We view Alaska as fertile operating ground for communications companies, as the state has higher household income than the national average and a stronger economy than that of the lower 48 states. Oil revenues supplied 28% of Alaska's total revenues in 2004, and state economists expect that the dependence on oil will increase to 33% of projected revenues in 2005.
In addition, we believe the Alaskan economy could receive a further boost in subsequent periods as the U.S. Congress approved a compromise budget resolution in late April that allows oil drilling on the coastal plain of the Arctic National Wildlife Refuge. While further action will be needed by Congress and the President to explicitly authorize drilling, we think there is an increased likelihood that the Alaskan economy will benefit.
DEPENDENCY PROBLEMS. In our view, among the indirect beneficiaries of the potential drilling would be:
General Communication and its peer Alaska Communications,
since local consumers would likely have more discretionary cash to spend on wireless, broadband, and cable.