With the rise of satellite internet and the unspooling of fiber optic cables, rural Alaska is in the midst of huge changes in broadband connectivity. For school districts increasingly reliant on the internet to deliver education, these changes couldn’t come sooner.
But finding the most affordable option, and turning away from established providers in favor of services like Starlink, is easier said than done for many rural school districts. It means navigating the complex and ever-growing systems of state and federal subsidies these districts have long relied on, and that critics say should be given more scrutiny.
It remains unclear how far into the future a school internet system propped up by hundreds of millions of dollars in subsidies can last. Which internet service providers are able to come out on top securing these lucrative contracts, and whether satellite internet like Starlink proves to be a pie in the sky approach, is still up in the air.
Switching to Starlink
With kids back in school across the state, one district in Western Alaska is in the first year of a major change. It’s switching from GCI to Starlink satellite internet to serve its approximately 2,000 students living hundreds of miles off the road system. The switch is only one of the difficult moves that the Lower Yukon School District has made in response to years of virtually flat per-student funding from the state.
“We were staring down the barrel of a big deficit,” said Joshua Walton, the district’s technology director. “And we were saying, ‘How do we mitigate some of the fallout of this?’ One of the biggest things that we looked at was internet. After a lot of calls and a lot of research, we made the plunge.”
Walton said that the decision to switch to Starlink wasn’t an easy one. But he said that the highest internet speeds the district could afford from long-time provider GCI were falling short of the mark.
“You run into a lot of issues with testing. Any kind of online curriculum, classes struggled to use it just because the bandwidth isn’t there,” Walton said.
In 2023, download speeds for all but one of the district’s 11 schools were limited to 25 megabits per second. That’s what the Federal Communications Commission considered, until recently, to be adequate for the internet needs of a small household. At its Emmonak school, the district was relying on that connection to serve more than 250 students and faculty.
With Starlink, Walton said that the district should be able to tap into download speeds as much as 10 times faster, and at a price many times cheaper. He said that upfront costs for the switch were around $100,000, but that the decrease in annual costs after federal subsidies is considerable.
“Out of pocket, we’re looking at, like, somewhere around ($40,000), which is just substantial savings when you look at where we were before,” Walton said. “From close to a million dollars out of pocket with GCI, (it) was an easy decision to make.”
Walton stressed that the district’s first year on Starlink is really a test run, and that there is no true backup if the low-Earth orbit satellite internet service fails.
Next year, after a one-year contract with an Anchorage-based Starlink reseller Microcom expires, the Lower Yukon School District will be free to choose whichever provider it believes can meet its needs through a competitive bidding process. Walton said that he hopes that the complete network overhaul that he helped to complete in time for the school year is more than a flash in the pan.
“I am on the edge of my seat, kind of just making sure that everything is going to work out because we’re betting big on Starlink right now,” Walton said.
The Lower Yukon School District is the largest district in the state to take the plunge with satellite internet, but it’s not the first. A handful of smaller districts spread across the state are headed into their second year using satellite internet.
“At the forefront”
More than 1,100 miles away from the lower Yukon, the tiny Southeast Island School District has fewer than 150 students spread across seven remote schools on Prince of Wales and Baranof Islands in Southeast Alaska.
Until recently, it was paying GCI around $1.2 million a year for 25-megabit internet at all but one of its schools. After state and federal subsidies, the district was still on the hook for nearly $50,000 in annual out-of-pocket costs.
That’s according to Everett Cook, the district’s technology director. As tech assistant in 2022, he said that he saw an opportunity to break away from the norm when the district’s remote Port Alexander school was facing chronic internet outages.
“It was right when Starlink was coming out, and I said, ‘We could be at the forefront of this and it would completely benefit all the schools,’” Cook said.
Within a short time, the district’s first Starlink unit was installed at Port Alexander, which Cook said kept roughly a dozen students connected that year. Over the coming months, additional schools in the Southeast Island district got Starlink, something Cook said that the district was fortunate to be able to phase in while still receiving services from GCI.
“It was really on a testing (basis) like, ‘Let’s see how this is going to work,’” Cook said.
When its contract with GCI ended in 2023, Cook said that all seven schools were poised to make the switch. And in contrast to the Lower Yukon School District, there would be backups in place for all but two of the schools: 50 megabits per second connections through Alaska Power and Telephone or AP&T, another regional internet provider in Southeast.
Cook said that total internet costs for the district have been chipped down to just over $18,000 a year through the changeover to Starlink and AP&T, and that download speeds have increased multiple times over. He said that’s in part because the state program meant to help the Southeast Island School District afford internet connectivity also limited the speeds it could tap into.
So when the district turned away from its million-dollar contract with GCI last year, the stakes were high. By implementing faster internet, they were also turning away from more than $200,000 from a state broadband assistance program called the Alaska School Broadband Assistance Grant or BAG, which placed a cap on internet speeds eligible for support.
“You’re using this government money to purchase an internet connection, and then you’re using more government money to slow it down in order to help pay for it. Like, what the heck?” Cook said.
As for federal subsidies, Cook said that the district has decided to forego them altogether. He said that it was costing around $10,000 a year to hire someone just to handle the necessary paperwork. For now, the Southeast Island School District has achieved major savings and a level of broadband independence that is rare in Alaska school districts.
But the much larger Lower Yukon School District doesn’t have that luxury. This year, the district is asking for more than $600,000 in federal subsidies to pay for its Starlink-based network, according to federal records.
In Southeast, Cook said that so far he sees the switchover as a success. Nevertheless, there are risks and unknowns with the new setup, including a lack of guaranteed bandwidth or dedicated support staff in case something goes wrong, both services that GCI is able to offer. But Cook said that he’s up for the challenge.
“It seems to me that a lot of the schools prefer to have the management services and they don’t have the headache of it. They’d rather just deal with the other things that they have to deal with,” Cook said. “Whereas I had fun doing it.”
“The big money”: E-rate
While the switch in internet providers is an experiment for the Lower Yukon School District, it’s still relying on the same massive federal subsidies to cover its internet costs.
That money is distributed through the Schools and Libraries Universal Service Support Program, known as the E-Rate program, aimed at achieving equal access to telecommunications across the country. In 2023 it provided roughly $115 million in broadband subsidies to Alaska school districts. The number is expected to double in 2024, according to federal E-Rate records.
“That’s where all the big money is,” said Valerie Oliver.
Until last year, Oliver served as the state’s E-Rate consultant under the Alaska State Library, a position she held for two decades. As she explained, federal broadband subsidies are tied to poverty levels.
“The number of kiddos you’ve got that are eligible for free or reduced lunch, that determines the discount that you’re going to get in the E-Rate program,” Oliver said.
In rural Alaska, that discount is generally 80% to 90%. The remainder of what districts owe each year to cover their internet cost is where the state comes in, through the BAG program.
BAG
BAG was first launched in 2014 to assist schools in Alaska with reaching internet download speeds of 10 megabits per second, considered laughably slow today.
Oliver helped write the first and second versions of the regulations that guide how BAG is administered. She said that she and the director of the BAG program at the time didn’t have the benefit of a team of experts to guide the process.
“It was two librarians working with an attorney who didn’t know anything about BAG, or E-Rate, or anything,” Oliver said.
For years, BAG capped eligible internet download speeds at 10 megabits per second, and then at 25 megabits per second. In the last legislative session, it quadrupled the cap to 100 megabits per second, enabled by fast-track passage of House Bill 193.
Rep. Bryce Edgmon (I-Dillingham), who sponsored the bill, which was originally introduced as Senate Bill 140 by Bethel Democrat Lyman Hoffman, urged quick passage of HB 193.
In a House Finance hearing in February 2024, Edgmon highlighted the looming deadline to apply for E-Rate subsidies at the 100 megabits per second benchmark, enabling eligible school districts to then secure the remainder of the necessary funding through the BAG program.
In the hearing, Edgmon said that he was hopeful that federal broadband funding, including more than $1 billion allocated for Alaska through the Broadband Equity and Development Program or BEAD, would eventually remove the need for the BAG program altogether.
“There is a sort of an imperfect nature of this as it was when it got introduced in 2014, amended in 2020, and here we are in 2024 upping it, hoping that these billions of dollars of federal money that are coming through primarily the BEAD program can help offset or make this bill not applicable,” Edgmon said.
Estimating the annual budget for the state’s BAG program is tricky. This is because Alaska’s commitment is determined by the level of E-Rate subsidies awarded to school districts. These begin flowing in after the state’s number is already set.
For the new law passed this year, the Legislature requested around $25 million, a rough estimate of the costs if every eligible district receives state funding to achieve the 100 megabits per second increase. And while the recently announced BAG award totals came in under budget, the new total is a three-fold increase from last year’s funding. It’s an expense that critics say the state should be leery of.
Fairbanks Republican Rep. Will Stapp was one of just a handful of lawmakers to vote no on HB 193. He said that he was shocked to see how much districts were paying out of pocket, despite receiving the maximum amount of federal and state subsidies.
“At the end of the day, these are considerable price increases, and you just have to ask yourself the question, ‘Hey, is this the actual cost of providing the service in the location?’ Some of these billings are pretty astronomical,” Stapp said.
An apparent windfall
When the Lower Yukon School District made the switch to Starlink, internet provider GCI lost its second-largest drawer of federal subsidies among the more than 30 districts it serves in Alaska.
But things have played out differently for GCI in the district it serves that draws the greatest subsidies: the much larger Lower Kuskokwim School District. In April, the district’s school board approved a contract with GCI for more than $101 million a year. The price tag for a high-speed connection at the district office in Bethel alone is currently $1.4 million per month.
After BAG and E-rate subsidies, the district is on the hook for around $3 million of this contract annually, according to a school board memo.
For GCI, the 100 megabits per second change to state BAG regulations has resulted in an apparent windfall, far beyond what the next largest Alaska providers have achieved in terms of overall subsidies. With the state support to increase speeds, districts GCI serves have roughly doubled their E-Rate subsidies to more than $200 million since the change, according to federal records. The Lower Kuskokwim district alone has applied for more than half of these federal subsidies. As for BAG subsidies, roughly $7.2 million is being awarded this year to bring its schools to 100 megabits per second.
In an emailed response, GCI declined to discuss details of its contract with the Lower Kuskokwim School District, but said that the price of internet services in rural Alaska were generally high due to the high costs of building, upgrading, operating, and maintaining networks.
The email went on to say that the company is very excited about bringing fiber internet to Bethel and other rural communities over the coming years through its AIRRAQ project – a collaboration between GCI and Bethel Native Corporation funded by over $100 million of tribal broadband connectivity grants. However, it did not say whether this project had any bearing on the current pricing for the Lower Kuskokwim School District.
The district’s new superintendent, Andrew “Hannibal” Anderson, said that it was satisfied with the current arrangement with GCI, but also declined to discuss details.
The future of BAG
This year, the state of Alaska can afford to fill in the gap between the millions of federal subsidy dollars and the internet needs of rural school districts. But that may not always be the case. Oliver, the state’s former E-Rate consultant, said that people should pay attention to the implications of steadily increasing costs for the BAG program.
“If we’re not careful and let the service providers jack up the cost of things too high, then we’ll never be able to pay our non-discounted share, our 10%, because they will knock things out of the ballpark, which is exactly what they’ve done with (the Lower Kuskokwim district),” Oliver said.
Oliver said that there’s a real risk that districts could have to make do with reduced subsidies.
“If we’re not already there, we will soon be at proration, and that is going to impact all districts that apply, including those that were good fiscal stewards of selecting a cost effective connection in the first place,” Oliver said.
Oliver said that she still believes in the importance of the program for helping address disparities in internet access across the state, and that there is still a chance to protect the future of the program.
“Can we improve upon something that started out as good? We absolutely can. And we should, because we are spending millions of dollars when we as a state don’t have a lot to spare,” Oliver said.
The Alaska Department of Education and Early Development declined to comment on the long-term sustainability of the BAG program.
The state Online Public Notices website was accepting written comments until Tuesday. It has details for providing oral comments via telephone on Oct. 9.
