FCC Denies SpaceX $885 Million in Subsidies for Rural Starlink Expansion

The Federal Communications Commission (FCC) has announced that Elon Musk’s SpaceX will not get the $885.5 million subsidy it was previously granted for Starlink internet services. The money was part of the broader $9.2 billion Rural Digital Opportunity Fund and was intended to beef up connectivity in underserved rural areas of the US. However, FCC chair Jessica Rosenworcel doesn’t think the agency should “publicly subsidize its still developing technology,” which requires a $600 satellite dish.

SpaceX was one of 180 companies vying for the funds during the 2020 bidding process, but only two have been dropped from the program. In addition to SpaceX, LTD Broadband has lost its $1.3 billion grant. This was just the first phase of the Rural Digital Opportunity Fund rollout, which will run through the early 2030s. It’s possible SpaceX will participate in future phases of the program, but it’s going to have to address some of its business practices first.

The FCC cited SpaceX’s fees as a primary reason for pulling the subsidy. At launch, SpaceX required all subscribers to pay $500 for the satellite dish that connects them to the Starlink megaconstellation. However, SpaceX raised that fee to $600 recently. The monthly fee for service also jumped from $99 to $110. The FCC thinks the limited universal service funds should go to less expensive connectivity options.

This announcement doesn’t come completely out of left field. Last year, the FCC warned SpaceX and other bidders that the subsidies could not be used to cover “parking lots and well-served urban environments.” SpaceX was allegedly set to use $111 million of the subsidy to expand in cities that already had plenty of internet access.

So far, SpaceX has deployed more than 2,000 Starlink satellites, making it the largest single satellite operator in the world. That’s all thanks to the company’s Falcon 9 rocket, which has a reliable, flight-tested propulsive landing system. Rather than discarding used rockets, SpaceX lands them on a drone ship for refurbishment and reuse. This has lowered the cost of launches considerably, and each one can haul 60 new Starlink nodes into orbit.

As the constellation expands, Starlink will be able to cover more areas. Perhaps when the network nears 12,000 currently approved satellites and includes the v2.0 hardware, it will be able to get a signal to the areas the FCC wants ISPs to focus on.

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