Where do all of the fees on your phone bill go? You may be shocked to learn the answer. A federal program funded by charges tacked on to American phone bills pays more than $340,000 a year to keep hundreds of buildings connected to the internet on Adak Island, Alaska. There’s just one problem: nearly all of those buildings are abandoned. Reporters from ProPublica and the Anchorage Daily News flew to the island in June, visited every location the local telecom told regulators it serves, and found no resident who said they subscribe to the service.
Alaska estimated Adak’s population at 77 last year, while residents themselves put the number closer to two dozen. With that number, the subsidy works out to roughly $14,000 a year for every person on the island. But that’s still a startling low amount of people to necessitate and maintain permanent internet service in such a remote location.
Residents have moved to satellite service instead. Starlink came to Adak in 2023 without any FCC subsidy, and people there told the reporters it costs between $90 and $140 a month. The subsidized fiber from the local company, Adak Eagle Enterprises, only offers download speeds between 1 and 10 megabits per second according to the FCC’s own broadband map, against a federal broadband standard of 100. One resident’s Starlink connection ran at 447 megabits per second.
Adak Eagle’s president, Larry Mayes, hung up when reporters first called and declined to comment when reached again in July. The one thing he said was that his company follows the rules of the FCC’s subsidy program, and that questions about the program belong with the agency. The FCC did not respond to the reporters’ questions.
Where the Subsidy Money Comes From
The payments come through the Universal Service Fund, a program created under the Communications Act of 1934 and expanded by the Telecommunications Act of 1996 to make phone and internet service affordable in rural and low-income areas. Carriers pay into it based on a contribution factor applied to their interstate revenues, and they pass that cost to customers as a line item on monthly bills.
The fund distributes roughly $8 billion to $9 billion a year across four programs, including subsidies for rural areas, low-income households, schools, libraries, and rural health care. A private nonprofit company, the Universal Service Administrative Company, handles administration under the FCC’s oversight.
The program survived a constitutional challenge last year. In FCC v. Consumers’ Research, decided June 27, 2025, the Supreme Court ruled 6-3 that the contribution mechanism does not violate the nondelegation doctrine, reversing the Fifth Circuit. Justice Elena Kagan wrote the majority opinion, and Justice Neil Gorsuch dissented, joined by Justices Clarence Thomas and Samuel Alito. As far as what’s going to happen with Adak Island, the future of the subsidized program is unclear at this time.