Convicted felon still earns $1 million yearly subsidy

Universal Service – Roger Shoffstall, 75, is serving a federal sentence related to felony tax evasion and lost telephone privileges tied to his small Alaska phone business after a guard caught him operating from behind bars. Yet his company, Summit Telephone, continues to receive

Snow and silence do not care about paperwork. Up near Fairbanks, Philip Marshall shoveled a tunnel through the cold to reach a cabin on the mountainside, then answered questions about internet access by inviting a reporter inside for black tea.

For Marshall. the story is simple: his service needs are met. his community has adapted. and faster satellite options have changed what people expect. In the corner of his home sits a plastic box. near the floor. meant for the Summit Telephone line that federal subsidies help pay for. It is unplugged and unused.

The government has been paying for it anyway.

Roger Shoffstall, 75, is a federal prisoner who began a three-year sentence for felony tax evasion. At the start of that term. he lost telephone privileges when a guard caught him running his small Alaska phone company. Summit Telephone. from behind bars. Over the years, he has lost other rights as well. He cannot serve on a federal jury. he does not receive an annual Permanent Fund dividend check like most Alaskans. and he is not allowed to own a gun.

One line item has not changed. Each year, the federal government sends Summit Telephone more than $1 million.

The money comes from the Universal Service Fund. a subsidy program created by Congress to bring fast. affordable phone and internet service to hard-to-reach places. Phone customers across the United States pay for it through a surcharge that appears on monthly bills labeled “Universal Service Fund. ” “Universal Connectivity Charge. ” or folded into other fees like “Regulatory Programs & Telco Recovery Fee.” The federal government and phone companies do not call it a tax. but carriers are required to contribute 37 cents of every dollar of their interstate and international phone revenues to the fund.

In Alaska, the scale of that support is enormous. Since 2016, the Federal Communications Commission has given telecommunications companies $4.6 billion in these subsidies, more than $600 per Alaskan per year. It is more per resident than in any other state.

Yet after all that spending. Alaska still ranks near the bottom for access to the land-based. high-speed internet the program was meant to deliver. Some communities have yet to be wired at all. In others, fiber-optic cables or microwave towers offer service with speeds recently clocked as the slowest in the country. Even with the subsidies. customers often face prices in the hundreds of dollars per month for internet that can be as low as one-tenth what the FCC considers broadband quality.

Summit Telephone is an example of how the money keeps moving even when consumer demand and technology move on. The service Shoffstall’s company provides is increasingly challenged by low-earth satellite internet from Starlink. which does not qualify for Universal Service Fund subsidies. In the same service area where Summit operates. Starlink costs about $90 to $130 per month for download speeds up to 280 megabits per second. Summit’s website says its fastest plan in the same region maxes out at 25 Mbps and costs $135 a month.

The program’s structure also means subsidy payments depend less on whether people keep using the service and more on whether providers build what regulators require. Fewer and fewer Alaskans have used subsidized service since Starlink entered the market, but Summit Telephone continued to receive support.

Records also show other Alaska telecom subsidy recipients being paid for service in places with tiny populations. A telecom on the Aleutian island of Adak receives more than $350. 000 a year to provide phone and low-speed internet services to 306 buildings. even though the Alaska Department of Labor says the island is home to fewer than 80 people. One business owner said everyone he knows on the island has moved on to Starlink anyway.

GCI. the state’s largest telecom and its largest subsidy recipient. received $466 million just two years after its settlement with the federal government for alleged fraud related to the same subsidy program. The settlement said it was neither an admission of guilt by GCI nor a concession by the Justice Department that the claims were not well founded.

Shoffstall and his attorney did not respond to repeated interview requests or answer detailed questions sent by email. On Thursday. Shoffstall sent two documents to the Anchorage Daily News and ProPublica asserting that he is a sovereign citizen of the United States. The FBI has described “those who believe that even though they physically reside in this country. they are separate or ‘sovereign’ from the United States” and has categorized the extremist version of this movement as “domestic terrorism.”.

Larry Mayes, the owner of Adak Eagle Enterprises, which receives the subsidy to provide internet on Adak, declined to answer questions about the funding. “You’ll have to talk to the FCC about that,” he said, hanging up the phone.

In a written response to questions, GCI said it and other Alaska telecoms depend heavily on the subsidies to provide services across the state.

“Before and after the settlement. GCI continued to work with the FCC and customers to provide high-quality communications services in compliance with all applicable laws and regulations. ” the GCI statement said. “The settlement did not change Alaskans’ growing demand for these services. GCI’s willingness to provide them. or the criticality of USF funding to the sustainability of those services.”.

The FCC did not respond to requests for comment. The agency is weighing the future of the program and recently circulated a proposal to overhaul or potentially sunset elements of the subsidy that funds companies like Summit.

Alaska’s telecom lobbyists and executives argue that geography forces them into higher-cost service. Christine O’Connor, executive director of the Alaska Telecom Association, said the subsidies have improved access and lowered costs for rural Alaskans.

“There is simply no way that rural Alaskan communities could be connected with Anchorage or with the rest of the United States and the world” if consumers living in rural Alaska communities had to pay the full cost, she wrote in a statement to the Daily News and ProPublica.

Daniel Lyons, a former attorney whose law firm represented Verizon and AT&T and who now teaches internet law at Boston College Law School, sees something else. He says the program is broken because no one has rigorously tested whether it works.

“It’s not proven how successful it is,” Lyons said, “because the FCC is not very good at auditing its program.”

Lyons has advocated scrapping how the subsidy is handled now. arguing instead for sending it directly to consumers so they could choose which provider gets their money. In Alaska. that might mean Starlink. though some new users say they are being charged a “high demand” fee of $1. 500 to sign up. or future satellite competitors like Amazon Leo.

“If the goal is to make sure everybody gets online,” Lyons said, “you try to find the families that can’t afford service at market rates and you give subsidies to them directly.”

The amount the government pays Summit is tied to how the federal program evolved, and to politics that shaped it long before today’s broadband landscape.

Alaska’s outsized share traces back to Sen. Ted Stevens, “Uncle Ted,” who spent 40 years delivering federal money to Alaska. In 1996. while he was nearing the height of his power. Congress passed the Telecommunications Act. creating the modern Universal Service Fund. The program was built before smartphones and streaming.

At the time, most homes in America had no internet. By the late 1990s, “high-speed” service meant 200 kilobits per second. Today, the FCC defines broadband as 100 Mbps, which is 500 times faster than in the 1990s.

Carol Mattey, a former FCC official who oversaw efforts to reform the subsidy, said Stevens ensured Alaska telecoms received special treatment.

“It would be suicidal to do something to make the head of the Appropriations Committee angry at you,” Mattey said. She served as deputy chief of the commission’s Wireline Competition Bureau.

Stevens lost reelection in 2008 while under a corruption indictment that was later dropped. He died two years later in a plane crash on a trip from a private lodge owned by GCI. GCI’s current president and chief operating officer, Gregory Chapados, is Stevens’ former chief of staff.

A GCI spokesperson wrote that while Stevens chaired the Appropriations Committee. he did not at the time chair the Senate Commerce Committee. which drafted the Telecommunications Act and oversees the subsidy program. Chapados. who served as chief of staff for Stevens from 1986 to 1992. was not involved in developing the Telecommunications Act. the company said.

GCI said it “maintains constructive working relationships with all members of our delegation to advocate on behalf of our customers and all other Alaskans.”

Nationally, the subsidy program allows payments to any company that the FCC or state regulators have designated as an “eligible telecommunications carrier.” How much they get depends on whether they provide internet to village schools, health care clinics, or just remote communities.

In its statement to ProPublica and the Anchorage Daily News. GCI said. “There are no provisions in the Telecom Act extending special treatment for Alaska.” But the company acknowledged that Alaska is treated differently in practice. In 2016. the FCC created a program called the Alaska Plan specifically for carriers in the state. allowing them to negotiate their own performance targets rather than being subject to the same cost models applied elsewhere.

Mattey said Alaska’s geography made it difficult for the agency to estimate the cost of serving customers in the state. The FCC assumed companies would only set goals they could achieve. Companies pushed back, Mattey said, and officials gave up.

“We tried so hard not to treat Alaska differently because our goal was to create defined deployment obligations for all companies, and we failed,” she said of the 2016 reforms. “The political pressure was too strong.”

Summit has received $12 million over the past decade by promising to deliver internet to 337 locations across roadside neighborhoods just north of Fairbanks. Filings by Summit report dozens of new connections in some years, a combined total of 271 as of 2025.

But the FCC’s interactive map of all locations U.S. telecoms report serving with internet shows far smaller use for Summit’s network. In a phone interview, Summit’s acting general manager, James Perry, said the company has about 120 internet customers and 160 in total.

The difference between what gets built and what gets used helps explain why Summit’s federal payouts have outlasted both Shoffstall’s prison term and the market’s shift toward satellite internet.

Shoffstall’s troubles with law predate his current sentence. In 1996. state prosecutors charged him with a misdemeanor after he mailed documents whose tone and language mimicked court orders to an Alaska bank. demanding money. The trial ended without a verdict when Shoffstall agreed to change his plea from not guilty to no contest. He received a suspended imposition of sentence, a judgment entering a conviction with no jail time, contingent upon completing probation.

Over the decades since, he has continued to file paperwork in state court, federal court, and with the Alaska Department of Natural Resources claiming to be a sovereign citizen not bound by the same court systems as other Alaskans.

An electrical technician by trade, Shoffstall bought the business for about $675,000 in 2000. Summit’s customers live mainly in the hillsides north of Fairbanks. with some right off the highway and others at the end of snowy roads marked by warning signs like: “You are no longer a trespasser. You are a target.”.

Among those customers was a Sunday school teacher who arrived in Alaska in 1981 and spent years answering phones for a small insurance company. In the late 1990s and early 2000s. Lois Sannes said she grew frustrated with a surcharge added to calls in the Summit service area. She began complaining to the Regulatory Commission of Alaska and wrote so many letters to the governor that someone wrote back. Sannes met with an attorney, whom she said told her the IRS had launched a criminal investigation into Shoffstall.

Separately, Sannes said, Summit’s rates and spending were under scrutiny from the regulatory commission itself. When Summit sought approval for the rates it charged other telecom companies to use its phone lines. the commission allowed them to review Summit’s unredacted financial reports. A consultant hired by rival telecom companies testified that Summit’s spending appeared unusually high. poorly documented. and in some cases tied to transactions between the company and Shoffstall himself.

Around this period, roughly 95% of Summit’s revenue, according to audited financial statements Summit filed with state regulators, came not from phone customers but the federal subsidy program and payments redistributed through the telecom industry itself.

The dispute ended in a settlement between Summit and its competitors. The commission issued no findings on whether there were problems with Summit’s books.

Then federal prosecutors moved. On Sept. 15, 2009, a federal grand jury indicted Shoffstall on allegations of felony tax evasion. The charges said he “willfully evaded the payment of his income taxes” for at least eight years beginning in 1996. Shoffstall’s former accountants testified against him.

A Fairbanks jury found Shoffstall guilty on Feb. 5, 2010, after a five-day trial. A certified public accountant, Garry Hutchison, told the jury, “I told him that he was going to get nailed, that’s not a question. The only question is whether or not it would bring the company down.”

The FCC has power to cut off subsidies to recipients convicted of fraud and other financial crimes related to the subsidy program. How closely related the crime must be is up to agency interpretation.

Shoffstall’s indictment said he used his position running a federally subsidized company to obstruct the IRS investigation. But the conviction was for tax evasion related to money he personally owed the IRS.

There is precedent for the FCC closely scrutinizing a subsidy recipient convicted of evading personal income taxes. In 2015. the FCC Wireline Competition Bureau directed the Universal Service Fund’s administrator to look into whether Hawaii-based Sandwich Isles Communications misused its subsidy dollars. After owner Albert Hee was convicted on federal tax crimes. the FCC fined Sandwich Isles and Hee $49.6 million and ordered repayment of $27 million in improperly received subsidies. Hee’s attorneys contested the charges, arguing he concealed nothing and the government mistook accounting errors for criminal intent. A jury disagreed.

In Shoffstall’s case, the FCC did not respond to questions about whether it investigated the company after his conviction. Even while he was in prison, records show Summit continued to receive Universal Service Fund subsidies. Two months after his release in January 2013, Summit reported collecting $1.1 million in annual subsidies.

When Shoffstall’s probation officer told a federal judge he was ignoring probation requirements, he was arrested on Dec. 9, 2013, and went back to prison for several months. Summit received $859,393 in Universal Service Fund subsidies during that time.

In later years, subsidies to Summit grew. FCC data shows Summit in 2016 received one of the highest levels of federal subsidies per customer in the country. As of that year. Shoffstall’s company paid him an annual salary of up to $121. 000 and an annual dividend of up to $155. 000 to a holding company for which he was the sole shareholder. The company stopped publicly disclosing that information after 2016, after the Regulatory Commission of Alaska stopped requiring detailed annual reporting.

Sannes, who once pushed state regulators to look closer at Summit, now lives in Wisconsin. Asked if she was surprised to learn Summit’s subsidies continued and increased to $1.5 million a year, she said she assumed the conviction would be enough to cut off the money.

“I’m horrified,” she said.

Summit Telephone’s story also includes filings that Shoffstall submitted in court while pursuing sovereign citizen arguments. In 2017, he accused the federal government of “high crimes” against him in one filing. In another. he issued what he called a “summary judgment” against President Donald Trump for “fraud. collusion and conspiracy.” None of that stopped Alaska’s telecom industry from spotlighting him.

In 2018. O’Connor cited Summit to state lawmakers as an example of a company forced to “muddle along with the obsolete technology” rather than upgrade its network due to the burden of state overregulation. O’Connor said raising rates to provide upgrades required Summit to make its case to regulators that the fee increases were necessary.

Asked whether it was an appropriate use of public funds for Summit to receive roughly $10. 000 per customer per year in federal subsidies. O’Connor did not directly answer. In a written response. the Alaska Telecom Association said the program “is specifically designed to support building and operating telecommunications networks in high-cost areas” and that providers “are subject to FCC program requirements. reporting obligations. and oversight.” When asked whether it stood by its 2018 characterization of Summit. O’Connor said her testimony focused on the challenges facing smaller providers generally.

Shoffstall never upgraded to expand the service. According to the FCC broadband map, Summit’s equipment remains incapable of delivering internet faster than 25 Mbps, one-fourth the FCC’s current definition of broadband.

Back in Marshall’s cabin, the unused subsidy line sits quietly while the rest of the internet world catches up. Neighbors told the reporter they did not complain about Summit’s speeds. with one saying she pays Summit $95 a month and the internet is fine for her needs. and another saying he uses the service too. But others have opted out by adding satellite internet.

One resident, Marshall said, counted 18 satellites passing overhead within nine minutes on a recent evening and called it Starlink. Starlink can deliver speeds up to 10 times faster than Summit for about the same price.

SpaceX. the company behind Starlink. did not respond to questions and does not publicly release the number of users in Alaska. But Ookla, which offers tools for testing internet speed, provided a proxy measure. About 1 in 10 Alaskans who tested their home internet speed through Ookla connected via Starlink, compared with roughly 1 in 67 in California.

The Marshalls said they have not felt the need to pay for either subsidized service or satellite service in their home. Their cellphones provide five-bar, 5G service from a nearby tower.

The federal subsidies that keep Summit Telephone running continue to underwrite a line that sits unplugged.

In the meantime. the program that Congress created to deliver connectivity to hard-to-reach places remains tangled in the same question. asked again and again by the people who pay the surcharge and by the regulators charged with spending it wisely. When the rules reward building more than serving. who exactly is the money for. and who benefits when the market moves on?.

United States politics FCC Universal Service Fund Universal Connectivity Charge Alaska internet subsidies Roger Shoffstall Summit Telephone Starlink telecom regulation Sen. Ted Stevens corporate fraud settlement rural broadband