Uncertainty for Alaska’s rural health care and telecommunications providers has been reduced after the Federal Communications Commission (FCC) increased its Rural Health Care (RHC) program budget from $400 million to $571 million and approved funding of Alaska Communications’ (NASDAQ: ALSK) contracts for funding year (FY) 2017.
In a June 25 announcement, the FCC increased the annual cap on program spending by nearly 43 percent, to $571 million, which reversed across-the-board spending cuts for the current funding year imposed under the old cap. The “pro-rata” cuts had created uncertainty and turmoil in the program for patients, health care providers and communications companies.
The program’s previous $400 million cap was set in 1997 and never indexed for inflation. The $171 million increase represents what the funding level would be today had the initial cap included an inflation adjustment.
Prospectively, the FCC will adjust the cap annually for inflation and allow funds unused from prior years to be carried forward.
In addition, the FCC approved Alaska Communications’ rural health care contracts for funding year 2017, which started July 1, 2017. The company previously announced during its first quarter 2018 earnings call that it had an accounts receivable balance for rural health care customers, net of amounts reserved, of $11.8 million at March 31, 2018. Alaska Communications’ approved funding year 2017 contracts have now been transmitted to the Universal Service Administrative Company for processing and payment.
“We are pleased that the FCC has approved our funding year 2017 contracts, increased the program budget and will adjust it annually for inflation. The FCC’s recent decisions create more certainty for both our rural health care customers and our company. We appreciate the FCC working with us and its commitment to the Rural Health Care program. We look forward to working with the FCC on the longer term RHC program changes,” said Alaska Communications Senior Vice President Legal, Regulatory and Government Affairs Leonard Steinberg.
Technology and telemedicine have assumed an increasingly important role in health care delivery, particularly in rural and remote areas of Alaska and the country. Broadband plays a critical role in the delivery of telemedicine, giving patients in rural areas high-quality health care services. The Rural Health Care program provides funding to eligible health care providers for telecommunications and broadband services necessary for the provision of health care.
About Alaska Communications
Alaska Communications (NASDAQ: ALSK) is the leading provider of advanced broadband and managed IT services for businesses and consumers in Alaska. The company operates a highly reliable, advanced statewide data network with the latest technology and the most diverse undersea fiber optic system connecting Alaska to the contiguous U.S. For more information, visit www.alaskacommunications.com or www.alsk.com.
Heather Cavanaugh, 907-564-7722
Director, External Affairs and Corporate Communications
Tiffany Smith, 907-564-7556
Manager, Board and Investor Relations