FCC denies SpaceX nearly $900M in internet service funding

The Federal Communications Commission rejected SpaceX’s application for nearly $900 million in federal funding to build out its satellite internet service, determining it could not deliver the service the funding program requires.

Why it matters: Rejecting SpaceX’s current bid means it will be even longer before a subsidized service could bring more broadband access to rural areas.

Driving the news: In its decision, announced Wednesday, the FCC pointed to Ookla broadband speed data from July 31, 2022 showing Starlink’s speeds have been declining, with upload speeds falling “well below 20 Mbps.”

  • Starlink initially applied for more than $885 million to provide 100/20 Mbps service to locations in 35 states.
  • SpaceX’s was one of the biggest initial winners in the FCC’s 2020 funding program. The FCC has been reviewing the winners of the 2020 funding program, and rejected SpaceX’s application for that funding.
  • “Starlink’s technology has real promise,” FCC Chairwoman Jessica Rosenworcel said in a statement. “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.”

The big picture: The Rural Digital Opportunity Fund, or RDOF, has faced criticism over whether the service providers set to receive the funding can actually deliver on the promised service.

  • The FCC on Wednesday also said the biggest winner — fixed wireless provider LTD Broadband, which was initially set to receive $1.3 billion — could not reasonably be expected to actually build the expansive service it promised.
  • “We cannot afford to subsidize ventures that are not delivering the promised speeds or are not likely to meet program requirements,” Rosenworcel said.

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