The Universal Service Fund pays more than $340,000 a year to keep internet service for hundreds of largely vacant buildings on Adak Island, Alaska. Reporters who visited the addresses listed by the local carrier found no subscribers, and many residents now use Starlink, which arrived in 2023 and delivers much faster speeds. Adak’s population is estimated between about two dozen and 77 people, making the subsidy roughly $14,000 per resident by one estimate. The fund—administered by USAC under FCC oversight—distributes about $8–9 billion annually and recently survived a Supreme Court challenge, but the island’s future service remains uncertain.
Taxpayers Pay $340K A Year To Keep Internet For Hundreds Of Vacant Buildings On Adak Island
Image Credit: Brett Sayles/Pexels.
Where do the extra fees on your phone bill go? A federal program funded by surcharges on American phone bills pays more than $340,000 a year to keep internet service activated for hundreds of buildings on Adak Island, Alaska—even though reporters who visited most sites found the structures empty and no active subscribers.
What Reporters Found
Reporters from ProPublica and the Anchorage Daily News traveled to Adak in June, checked every address the local carrier reported to regulators, and were unable to find a resident who said they subscribed to the carrier’s service. State data put Adak’s population at 77 last year; residents interviewed by reporters said the island likely has closer to two dozen people. Using the lower estimate, that subsidy amounts to roughly $14,000 per resident per year.
Local Service Versus Satellite
Many islanders have switched to satellite broadband. Starlink arrived on Adak in 2023 without any FCC subsidy; residents reported monthly bills of about $90–$140 and real-world speeds far above the subsidized provider. By contrast, the fiber service subsidized through the federal program from local carrier Adak Eagle Enterprises is reported on the FCC’s broadband map as delivering only 1–10 Mbps download speeds—well below the federal benchmark of 100 Mbps. One resident recorded a Starlink download speed of 447 Mbps.
Responses And Program Details
Adak Eagle’s president, Larry Mayes, hung up on an initial call with reporters and declined to comment in July beyond saying his company follows the rules of the FCC subsidy program and that questions belong to the agency. The FCC did not respond to reporters’ inquiries.
The payments flow through the Universal Service Fund (USF), established under the Communications Act of 1934 and expanded by the Telecommunications Act of 1996 to help make phone and internet service affordable in rural and low-income areas. Carriers contribute to the fund based on a contribution factor applied to their interstate revenues, and those costs appear as a surcharge line item on many customers’ monthly bills.
The USF distributes roughly $8–$9 billion a year across four programs: high-cost subsidies for rural carriers, Lifeline for low-income households, E-rate for schools and libraries, and support for rural health care. The private nonprofit Universal Service Administrative Company (USAC) administers the programs under FCC oversight.
Legal Context And Outlook
The subsidy mechanism survived a constitutional challenge in FCC v. Consumers' Research, decided June 27, 2025, when the Supreme Court ruled 6–3 that the contribution mechanism does not violate the nondelegation doctrine. Justice Elena Kagan wrote the majority opinion; Justice Neil Gorsuch dissented, joined by Justices Clarence Thomas and Samuel Alito. What this ruling means for the future of subsidized service on Adak remains unclear, and the island’s residents and policymakers may now face questions about whether these subsidies are achieving their intended purpose.
Bottom line: Federal phone-bill surcharges are funding costly, permanent internet connections to many largely vacant buildings on a remote Alaskan island, while residents increasingly rely on faster, unsubsidized satellite options.
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