My Turn: When dealing with low oil revenues, Alaskans should come first

  • Sunday, March 27, 2016 1:03am
  • Opinion

It’s been a rough couple of months for Alaska’s telecommunications monopoly, GCI.

First, a GCI executive at the company’s Anchorage-based television station KTVA made some extremely insensitive comments. The company cracked down by issuing a six-tweet apology.

Then, GCI was targeted in an email scam in which a third party contacted the payroll department and pretended by email to be a company executive. This move netted the brazen bandit sensitive tax information for more than 2,500 GCI employees.

On top of that, the company lost almost $30 million last year, with nearly a third of that – $8.9 million – coming in the fourth quarter alone. Part of the reason for the loss, according to a company spokesman, was attributed to GCI investing in its wireless network, which is probably a good thing given the higher-than-usual outages many of its cell phone users experienced last winter.

And, GCI is coming under some fire for Alaska’s Future, the coalition the company launched late last year to influence the state’s budget negotiations in Juneau. Beyond what the company already spends to peddle influence in the state Capitol, GCI CEO Ron Duncan, who was paid more than $3 million in 2014, said he was “very concerned about the looming fiscal crisis and what it could mean for GCI, its employees, and all Alaskans.”

He should give a moment’s thought to action that Great Britain took, just last week, in recognition of waning oil production in its Brent Field in the North Sea. The government cut the supplementary charge for the oil and gas industry to 15 percent from 25 percent, which dropped the overall corporate tax rate to 40 percent. The change also eliminates the 35 percent Petroleum Revenue Tax. These changes were implemented because Brent oil prices fell by more than 60 percent since mid-2014. The effective date for the changes will be Jan, 1, 2016. Contrast that action with GCI’s “Me First” approach.

GCI is focusing all its efforts on the most illogical and counterproductive idea, hiking taxes on the state’s energy industry when global oil prices are low and the state is hemorrhaging jobs. It’s not surprising that GCI would try to use its considerable influence to tap the Permanent Fund and cap annual payments to Alaskans, spending at fiscally irresponsible levels and avoiding a responsible budget because they might impact the company’s bottom line.

The GCI bottom line remains pretty hefty thanks to the millions in state contracts it has and the millions more it collects through the federal government each year; the Universal Service Fund alone sends GCI upward of $170 million annually — more than 70 percent of all the USF money Alaska gets.

The USF program is designed to encourage broadband deployment in rural areas, so Alaska’s largest telecommunications company gets the lion’s share of the dollars. But the Federal Communication Commission’s latest report on broadband progress showed more than 80 percent of rural Alaskans still don’t have access to broadband — a stunning number.

Yet after months of public embarrassments, it appears that GCI’s targeted lobbying campaign is starting to pay dividends. The state Senate, against the wishes of the governor, appear to be leaning toward spending the state’s savings over cutting costs.

So a coalition founded by GCI — the business monopoly that provides Alaska with poor-coverage and semi-reliable telecommunications — may succeed in placing the state budget entirely on the backs of the citizens who pay for GCI’s services and pay its CEO’s salary. For GCI, the future and the salary look secure and unchanged. For the people of Alaska, the future will perpetuate higher taxes, smaller dividend checks and continuing spotty telecommunications service from a company and CEO whose motto should be, “I’ve got mine.”

Alaskans should ask themselves whether GCI is really working in their favor, or if the economic logic exercised by the British government in a similar situation, would not be the better one for Alaska as well.

• Jack Rafuse is a former White House energy advisor and longtime energy executive, including a longtime member of the Unolocal management staff during the days of TAPS construction. He is a resident of Virginia.

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