Space X Gets $886 Million From FCC To Put Very Small Dent In U.S. Broadband Gaps

from the baby-steps dept

For a country that likes to talk about "being number one" a lot, that's sure not reflected in the United States' broadband networks, or the broadband maps we use to determine which areas lack adequate broadband or competition (resulting in high prices and poor service). While the U.S. government doesn't genuinely know who has broadband and who doesn't (in part thanks to telecom lobbyists who have fought more accurate mapping to obfuscate monopolization) the best estimates we do have aren't pretty.

An estimated 42 million Americans (double FCC claims) still don't have any broadband whatsoever, despite 30 years of industry subsidization. Another 83 million Americans live under a broadband monopoly, usually Comcast. Tens of millions more Americans live under a duopoly where their only choice is again either Comcast, or some regional phone company that can't be bothered to upgrade its aging DSL lines because it's not profitable enough, quickly enough for Wall Street's liking.

Enter Space X's Starlink, which is promising to cover the night sky in a constellation of low orbit satellites capable of delivering fairly decent broadband, pretty much anywhere. Early beta impressions have been promising, delivering speeds upwards of 100 Mbps for $100 per month (plus a $500 up front hardware fee). It's very promising tech, if you ignore the night sky pollution the technology creates (which Musk promised wouldn't occur) that's hampering scientists and researchers.

It's promising enough that the FCC this week doled out $886 million in subsidies from the agency's Rural Digital Opportunity Fund (RDOF), to deliver broadband to 642,925 rural homes and businesses in 35 states. It's part of a total $9.2 billion in new funding being thrown at an industry that doesn't have a particularly good track record on actually spending this kind of money responsibly. It's not entirely clear why Musk's wealthy business empire needed the extra taxpayer help, or what Starlink exactly intends to do with the money (since it didn't want to tell the press):

"FCC funding can be used in different ways depending on the type of broadband service. Cable companies like Charter and other wireline providers generally use the money to expand their networks into new areas that don't already have broadband. But with Starlink, SpaceX could theoretically provide service to all of rural America once it has launched enough satellites, even without FCC funding.

One possibility is that SpaceX could use the FCC money to lower prices in the 642,925 funded locations, but the FCC announcement didn't say whether that's what SpaceX will do. We asked SpaceX and the FCC for more details and will update this article if we get any answers."

Consumer groups have looked at the Starlink bid more closely and have found that Musk's company exploited a very broken FCC bidding system to obtain money for projects in many urban, affluent areas that don't actually make a lot of sense for a fund designed to help shore up access to low-income and rural communities:

"By bidding for subsidies assigned to dense urban areas, Musk's firm and others were able to get potentially hundreds of millions in subsidies meant for people and businesses in rural areas that would never see broadband deployment without the government's help."

Again, a company run by one of the wealthiest men on the planet exploited a broken FCC system to get taxpayer/ratepayer money that could have gone to actual areas in need. Instead, the company got nearly a billion by promising to service a handful of properties near airports and luxury golf courses it never intended to target anyway. Kind of ironic for a guy who has recently been whining about moving to Texas for (at least in part) unfair taxation reasons.

To be clear, Starlink will be damn near revolutionary for Americans stuck without any service at all. It will also be a huge step up for users stuck on older, expensive, slow, and capped traditional satellite systems. But those expecting Starlink to be a nationwide game changer will likely be disappointed. The $600 first month cost is too steep for the countless Americans who don't have broadband because it's too heavily monopolized and therefore expensive. Musk himself has also made it clear the service simply won't have the capacity to offer service in parts of the U.S. with any significant population density.

In other words: it's not going to seriously challenge the real reason U.S. broadband is so insufferably mediocre and expensive: the regional monopolies enjoyed by telecom giants, and the ocean of folks they pay to keep it that way.

While an improvement over traditional satellite, Starlink also isn't a serious replacement for fiber. It's still not clear what kind of odd, post-net neutrality network management and throttling practices the company will engage in once its networks are fully loaded. If America could be bothered to actually do a serious audit of the state and federal subsidies given the telecom industry over the last 30 years, you'd find taxpayers likely already paid for fiber to every home in America several times over. Instead, those billions went toward a rotating selection of routinely half completed networks and a whole lot of fraud.

That's not to say subsidization doesn't have its role and very clear benefits in shoring up access when done right. But as we keep pointing out, more subsidies can't fix regulatory capture. They can't fix a Congress in bed with telecom lobbyists. They can't fix U.S. broadband policy that has, for twenty years now, basically been dictated by the biggest and most powerful sector monopolies. So while it's absolutely good that Starlink is taking steps to shore up access, those expecting a total sector revolution at the hands of Elon Musk probably shouldn't hold their breath.

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Filed Under: broadband, competition, fcc, rdof, rural digital opportunity fund, satellite
Companies: spacex, starlink


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  • icon
    Michael Gantz (profile), 15 Dec 2020 @ 6:58am

    Starlink is an awesome solution.

    Let me explain. The Comcast physical cable is across the road from me. Seems simple to just call them up and order Internet service. Well because of some odd flukes of the infrastructure: terrain, services not actually located in the easements, power equipment on wrong side of poles, etc, Comcast wants to charge me $20,000 plus to setup service. LOL, yeah right. I'm sorry but their product is no way worth that kind of cash.

    So when someone says "Hey, Starlink has high startup costs at $500!" I just laugh because $500 is a drop in the bucket. Heck, sign me up for two just in case one breaks.

    reply to this | link to this | view in chronology ]

    • icon
      PaulT (profile), 15 Dec 2020 @ 7:30am

      Re: Starlink is an awesome solution.

      Or.. you could have a competently regulated service where the tax dollars currently being funnelled into Starlink are instead used to provide access to your underserved area, and do so in a way that would allow others to use the same infrastructure (either other customers or other ISPs).

      Enjoy your scalping, I guess, I know which option I'd prefer.

      reply to this | link to this | view in chronology ]

      • icon
        Michael Gantz (profile), 15 Dec 2020 @ 7:35am

        Re: Re: Starlink is an awesome solution.

        I'll be able to order and use Starlink sometime in the near future. If I wait for your solution I'll probably never get broadband.

        reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 15 Dec 2020 @ 8:33am

        Re: Re: Starlink is an awesome solution.

        Paul, get outta here with that crazy talk. Here in the U$, we have these vicious creatures called ‘Lobbyists’, and our elected/selected officials absolutely LOVE them...even without lube.

        reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 15 Dec 2020 @ 8:44am

        Re: Re: Starlink is an awesome solution.

        Paul is talking theory, Micheal is talking practice. Paul's solution will likely never happen. Michael's solution will be here in a few months to a year or so. Paul's solution will apply to some US locations. Michael's solution will actually apply to most people on Earth, local government willing. Paul's solution will require tax dollars forever, and many more than Michael's solution.

        Right now, in this economy and political environment, Paul seems to be whistling in the dark. If he were to argue that SpaceX is going to do it anyway and the tax subsidies should be scrapped for everyone, I'd be right there with him (not that I'd expect him to succeed), but arguing for a purely theoretical (in practice) and almost certainly more costly solution isn't going to get my vote.

        reply to this | link to this | view in chronology ]

        • icon
          Bluegrass Geek (profile), 15 Dec 2020 @ 11:54am

          Re: Re: Re: Starlink is an awesome solution.

          Michael's solution only helps Michael. He can afford the $600 for the equipment and service. That's not a solution to the problem of fixing rural broadband, just a solution for Michael.

          reply to this | link to this | view in chronology ]

          • identicon
            Anonymous Coward, 15 Dec 2020 @ 12:44pm

            Re: Re: Re: Re: Starlink is an awesome solution.

            It's a solution for a significant number of people (including at least some indigenous North Americans on reserves, not noted for their general wealth. Saying it's just a solution for Michael and meaning it literally is, bluntly, a lie.

            The only alternative being discussed at the moment is Paul's, which is more a fantasy than a solution, in that it simply isn't going to happen. By all means work for more honest regulation of telecoms, but don't propose that as a realistic solution for any current problem, because it isn't going to happen, not this year, not this decade, heck probably not this generation.

            Not saying that the current corruption is good or right, just that it is and it isn't going to go away any time soon.

            reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 15 Dec 2020 @ 7:30am

    This is the second article where you question why Starlink needs subsidies to do what it was doing anyway. The answer is clear, because if the government denied subsidies under the current laws they would be sued and lose. “They don’t need it” is not a relevant argument here. Complain about the subsidies in general sure or the definitions that result in parking lots getting subsidies service, but why continuously single out the player who is most likely to actually deliver what they are promising?

    reply to this | link to this | view in chronology ]

  • This comment has been flagged by the community. Click here to show it
    icon
    spsattestation (profile), 15 Dec 2020 @ 7:47am

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  • identicon
    Anonymous Coward, 15 Dec 2020 @ 7:50am

    On the plus side...

    There are at least two isolated native communities that are benefiting from Starlink (the Hoh tribe in Washington state and the Pikangikum First Nation in northwest Ontario, Canada), and I've seen comments recorded from both saying the cost is well worth the service, even with the startup cost. Native reserves tend to be the poorest of the poor in both nations. $600 canadian is a lot of money, but Starlink is much better value than a 6 hour road trip (one way) likely with two nights that would in hotels/motels that would otherwise be reqruied for a medical consultation (or a court appearance).

    I am hoping that this money will be used to reduce the cost of the antennae that Starlink requires (or maybe even better, fully subsidize them for the most needy and deserving who wouldn't otherwise be able to afford the startup costs).

    Also remember that this was a reverse auction, so it is highly possible that SpaceX participation saved the tax payer money (by undercutting competitive bids) that would likely have been used to fail to build network extensions if the traditional companies had got their hands on it.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 15 Dec 2020 @ 8:27am

    It's not entirely clear why Musk's wealthy business empire needed the extra taxpayer help, or what Starlink exactly intends to do with the money

    Starlink needs base stations that meet two requirements, visible to the satellites that serve their target areas and with available fibre for the backhaul. Such base stations can use better antenna arrays that customer stations, and so may be placed on the edge, or outside a targetted service area. I suspect that they need 100 plus base station to serve the contiguous states.

    Those base station can only be placed where the backhaul exists, or can be built out easily. If and when satellite to satellite relay is implemented, it becomes easier to place those base stations where the fibre infrastructure exists. In general those base station will be built near the edges of the areas that lack a good broadband infrastructure, but with the intent of serving them.

    reply to this | link to this | view in chronology ]

  • This comment has been flagged by the community. Click here to show it
    identicon
    Faber Schnidejoch, 15 Dec 2020 @ 10:21am

    I said this wouldn't happen. -- But subsidized over $1827 per!?

    That figger is using the highest POSSIBLE, NOT the current handful: 886,000,000 / 485,000 = 1,826.8

    From prior piece: "Starlink lobbies the FCC for up to $16 billion in subsidies"!!! -- That'd be $32,990 EACH subscriber!

    OKAY, I admit that my statement was premised in the 20th Century. Forgot that we no longer have a "capitalist" system.

    This must be why Techdirt believes that "public-private partnerships" are GOOD. It's direct tap into huge "income stream"! Federal subsidies of $1827 PER subscriber! -- It's beyond "socialism" to blatantly criminal so that even the minion hedges.

    reply to this | link to this | view in chronology ]

  • This comment has been flagged by the community. Click here to show it
    identicon
    Faber Schnidejoch, 15 Dec 2020 @ 10:22am

    WHO IS THIS MUSK GUY? -- I know background is verboten here.

    SO WHERE THE HELL DOES ELON MUSK GET ENOUGH PULL FOR $886 MILLION? -- That's on top of at least 5 BILLION for electric cars AND whatever contracts on rockets!

    Musk's only known credential is that he had over $100 million to buy into Paypal early. He did not design or build Paypal, ONLY had money from his father, whom he stated is "the most evil person in the world". He clearly is no rocket scientist, because thinks it's easily possible to get a human to Mars. He isn't actually technical, just hires experts. Musk is not an entrepreneur, but more of a Federal Technical Director in the neo-fascist system.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 15 Dec 2020 @ 1:05pm

      Re: WHO IS THIS MUSK GUY? -- I know background is verboten here.

      Well, I've seen some spiteful, hate-filled nonsense spewed around here, but usually only by right-wing trolls. This one takes the cake.

      Musk founded a software company called zip2, which he sold to Compaq for over $300 million, before his next company, X.com, merged with pay-pal. Last I checked, $300 million was more than $100 million, but hey, what do I know? I only have a math degree.

      Second, while he has said that he thinks the radiation problem on a trip to Mars is easily solved, and plenty of people disagree with him, what the hell does that have to do with rocket science? He founded a rocket company, put virtually all his money into it and nearly lost it all when the first three Falcon 1 launch attempts failed. And you know who SpaceX's chief engineer is? On Elon Musk. He is the person who chose the material for the Spaceship. He is the person who insisted on designing for reusability from the get-go for the Falcon line of rockets. He is the person who makes the final engineering decision. He is almost certainly the only person in SpaceX's history without whom it would not have succeeded (if it had even been formed, which it wouldn't have been). Writing off his contributions as "just hires experts" belittles his very real contributions in a really stupid way.

      As for his pull, SpaceX won the contracts because it demonstrated unequivocally that it could meet the requirements and underbid its competitors. He raised $5 billion at Tesla because people and institutions want to buy Tesla stock. He wins the rocket contracts because SpaceX does the job and does it cheaper (and possibly better) than anyone else. SpaceX has competition and they all cost more for the same launch. In other words, his "pull" is doing the work better than others.

      Not that he is anywhere near perfect. He has said some really stupid and/or obnoxious things on twitter. His timekeeping leaves a lot to be desired (as in some project overrun estimates by literally years). His reaction to the coronavirus was almost as bad as his orangeness. But is it came down to a choice between you and him for the last parachute in a crashing plane, I would hesitate giving it to him for even a fraction of a second.

      reply to this | link to this | view in chronology ]

      • identicon
        Rocky, 15 Dec 2020 @ 2:07pm

        Re: Re: WHO IS THIS MUSK GUY? -- I know background is verboten h

        He has said some really stupid and/or obnoxious things on twitter.

        Everyone is an asshole to one degree or another on occasion, Musk is no exception. Then there are people like the troll you are replying to, to which being an asshole is their normal behavior.

        reply to this | link to this | view in chronology ]

    • identicon
      Rocky, 15 Dec 2020 @ 1:22pm

      Re: WHO IS THIS MUSK GUY? -- Uneducated troll is wondering

      SO WHERE THE HELL DOES ELON MUSK GET ENOUGH PULL FOR $886 MILLION? -- That's on top of at least 5 BILLION for electric cars AND whatever contracts on rockets!

      Seems you don't understand how the world works but it's very simple: He gets shit done.

      Musk's only known credential is that he had over $100 million to buy into Paypal early.

      No. He had $22 million from the sale of Zip2 which he founded, and he used $10 million of that to fund X.com which later merged with Confinity who had a service called PayPal.

      He did not design or build Paypal, ONLY had money from his father, whom he stated is "the most evil person in the world".

      No, he didn't get any money from his father - that's just the typical random garbage spawned on the internet by jealous knuckledraggers.

      He clearly is no rocket scientist, because thinks it's easily possible to get a human to Mars. He isn't actually technical, just hires experts.

      Well, in comparison to you he's actually eminently more qualified to have an opinion on space travel and the possibility to get a human to Mars, especially since he actually have an education (Bachelor degrees in physics and economics) and a proven track-record. He is also smart enough to know that you need to hire experts. The only notable things you done is to repeatedly lie, have a hate-boner for educated people, being banned from numerous forums and promote communism.

      Musk is not an entrepreneur, but more of a Federal Technical Director in the neo-fascist system.

      Well, facts speak for themselves - but you aren't interested in facts and I get why you don't like him, he's successful and have an education - which are things you really hate because it reminds you of your own inadequacy.

      reply to this | link to this | view in chronology ]

  • icon
    ECA (profile), 15 Dec 2020 @ 1:23pm

    They have already

    Estimated the Coverage of the sky with over 40,000? low earth sats.

    Dont think you will be able to get a SOLID line of sight for awhile.
    And I get 300mbps from my Hardline to cable, at $60.

    reply to this | link to this | view in chronology ]


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