The Federal Communications Commission (FCC) last week rejected a previously awarded $866 million bid for subsidies by Starlink, a subsidiary of Elon Musk’s SpaceX, to deliver broadband through the Rural Digital Opportunity Fund (RDOF). The FCC move indicates that the government broadband funding may not be available to satellite operators.
The RDOF, which allocated a total $9.2 billion in Phase 1 of the program to expand broadband to more than 10 million rural Americans, requires providers to offer a minimum of 100 megabits per second (Mbps) download and 20 Mbps upload, but “[data from speed test company Ookla] reported as of July 31, 2022, indicate that Starlink’s speeds have been declining from the last quarter of 2021 to the second quarter of 2022, including upload speeds that are falling well below 20 Mbps,” the FCC noted in its decision.
To complete its constellation, Starlink must conduct multiple launches in a regular cadence, Greg Guice, director of government affairs at the nonprofit Public Knowledge, told Connectivity Business News. “Keeping up with that demand might have given some pause to FCC.
“There’s a desire to have the FCC and NTIA [National Telecommunications and Information Administration] programs link up,” Guice added.
Both the FCC and NTIA, a division of the U.S. Department of Commerce, fund programs for rural broadband — if each has different definition of broadband, that could have the government programs working at cross purposes.
The NTIA is managing nearly $50 billion in government funding for broadband over several programs, the largest of which is the $42.5 billion Broadband Equity, Access, and Deployment (BEAD) program. The NTIA in May ruled that “locations served exclusively by satellite … do not meet the criteria for Reliable Broadband Service and so will be considered “unserved” in the BEAD Notice of Funding Opportunity (NOFO).
Post-auction due diligence
While it is unusual for a government agency to conduct due diligence after declaring a broadband winner, “the process worked,” Derek Turner, senior advisor for economic and policy analysis at the nonprofit Free Press, told Connectivity Business News. The nonprofit last year warned in public comments that Starlink had provisionally won RDOF funding to build service to areas such as Miami Airport, which has no residents and is not rural.
States will play a key role in the BEAD program and are waiting on the FCC to complete its broadband maps, Turner noted. “We hope that states build in due diligence in the front end,” he said.
Satellite’s broadband advantage may work against it
Satellite services are available to all homes within sight of the satellites — a cost advantage for broadband users in areas where deployment is most expensive.
But satellite’s cost advantage also suggests that satellite companies don’t need government funding, Turner said. Government funding exists to enable terrestrial providers to earn the rate of return they need in order to deploy to remote areas, he explained, and satellite providers already offer service to those areas.
The Satellite Industry Association declined a request from Connectivity Business News to comment, saying it does not make statements on issues affecting individual members. Satellite broadband provider Hughes Network Systems, which has a small $1.3 million RDOF award pending, also declined to comment for this story.
Broadband communities
The government’s broadband subsidy programs are designed to build broadband networks for entire communities across the U.S., Gary Bolton, president and chief executive at advocacy group Fiber Broadband Association, told Connectivity Business News. Fiber enables jobs, work from home, home school, remote health care, economic development and the local provision of high-speed wireless, he said.
But former FCC Commissioner Jonathan Adelstein, now head of global public policy and development at infrastructure investor DigitalBridge (NYSE:DBRG), said Tuesday during a panel at the Technology Policy Institute’s Aspen Forum that he’s worried the government is investing solely in one technology, particularly given supply chain problems.
