The FCC is canceling $886 million in funding for Starlink to expand access in rural areas, citing the cost of the satellite internet system and concerns about its ability to provide fast enough speeds.
The FCC announced today(Opens in a new window) that it had rejected “long-form applications” for funding from the Rural Digital Opportunity Fund from both SpaceX and an ISP called LTD Broadband.
The FCC stated in a statement, “The Commission determined that these applications failed to demonstrate that the providers could deliver the promised service.”
“We cannot afford to subsidize ventures that are not delivering the promised speeds or are not likely to meet program requirements,” FCC Chairwoman Jessica Rosenworcel added.
The FCC tentatively awarded SpaceX $886 million in December 2020 to help its Starlink service provide high-speed broadband to 642,925 locations across 35 states. However, before the federal funding could be fully secured, SpaceX was required to submit a long-form application outlining how Starlink would meet its obligations.
In the coming years, the FCC’s goal with the Rural Digital Opportunity Fund is to provide gigabit internet speeds to more than 85% of the selected rural locations and at least 100Mbps download speeds to all 99.7% of the locations.
The FCC announcement indicates that the US regulator is not confident SpaceX will meet those targets, given that Starlink’s current advertised speeds range from 50Mbps to 200Mbps. The high cost of Starlink equipment is another issue. The service costs $110 per month in the United States, plus a $599 one-time fee for the Starlink dish.
“Starlink’s technology has a lot of potential,” Rosenworcel said. “However, the question before us was whether to publicly subsidize its still-developing consumer broadband technology, which requires users to purchase a $600 dish, with nearly $900 million in universal service funds until 2032.”
The FCC described Starlink as “nascent LEO (low-Earth orbiting) satellite technology” with “recognized capacity constraints” in its formal decision notice. Furthermore, the FCC received data from Ookla’s Speedtest.com indicating that “Starlink’s speeds have been decreasing from the last quarter of 2021 to the second quarter of 2022.”
SpaceX did not respond immediately to a request for comment. However, the company’s Starlink internet system has struggled to provide consistent high-speed internet to some users across the United States. During peak usage hours, some customers have experienced speeds of less than 5Mbps.
The issue appears to be the result of network congestion or an excessive number of users consuming capacity on the Starlink network. SpaceX is working to resolve the issues by launching more satellites into orbit, but this will take time and regulatory approval.
Last month, rival Viasat put pressure on the FCC to deny SpaceX the $886 million in funding. “As the number of Starlink subscribers grows, the system will become even more capacity-constrained, likely impairing network performance and limiting end-user speeds,” Viasat wrote. In response, SpaceX informed the FCC(Opens in a new window) that Viasat was attempting to “hinder competition at all costs to protect its legacy technology.”
Not everyone at the FCC agrees with the agency’s decision to deny SpaceX funding. FCC Commissioner Brendan Carr stated in a statement(Opens in a new window) that “we should be making it easier for unserved communities to get service, not rejecting a proven satellite technology that is delivering robust, high-speed service today.”
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“To be clear, this is a decision that tells families across the country that they should just keep waiting on the wrong side of the digital divide even though we have the technology to improve their lives now,” he said, adding that he found out about the FCC’s decision while on a business trip in Alaska.
The FCC determined that LTD Broadband “was not reasonably capable of deploying a network of the scope, scale, and size required by LTD’s extensive winning bids.” Originally, the FCC planned to award LTD Broadband $1.3 billion to expand high-speed internet access in 15 states.