FCC Nixes SpaceX Bid for $866 Million in Broadband Payouts

The Federal Communications Commission (FCC) has rejected SpaceX’s bid for $866M in subsidies to roll out Starlink in the rural US, according to a press release issued yesterday.  

“Consumers deserve reliable and affordable high-speed broadband,” FCC Chairwoman Jessica Rosenworcel said in a statement. “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. We cannot afford to subsidize ventures that are not delivering the promised speeds or are not likely to meet program requirements.”

Ouchies. The would-be subsidies are part of a larger $20.4B pot aimed at reducing the digital divide. This program, formally known as the Rural Digital Opportunity Fund (RDOF), provides payouts to broadband providers (terrestrial- or satellite-based) to provide coverage in rural, underserved pockets of the US. 

  • Rosenworcel notes that while Starlink “has real promise,” the satellite internet provider is “still developing technology for consumer broadband.” 
  • In the decision, the FCC noted that despite SpaceX’s initial application to provide 100 download/20 upload Mbps service, Starlink’s upload speeds have been on the decline and are now “well below 20 Mbps.”
  • The decision also impacted another company, LTD Broadband, which was awarded $1.3B under Phase 1.  

The background: In December 2020, the FCC awarded SpaceX the $866M as part of the RDOF’s $9.2B Phase 1 auction for Starlink to provide internet service to some ~650,000 locations in 35 states. There are strings attached and performance criteria. In February, the FCC said it would double the number of audits and on-site verification visits it conducts in 2022, after claims of lax oversight and misallocated funds.

You win some, you lose some: SpaceX recently rolled out Starlink internet service for boats, planes, trucks, and RVs, which the FCC authorized in June. Overall, the company has launched 2,900+ Starlink satellites. It’s closing in on 500,000 subscribers (or may have already passed that). However, the company has received mixed reviews on service quality from consumers as Starlink onboards tens of thousands of new users monthly and its network gets more congested.  

Looking forward: SpaceX will likely bid in later RDOF auctions, but this rejection could mean that rural customers will have to wait even longer for subsidized broadband access.