FCC shoots down nearly $1B in Starlink subsidies

Rafi Schwartz, The Week US
Fri, December 15, 2023

Starlink hardware.

For the second time in as many years, the U.S. Federal Communications Commission has rejected an effort by Elon Musk's Starlink internet service provider company to receive nearly $1 billion in government subsidies to expand rural broadband service. The decision, announced this week by the independent government agency tasked with regulating much of the country's media and broadcast infrastructure, reaffirms a 2022 rejection of Starlink's application for over $885 million from the Rural Digital Opportunity Fund program — a more than $20 billion initiative designed to bring high-speed internet to far-flung communities across the country.

Explaining that the agency has a "responsibility to be a good steward of limited public funds," FCC Chairwoman Jessica Rosenworcel justified this week's rejection, claiming that "careful legal, technical and policy review" had determined Musk's Starlink company had ultimately "failed to meet its burden" to receive the funding. The language echoed Rosenworcel's 2022 assertion that although Starlink "has real promise," it was ultimately a "still developing technology for consumer broadband." Among the FCC's concerns was the "uncertain nature" of Starlink parent company SpaceX's Starship rockets, which have yet to achieve stable orbit.

The decision not to grant Starlink the federal subsidies was not, however, unanimous, with the FCC board's Republican members dissenting. The rejection fits the "Biden administration’s pattern of regulatory harassment" against Musk and his businesses, Senior Republican Commissioner Brendan Carr wrote, claiming that the White House is "choosing to prioritize its political and ideological goals at the expense of connecting Americans."

'Dissolve the program and return funds to taxpayers'

Reaction to the FCC's decision from Musk and his associates was predictably swift and severe, with SpaceX legal chief Christopher Cardaci writing he was "deeply disappointed and perplexed" by the rejection in a letter to the commission obtained by The Verge. Musk himself weighed in on X, formerly Twitter, claiming that Starlink was the "only company actually solving rural broadband at scale!" Without offering specifics, Musk also insisted "they should arguably dissolve the program and return funds to taxpayers, but definitely not send it those who aren't getting the job done." Musk has previously "acknowledged Starlink's capacity limits several times," Ars Technica noted.

Musk's mother, Maye — who often intervenes on her adult son's behalf — also joined the fray, asking President Biden if he has "any idea how furious I am?" and insisting that "people in other countries are proud of Elon."

The FCC had "invoked dubious grounds" to reject Starlink's application, according to The Wall Street Journal's editorial board, which not only agreed with Commissioner Carr's suggestion of political bias against Musk, but raised the prospect of broader industry interference, as well. In rejecting Starlink, the FCC's Democrats may be "doing the bidding of the Communications Workers of America, which represents workers at traditional broadband providers" and whose unionized members would be largely excluded from a Starlink project.

'Experimental special temporary authorization'

Critics of Starlink's rural broadband proposal have long accused the company of wasteful misdirection, by "bidding for the right to serve a large number of very urban areas that the FCC’s broken system deemed eligible for awards," media advocacy group Free Press reported in 2020, at the onset of the project's application process, in which Starlink was initially approved for the subsidies. In particular, the group noted, many of the sites used by Musk in the application were "urban airports, parking lots and dog parks" in densely populated cities.

Other concerns center on the cost to consumers, with TechDirt's Karl Bode pointing out that "Starlink requires a $600 up front equipment fee and costs $110 a month" even as "data consistently shows that affordability is a key obstacle to broadband adoption."

While Starlink's rural broadband subsidy may no longer be a reality, the FCC this week nevertheless went out of its way to approve another of the ISP's proposals, granting SpaceX special dispensation to test its burgeoning cellular data program across the United States. As first reported by PC News, the FCC on Thursday "issued the company an 'experimental special temporary authorization to conduct" a massive test of its ability to use "840 satellites — each one acting as orbiting cell tower— to beam the connectivity to 2,000 test devices on the ground" across more than two dozen locations.