Final FCC Denies $885M Starlink Subsidy Request

The FCC explained that this first application was a high-level, short one, and that those qualifying for that would receive closer scrutiny. (In fact the FCC had considered not even letting orbital communications companies apply, but decided to allow them to compete on their merits.) This was in addition to “numerous financial and technical deficiencies” the agency identified in the proposal and the company’s operations. It even leaned on the promise of SpaceX’s super-heavy launch vehicle Starship as evidence for these claims. As the FCC points out, though:A the time of the Bureau’s decision, Starship had not yet been launched.

The Federal Communications Commission (FCC) has firmly rejected Starlink’s proposal to receive $885 million in public funds to expand its orbital communications infrastructure in underserved parts of rural America. The FCC maintained that the company did not provide sufficient evidence to prove that it could deliver on its promise to provide reliable and accessible service to these areas.

The $885 million was originally set aside for Starlink in 2020 as part of the Rural Digital Opportunity Fund (RDOF), a program aimed at subsidizing internet service in regions where it is considered too expensive or difficult for private companies to provide. Starlink won the funding for its bid on the amount of connectivity it could provide, the cost, and the regions it intended to serve.

However, the FCC found that Starlink’s initial application was lacking in detail and scrutinized it more closely. In fact, one organization that was awarded over a billion dollars was found to be a regional operation that would not be able to expand as it had hoped.

In Starlink’s case, the FCC determined that although its proposed satellite internet service showed potential, it was still an emerging technology. Moreover, the required equipment, including a dish that cost $600 at the time, could be a significant barrier for individuals without much disposable income, which is the targeted demographic for this funding. The FCC had initially considered not allowing orbital communication companies to apply for this funding but later decided to allow them to compete based on their merits.

The FCC also found “numerous financial and technical deficiencies” in Starlink’s proposal and its operations. This does not discount the fact that it is a well-managed company with a quality service, but it raised serious questions regarding its suitability for this particular auction and award.

After reviewing all of the information submitted by Starlink, the Bureau ultimately concluded that Starlink had not shown that it was reasonably capable of fulfilling RDOF’s requirements to deploy a network of the scope, scale, and size required to serve the 642,925 model locations in 35 states for which it was the winning bidder.

Starlink exercised its right to request a review of this decision, arguing that it was held to an “inappropriately onerous standard.” In their appeal, the company claimed that it had a plan to launch more satellites and could expand its network as promised. It even mentioned SpaceX’s Starship, a powerful launch vehicle, as evidence to support their claims.

However, the FCC pointed out that at the time of the decision, Starship had not yet been launched, and to this day, all of its attempted launches have failed. The FCC took this into account when making predictions about Starlink’s ability to meet its RDOF obligations.

In a footnote, it was noted that it was only after the decision was made that SpaceX announced it would not be using Starship for the second generation of Starlink satellites.

While acknowledging the merit of Starlink’s approach, the FCC was not entirely confident that it was the best use of nearly a billion dollars. They suggested that it might be considered in future funds instead.

Both Republican FCC commissioners, Brendan Carr and Nathan Simington, dissented from this decision. Simington pointed out that “many RDOF recipients deployed no service at any speed to any location at all,” while Starlink was already serving half a million subscribers, including areas with no other readily available broadband options. He dismissed concerns over launch problems as “motivated reasoning” from the Bureau.

Carr, on the other hand, attributed this decision to politics and President Biden’s “regulatory harassment” towards Elon Musk, who had recently acquired and used Twitter to voice his political and ideological views. However, this decision was made well before Musk’s acquisition and subsequent fall from grace, and the FCC is only reaffirming their reasoning today.

Ultimately, the FCC erred on the side of caution in making this decision, considering the significant amount of funding involved. The money will now go to other applicants and programs.

Although Starlink did not actually receive this funding, the loss of potential income is still a significant blow. However, the company likely knew that their appeal was a long shot and had not been counting on this money for quite some time.

Additionally, despite not being profitable, Starlink has recently reached “breakeven cash flow,” according to CEO Elon Musk. While their revenue has increased drastically, it has been costly to build and launch the necessary satellites to accommodate their growing customer base. The company may have fallen behind its initial projections of being in the billions in profit by now, but it has undoubtedly demonstrated its capabilities in both domestic and military applications.

Perhaps Starlink does not necessarily need that $885 million after all since the Pentagon’s funding is just as valuable.

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Kira Kim

Kira Kim is a science journalist with a background in biology and a passion for environmental issues. She is known for her clear and concise writing, as well as her ability to bring complex scientific concepts to life for a general audience.

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