SpaceX loses $900 million in rural broadband subsidies

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LOGAN, Utah — SpaceX has lost its bid for nearly $900 million in rural broadband subsidies for its Starlink service. 

The Federal Communications Commission said Aug. 10 that SpaceX had failed to show it could meet requirements for unlocking the funds, which aim to incentivize expanding broadband services to unserved areas across the United States.

“We must put scarce universal service dollars to their best possible use as we move into a digital future that demands ever more powerful and faster networks,” FCC chair Jessica Rosenworcel said in a statement.

“We cannot afford to subsidize ventures that are not delivering the promised speeds or are not likely to meet program requirements.” 

SpaceX was provisionally awarded the subsidies in December 2020 after competing in an auction under phase one of the FCC’s Rural Digital Opportunity Fund (RDOF).

SpaceX’s winning share was one of the largest among the auction’s 180 successful bidders, and covered nearly 643,000 homes and businesses in 35 states. 

Auction winners were required to submit paperwork to the FCC to show how they planned to deploy services that meet RDOF conditions to receive the funds over 10 years. 

For Starlink, this included providing 100 megabits per second (Mbps) download speeds and 20 Mbps upload speeds.

Terrestrial telco LTD Broadband, which was provisionally awarded $1.3 billion in subsidies under the program, also failed to demonstrate it could “deliver the promised service,” Rosenworcel said.

“Starlink’s technology has real promise,” Rosenworcel added. 

“But the question before us was whether to publicly subsidize its still developing technology for consumer broadband—which requires that users purchase a $600 dish—with nearly $900 million in universal service funds until 2032.”

Ookla speed tests showed median download speeds for SpaceX’s Starlink satellite broadband network improved 38% to 90.55 Mbps in the first quarter of 2022, compared with the corresponding quarter last year.

However, Ookla said upload speeds fell from 16.29 Mbps to 9.33 Mbps.

SpaceX has launched more than 2,700 Starlink satellites to low Earth orbit (LEO) to improve its service and coverage.

According to satellite broadband competitor Viasat, limitations in Starlink’s network architecture prevent it from meeting RDOF obligations even with more satellites.

“As the number of Starlink subscribers increases, the system will become even more capacity-constrained, which is likely to impair network performance and constrain speeds for end users,” Viasat told the FCC in a July 13 letter.

In a July 29 letter to the FCC, SpaceX said Viasat “is transparently attempting to have the Commission impede competition at all costs to protect its legacy technology.”

SpaceX and Viasat have a long history of battling it out over regulatory matters through FCC filings.

Viasat, which operates broadband satellites in geostationary orbit, was denied an attempt to bid for subsidies in the RDOF auction with a proposed LEO constellation.

Rosenworcel’s decision comes after she said last year that the FCC was taking steps to “clean up issues with the program’s design originating from its adoption in 2020,” following complaints about how some of the subsidies would fund broadband in parking lots and well-served urban areas.

These steps included letters to SpaceX and other winning RDOF bidders to withdraw funding requests for areas that already have service, or where “significant questions of waste have been raised.”

SpaceX has been raising billions of dollars to support plans to expand Starlink and its next-generation rocket Starship. The company raised $250 million in an equity round from undisclosed investors in July, bringing total funding raised so far this year to a reported $2 billion.

 

This article was edited Aug. 10 to correct a typo in Ookla’s upload speed figures for Starlink.