GCI fined over $40M for competitive bidding violations

GCI Communications Corp. has agreed to pay over $40 million for violations related to competitive bidding regulations in connection with GCI’s participation in the Federal Communications Commission’s (FCC) Rural Health Care Program.

The settlement, announced on May 11, involves a federal program that provides over $570 million annually to assist rural health care providers with their telecommunications needs.

Under the Rural Health Care Program, the FCC pays a subsidy equal to the difference between the more expensive cost for a telecommunication service in a rural area and the less expensive cost for the same service in an urban area in the same state. FCC regulations also require contracts for these subsidized services be awarded through a competitive bidding process.

The federal government alleged that between 2013 and 2020 GCI failed to comply with FCC regulations that governed how telecommunications companies must calculate their prices for purposes of claiming subsidy payments, and as a result GCI received greater subsidy payments than it was entitled to. The government further alleged that GCI caused Eastern Aleutian Tribes Inc., a rural health care provider in Alaska, to agree to inflated prices after the relevant contract was competitively bid.

As a result, GCI allegedly knowingly received higher payments under the program from 2015 through 2018 in connection with its contract with Eastern Aleutian Tribes, Inc., federal authorities contended.

“Compliance with the Universal Service Fund’s Rural Health Care Program rules is a critical component in making sure that medical providers have access to the types of communications equipment and services needed to enhance medical options and care in rural communities,” said FCC Enforcement Bureau Chief Loyaan Egal.


Heather Handyside, chief communications officer for GCI, said that the company has been serving Alaskans for more than 40 years, connecting some of the “most remote communities in the nation.”

“As a long-time provider of Rural Health Care Program supported services, we take seriously the responsibility of being effective stewards of Universal Service Fund support,” Handyside said. “This settlement concludes several years of active discussions with federal regulatory agencies. It reflects the result of both broad changes in program guidance and past challenges GCI identified during an extensive internal review.”

Handyside noted that the FCC recently updated its guidance for calculating rates charged under the Rural Health Care program, and this settlement specifically reflects GCI’s agreement to apply this guidance retroactively to the years 2010 through 2016. 

“The settlement also resolves a limited number of compliance issues related to GCI’s participation in the Rural Health Care program, which GCI identified and self-reported. GCI has conducted a comprehensive internal review to ensure that appropriate protocols are in place going forward and that we are coordinating with our customers and federal agencies in the application and administration of funds,” she said.

Contemporaneous with the civil settlement, GCI has agreed to enter into a corporate compliance agreement with the FCC. GCI will also resolve an FCC administrative investigation and an FCC proceeding arising from GCI’s participation in the Rural Health Care Program.

The claims resolved by the settlement are allegations only and there has been no determination of liability, federal authorities said.