next two years, GCI’s Pete Pounds said during an investor call.
GCI is also working to expand 3G and 4G service in many rural communities, and received notice from the Federal Communications Commission in late October that it was ready to award bids from its Tribal Mobility Fund auction, which will fund much of that effort.
In December, the company announced that it was launching 3G service in Nome.
GCI submitted 51 winning bids in the auction for a total of $41.4 million, and is expected to bring 3G or 4G service to more than 37,000 people in 48 communities as a result. According to the most recent announcement from the FCC, Barrow, Kotzebue and Unalaska are among those set for service upgrades.
GCI also completed additional work on its TERRA network, which is a broadband network. TERRA is a multi-year effort to build out terrestrial fiber cables and microwaves towers in much of Southwest and Northwest Alaska to enhance broadband connectivity there.
During summer 2014, crews completed some of the work in Galena and Melozitna, among other locations, as part of the buildout along the Yukon River.
Work at Shaktoolik, Dime, Baldwin and other communities was also completed to extend TERRA-NW from Nome to Kotzebue, which was completed in December 2014.
Other telecoms also worked on rural Alaska buildouts: AT&T worked on permitting for a tower in Nome that would enable it to launch 4G LTE service, and also worked on enhanced service in Cordova through a partnership with a local telecommunications provider there.
4. Quintillion preps for Arctic work
Quintillion and Arctic Fibre completed survey and permitting work during summer 2014 as part of an effort to lay submarine cable from Japan to Britain.
Arctic Fibre is a Canadian entity building the new telecommunications network; local company Quintillion is partnering on the Alaska portion of the project, including landing spurs bringing the high-speed to connection directly to seven communities in Alaska.
This summer, permitting and other prep work was conducted, including marine surveys of the area where submarine cable could be laid, and geotechnical surveys to determine the design for fiber spurs to shore.
The company also held meetings throughout the region to inform residents about the work.
Initially, Shemya, Nome, Kotzebue, Point Hope, Wainwright, Barrow and Prudhoe Bay will be connected to the new network. In time, Alaska telecoms could build out the network further, delivering faster service to more of the Arctic. The project also includes a terrestrial cable line from Prudhoe Bay to Fairbanks.
Landing sites in each community have been identified, and buildings for the landing sites in Barrow, Wainwright and Point Hope were constructed in 2014 and sent to each of those communities.
The Alaska component of the project will be built first, with Asia expected to be completed afterward, and Canada and Europe as the final piece.
However, either the Asia segment or the Dalton Highway segment must be completed before service is available in Alaska, according to a September 2014 briefing on the project.
The company also announced some investors in 2014 — Calista subsidiary Futaris, Inc. and the Arctic Slope Telephone Association Cooperative both said publically that they are investing.
Journal reporter DJ Summers contributed to this article.