On Adak Island in the Bering Sea, the wind blows through broken windows and houses sit abandoned on a former Navy base. Yet the federal government’s Universal Service Fund still pays more than $340,000 per year to connect hundreds of buildings to the internet, according to ProPublica and the Anchorage Daily News. Residents say they do not use those connections.

The mismatch is the story, and it’s stark: the last people to live in the houses left long ago, and when ProPublica flew to Adak in June and visited every building the company told regulators it serves, not a single person reported subscribing to the island’s subsidized internet service. Instead, residents get online through Starlink, the Elon Musk satellite service that arrived in 2023 without FCC subsidy support. People here say it is up to 40 times faster and costs $90 to $140 per month, while Adak Eagle’s subsidized arrangement historically supported much higher customer charges, with the company’s website advertising internet plans currently ranging from $99 to $550 per month.

This is not a remote footnote in a footnote. Adak is about 1,200 miles from Anchorage, and the phone-bill fee that funds the FCC’s remote-internet goals shows up on nearly every American’s bill. The Universal Service Fund is designed to bring fast, affordable internet to remote towns. But ProPublica reports that in practice, it can also pay for outdated service that customers no longer use. The paper frames the problem as a safeguarding failure: the money keeps moving to telecom companies even if the companies’ ownership stories and compliance histories get messy. It notes, for example, that the FCC kept paying a Fairbanks company while its owner served federal prison time for tax evasion, and it continued paying GCI even after the company signed a settlement related to alleged fraud tied to the subsidy. (That settlement included language that it was neither an admission of guilt by GCI nor a concession by the Justice Department that the claims were not well founded.)

Adak makes the failure easy to see because the population collapsed. At the island’s population peak decades ago, Adak housed thousands of Navy personnel and their families. Now, the state estimated the population at 77 last year, while residents put it at closer to two dozen. On those numbers, ProPublica says the federal internet subsidy to the local telecom amounts to about $14,000 a year per person. And the reporting suggests there is “zero indication” that those people are benefiting from the subsidized connections.

The telecom at the center of this is Adak Eagle. Like many Alaska telecoms, it was built on public money. It began in the early 2000s with FCC subsidies and federal loans to upgrade old telephone wires for fiber-optic lines intended to support both voice and internet. By 2011, ProPublica reports the company was collecting $2.68 million a year from the Universal Service Fund. The paper also details additional funding streams. It describes a 2013 federal order stating that company president Larry Mayes spent telecom subsidy money on a fleet of vehicles and a fishing boat that were not necessary for the business, and that the $237,455 salary Mayes paid himself in one year was “unreasonable” and “disproportionate” given the company’s size and what’s typical for Anchorage, where he lives. (The company told the FCC at the time that salaries “should be evaluated in the context of a small company where each employee wears multiple hats,” and it pointed to the island’s “remoteness and harsh climate conditions.”)

Adak Eagle’s funding did not end there. ProPublica says Mayes received $3.6 million from the federal broadband subsidy since 2016, plus $3.54 million from the FCC through a program that replaces revenue phone companies once earned connecting long-distance calls. The state added $3.75 million through Alaska’s own subsidy program, the Alaska Universal Service Fund. When ProPublica first asked Mayes about the federal internet money, he hung up and did not respond to requests for interviews or questions delivered in June and July. Reached again by phone on July 13, he declined to comment and ended the call. The one statement he made before hanging up on the first call: that he is playing by the rules of the FCC’s subsidy program, and that if ProPublica had questions, it should ask the agency. The FCC did not respond, ProPublica reports.

The reporting also paints a ground-level picture of why “connected” does not necessarily mean “available.” After the Navy shipped out and the base closed in 1997, hurricane-force Aleutian winds pried homes apart. ProPublica describes the Walking Dead feel of the island after stepping outside Adak’s tiny airport terminal: long stretches of streets with no people, a shuttered McDonald’s drive-thru advertising 99-cent hamburgers, and neighborhoods with houses damaged so badly that bathroom mirrors and toilets sit exposed. It notes severe deterioration in older beachfront areas called “Officer’s Country,” including homes cleaved in half. Even in newer neighborhoods, ProPublica reports rotted exterior walls with holes so wide you could drive a truck inside, grass growing on living room floors, bird nests in bedrooms, and missing exterior walls on at least one home.

In the few homes the FCC paid Adak Eagle to connect that are still habitable, the occupants have abandoned Adak Eagle, ProPublica reports. It includes an example: Henry Collins, 61, lives in one of those homes. ProPublica reports he was partially blinded in a chemical accident while cleaning a boat at the island docks, and he and his wife spend their days caring for their newborn. They FaceTime with family in the Philippines and hold the baby up to the screen. The broader takeaway is less about one resident’s story and more about how subsidy incentives can lag behind technological change. Starlink arrived in 2023, and residents reportedly moved. But the federal funding did not follow that reality.

For executives, boards, and investors watching telecom and broadband policy, Adak is a stress test for how funding flows get governed. When regulators keep paying for service that nobody uses, the system stops rewarding outcomes and starts rewarding paperwork and continued eligibility. That can distort competition, encourage vendor behavior that maximizes compliance over utility, and leave public money stranded while communities adopt faster alternatives without subsidy support. The question decision-makers should take from Adak is simple and uncomfortable: when usage changes, how fast does your oversight mechanism notice?