FCC Decides Against Giving Starlink $1b In Rural Broadband Subsidies

The US Federal Communications Commission (FCC) has decided it won't give Starlink nearly a billion dollars in rural broadband subsidies after all.

The reversal has already drawn criticism from some corners, including from inside the FCC, for failing those without internet access.

In an official notice, the FCC said it rejected long-form applications by Starlink and another internet service provider, LTD Broadband, to receive support through the Rural Digital Opportunity Fund, a program designed to help boost internet availability in poorly served areas of the US.

The FCC said the two companies had failed to demonstrate that they would be able to deliver their promised services, and therefore funding those networks "would not be the best use of limited Universal Service Fund dollars to bring broadband to unserved areas across the United State."

Both Starlink and LTD Broadband were among the bidders who in 2020 were tentatively awarded a slice of the $20.4 billion that the Rural Digital Opportunity Fund has to distribute over 10 years to bring internet access to millions of homes and small businesses in rural America.

Starlink, which is a satellite broadband service operated by Elon Musk's SpaceX, was awarded $885.5 million in the December 2020 auction, while LTD Broadband won $1.32 billion for its fixed wireless service, delivered from a network of towers akin to a cellular mobile service.

Now that offer of taxpayer cash has been withdrawn by the FCC.

FCC chair Jessica Rosenworcel acknowledged that Starlink's service in particular had merit, but said it would not be appropriate to use public funds for technology that was still effectively being developed.

"Starlink's technology has real promise," she 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."

For LTD Broadband, it may be a case of being overambitious. Although only a relatively small outfit, it submitted and won bids in 15 states, leading to it becoming the largest winning bidder overall.

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However, it subsequently failed to receive eligible telecommunications carrier status in seven states, rendering it ineligible for support there, according to the FCC, so the review concluded that LTD Broadband was not capable of deploying a network of the scope, scale, and size required to fulfill all its winning bids.

"After careful legal, technical, and policy review, we are rejecting these applications," said Rosenworcel, adding: "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."

The decision has inevitably drawn criticism already, even from within the FCC itself.

In a statement, Commissioner Brendan Carr stated his surprise at finding out "via a press release while I am on a work trip to remote parts of Alaska" that the FCC had come to this decision, saying it should be making it easier for poorly served communities to get service, "not rejecting a proven satellite technology that is delivering robust, high-speed service today."

"To be clear, this is a decision that tells families in states 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 concluded.

We asked Starlink for its response to the decision, and a spokesperson for the company was not immediately available. ®