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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  1. 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,, 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.

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