The Federal Communications Commission (FCC) has taken action Final rejection of Starlink’s $885 million request in public funds to expand orbital communications infrastructure to cover parts of rural America, saying the company “has failed to demonstrate its ability to deliver the promised service.”
As previously reported, the money in question was part of the Rural Digital Opportunity Fund, a multibillion-dollar program to support the launch of Internet service in places where private companies previously decided it was too expensive or remote to do so. Starlink was first allocated $885 million in 2020, matching the company’s pitch for how much connectivity it could provide, at what cost and to which regions.
The FCC explained that this first application was high-level and short, and that those eligible would be subject to careful scrutiny. For example, one organization that was allocated more than $1 billion in funds turned out to be a regional operation that could not expand the way it had hoped.
In the case of Starlink, it was determined last summer that although the satellite internet proposal was promising, it was a “technology still in development” and required the user to purchase a dish, priced at $600. Not many people would pay that much for a year of internet, so this is a serious consideration given the target demographic of people who lack resources. (In fact, the FCC considered not allowing orbital carriers to apply, but decided to let them compete on their merits.)
This is in addition to “numerous financial and technical deficiencies” identified by the agency in the bid and the company’s operations. That’s not to say it’s not a well-run company that provides good service to some, but for the purposes of this auction and prize, there were serious questions:
After reviewing all of the information provided by Starlink, the Office ultimately concluded that Starlink had not demonstrated that it was reasonably capable of meeting the RDOF’s requirements to deploy a network of the scale and size required to serve 642,925 typical locations in 35 states. Who was the winning bidder?
Starlink asked for the decision to be reconsidered, as is their right in this case, alleging, among other things, that it was held to an “inappropriately burdensome standard.” (Apparently, the relevant sections have been revised in the latest to request) that although short-term tests showed a drop in speeds and other metrics, the company has a plan to launch more satellites and will be able to grow the network as it claims. It even relied on the promise of SpaceX’s superheavy Starship launch vehicle as evidence for these claims.
As the FCC notes:
At the time of the office’s decision, the spacecraft had not yet been launched. In fact, even as of today [i.e. over a year later], The spacecraft has not been successfully launched yet; All launch attempts failed. Based on Starlink’s previous assertions about its plans to launch its second generation satellites via Starship, and information that was available at the time, [Wireline Competition] The Bureau necessarily considered Starlink’s continued inability to successfully launch the Starship rocket when making a predictive judgment about its ability to meet its RDOF obligations.
It was noted in a footnote that it was only after issuing the rejection that SpaceX announced that it would not be using Starship after all for the second generation of Starlink satellites.
Essentially, although they saw the merits of this approach, they could not be 100% sure that this was the best use of the better part of a billion dollars. Maybe in the next box.
The FCC’s Republican commissioners, Brendan Carr and Nathan Symington, objected to the decision. Simington perhaps rightly points out that “many RDOF recipients never deployed any service at any speed in any location at all,” while Starlink was serving half a million subscribers at the time of the denial, many of them in areas not served by other broadband options. He dismisses the launch problems as quibbles in the office’s “motivated reasoning.”
Carr, for his part, calls it politics: “After Elon Musk took over Twitter and used it to express his political and ideological views without any filter, President Biden gave federal agencies the green light to go after him…Elon Musk became the ‘enemy of the progressives.’” No. 1.’ Today’s decision certainly fits the Biden administration’s pattern of regulatory harassment.
Of course, Starlink’s denial occurred long before this acquisition and Elon Musk’s subsequent fall from grace (what did he have), and the FCC is simply confirming the reasoning here today, not issuing a new one. This is completely factually incorrect.
Both men display a belief in Starlink that may or may not be misplaced. But with $885 million at stake, the FCC’s decision to err, if it did, on the side of caution, makes sense. Funding will go to other applicants and programs.
Although this money was not actually awarded to Starlink, the loss of income (or however this award is categorized financially) is not easy to bear. However, she likely knew that her appeal of the decision was far-fetched and did not rely on these funds for long.
Although the company is not profitable, it recently reached “break-even cash flow,” if its CEO Elon Musk is to be believed. Sure, its revenues rose dramatically (from about $222 million to $1.4 billion), but that came at a significant operational cost as the satellites needed to serve thousands of new customers were built and launched. It lags behind its own predictions from a few years ago that it would now lose billions, but at least it has demonstrated its capabilities convincingly both domestically and in war.
You probably don’t need $885 million anyway, the Pentagon’s money is just as green.