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FCC Shoots Down SpaceX Bid For $866 Million In Broadband Payouts

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The Federal Communications Commission has rejected SpaceX’s bid for $866 million in grants to roll out Starlink in the U.S. nationwide, according to a press release issued Thursday.

“Consumers deserve reliable and affordable high-speed broadband,” FCC Chair Jessica Rosenworcel said in a statement. “We need to make the best use of scarce universal service dollars as we move into a digital future that requires increasingly powerful and faster networks. We cannot afford to subsidize companies that fail to achieve promised speeds or are unlikely to meet program requirements.”

The potential grants are part of a larger $20.4 billion pot aimed at narrowing 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 parts 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 request to provide a 100 download/20 Mbps service, Starlink’s upload speeds have declined and are now “well below 20 Mbps.”
  • The decision also affected another company, LTD Broadband, which had received $1.3 billion from the RDOF.

The background

In December 2020, the FCC awarded SpaceX the $866 million as part of the RDOF’s $9.2 billion Phase 1 auction for Starlink to provide Internet service to approximately 650,000 locations in 35 states. There are obligations attached to it and performance criteria. In February, the FCC said it would double the number of on-site audits and verification visits by 2022, following claims of lax oversight and misallocation of funds.

You gain what you lose what

SpaceX recently rolled out Starlink internet service for Boats, airplanes, trucks and RVs, which the FCC approved in June. In total, the company has launched 2,900+ Starlink satellites. It’s approaching (or may have already passed) 500,000 subscribers. However, the company has received mixed reviews on consumer service quality as Starlink brings onboard tens of thousands of new users every month and the network becomes increasingly congested.

Look forward to something

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

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