Convicted felon’s Alaska telecom receives $1m in federal subsidies for obsolete internet

A ProPublica investigation has revealed that Roger Shoffstall, a 75-year-old convicted felon, continues to receive more than $1 million annually in federal subsidies for his Alaska-based company, Summit Telephone. Shoffstall served three years in federal prison for felony tax evasion, yet his company remains a recipient of funds from the Universal Service Fund (USF), a programme designed to support internet infrastructure in high-cost areas.

The subsidies pay for internet service with maximum speeds of 25 Mbps, which is significantly slower than the Federal Communications Commission’s current definition of broadband at 100 Mbps. Despite the availability of cheaper, faster satellite alternatives such as Starlink, many subscribers in Shoffstall’s service area remain on the slower, subsidised network, or have left the infrastructure unplugged and unused.

Alaska receives more per capita in USF subsidies than any other state, with telecommunications companies receiving $4.6 billion in these funds since 2016. This amounts to more than $600 per resident annually. However, the state still ranks near the bottom for access to land-based high-speed internet, with some communities relying on service that is among the slowest in the country.

The USF programme allows payments to companies regardless of actual customer usage or service quality. In Shoffstall’s case, the FCC pays his company approximately $800 per month per customer. Records indicate that while Summit Telephone reports serving hundreds of locations, the number of active internet customers is far smaller, with some subscribers having switched to satellite providers that do not qualify for subsidies but offer superior speeds at comparable prices.

Shoffstall’s legal troubles predate the current scrutiny. He was convicted in 2010 of felony tax evasion after testimony from former accountants who stated he willfully evaded income taxes for at least eight years. Although the FCC has the power to cut off subsidies to recipients convicted of financial crimes, records show Summit Telephone’s subsidies continued to grow even while Shoffstall was imprisoned or on probation. The FCC did not respond to requests for comment regarding Shoffstall’s case.

Critics argue the subsidy program is fundamentally broken due to a lack of rigorous auditing. Daniel Lyons, a former attorney for major telecom firms and now a law professor, stated that the FCC is not very good at auditing its program and that it is not proven how successful the subsidies are. He advocated for sending subsidies directly to consumers, allowing them to choose providers such as Starlink, rather than paying companies to build and maintain obsolete networks.

The origins of Alaska’s outsized share of subsidies trace back to the late Senator Ted Stevens, who chaired the committee controlling the FCC’s budget. Stevens ensured Alaska telecommunications companies received special treatment through the Alaska Plan, which allowed carriers to negotiate their own performance targets rather than adhering to national cost models. Former FCC official Carol Mattey described the political pressure on the agency as too strong to enforce uniform deployment obligations.

Summit Telephone has received $12 million over the past decade by promising to deliver internet to 337 locations north of Fairbanks. However, the company has not upgraded its technology to meet modern standards. Shoffstall, who identifies as a sovereign citizen, has continued to file paperwork in various courts claiming he is not bound by the same systems as other Alaskans. He and his attorney did not respond to repeated interview requests.

The Alaska Telecom Association defended the subsidies, stating they are critical for providing services across the state’s challenging geography. Executive director Christine O’Connor said rural communities could not be connected without federal support. However, the association declined to directly answer whether it was an appropriate use of public funds for Summit to receive roughly $10,000 per customer per year in subsidies.

Meanwhile, residents in Shoffstall’s service area are increasingly turning to alternatives. Philip Marshall, a 74-year-old resident near Cleary Summit, noted that his neighbour’s Summit internet line sits unplugged in a plastic box despite the company receiving substantial subsidies to maintain it. Marshall and his wife rely on 5G mobile service, illustrating how the subsidy model may be failing to deliver the high-speed internet it was originally intended to provide.