The Federal Communications Commission (FCC) of the United States has rejected an application submitted by Elon Musk’s SpaceX for $885.5 million in subsidies for providing broadband internet services in rural areas via its Starlink satellite system. The regulatory body also canceled LTD Broadband’s subsidy plans worth over a billion dollars. The FCC’s official statement explains why the two proposals were canceled: “these applications failed to demonstrate that the providers could deliver the promised service.”
Jessica Rosenworcel, Chairwoman of the FCC, stated that the government cannot “afford to subsidize ventures that are not delivering the promised speeds or are unlikely to meet program requirements.” She added that, despite showing great promise, the Starlink architecture was still a work in progress that required a $600 investment to obtain a network reception dish before users could connect to the internet via Starlink satellites.
SpaceX was initially slated to receive funding from the Rural Digital Opportunity Fund (RDOF), an FCC initiative that would invest billions of dollars in infrastructure that would provide affordable, high-speed internet in rural areas. LTD Broadband won the first auction in December 2020, with a proposal worth more than $1.3 billion in benefits.
Nascent technology that fails to deliver
According to the FCC’s public notice, SpaceX was to provide low-latency broadband internet (100 Mbps downlink, 20 Mbps uplink) in 642,925 locations across 35 states. According to an Ookla report from July of 2022, Starlink’s internet speed has been declining, with uplink speeds falling below the baseline of 20 Mbps. The notice, however, includes a few harsher observations about SpaceX and its Starlink observations.
The agency notes that by vetoing the application proposals for LTD and SpaceX’s Starlink, it is avoiding risky bets “that promise faster speeds than they can deliver” and “plans that are not realistic or are based on aggressive assumptions and predictions.” As a result, it was determined that Starlink was unable to meet the FCC’s requirements.
However, this is not the end of SpaceX’s journey. As it continues to launch more internet-beaming satellites into Low-Earth Orbit, the company can reapply for subsidies in the next round of RDOF auctions (LEO). So far, the company has injected thousands of Starlink LEO satellites, surpassing the 3,000 mark earlier this week with another Falcon 9 mission. In addition, after receiving FCC approval to provide internet services on the move, SpaceX now offers a service that provides Starlink installation on boats.