Starlink loses out on $886 million in rural broadband subsidies

The FCC announced today that it won’t award Elon Musk’s Starlink an $886 million subsidy from the Universal Service Fund for expanding broadband service in rural areas. The money would have come from the Rural Digital Opportunity Fund program (RDOF), but the FCC writes that Starlink wasn’t able to “demonstrate that it could deliver the promised service” and that giving the subsidy to it wouldn’t be “the best use of limited Universal Service Fund dollars.”

That was the same reason the FCC gave when it rejected Starlink’s bid last year, which led to this appeal. SpaceX had previously won the bidding to roll out 100Mbps download and 20Mbps upload “low-latency internet to 642,925 locations in 35 states,” funded by the RDOF.

“The FCC is tasked with ensuring consumers everywhere have access to high-speed broadband that is reliable and affordable,” FCC Chairwoman Jessica Rosenworcel said. “This applicant had failed to meet its burden to be entitled to nearly $900 million in universal service funds for almost a decade.” FCC commissioner Brendan Carr dissented, writing that “the FCC did not require — and has never required — any other award winner to show that it met its service obligation years ahead of time.”

President Biden has promised more equitable internet access since taking office. But his funding plan was slashed by the time it became law, with the final version offering no money for locally-run internet service.

Christopher Cardaci, head of legal at SpaceX, writes in a letter to the FCC that “Starlink is arguably the only viable option to immediately connect many of the Americans who live and work in the rural and remote areas of the country where high-speed, low-latency internet has been unreliable, unaffordable, or completely unavailable, the very people RDOF was supposed to connect.”