Annoyance Builds At Elon Musk Getting A Billion In Subsidies For Starlink Broadband

from the not-really-helping dept

So we've noted a few times how Elon Musk's Starlink is going to be a great thing for folks stuck out of reach of traditional broadband options. Though with a $600 first month price tag ($100 monthly bill and $500 hardware charge) it's not some magic bullet for curing the "digital divide." And without the capacity to service more densely populated areas, the service is only going to reach several million rural Americans. That's a good start, but it's only going to make a tiny dent for the 42 million Americans that lack access to any broadband, or the 83 million currently stuck under a broadband monopoly (usually Comcast). Starlink is going to be a good thing, but not transformative or truly disruptive to US telecom monopolies.

There are a few other issues with the tech as well. One is the creation of light pollution that's harming scientific research (which US regulators have absolutely no plan to mitigate). Then there's the fact that Musk's Starlink recently gamed the broken FCC auction process to nab nearly a billion dollars it doesn't really deserve. Consumer group Free press did a good job breaking down how we're throwing a billion dollars at the second richest man on the planet via an FCC RDOF auction that's very broken, and by proxy easily exploitable by clever companies:

"But lest I be accused of West-Coast bias, here’s a parking lot outside the Pentagon, where Elon Musk’s Starlink is getting scarce ratepayer funds to offer his “coming soon” satellite service, one that he’s previously said was intended to bring broadband to the hardest-to-reach rural areas. Apparently Uncle Sam wants you to pay for completely unnecessary satellite-internet service to an urban parking lot a few feet from one of the most connected properties on the planet.

Again there's really no reason to be subsidizing Musk here. Especially for somebody that has lots of deep thoughts on stuff like "socialism." Needless to say, there's a growing roster of companies and broadband co-ops that also aren't particularly keen on Elon Musk getting money that could be going to truly struggling local broadband providers, many of which operate on highly restrictive budgets, and are deploying actual fiber connections:

"SpaceX’s broadband-from-orbit “is a completely unproven technology,” said Jim Matheson, chief executive officer of the National Rural Electric Cooperative Association, which has members that vied for the funding. “Why use that money for a science experiment?"

I think it's less about the tech not working (early beta reports are pretty great), and more about not throwing a billion dollars at a billionaire for a low orbit satellite technology that's both inferior to fiber, and easily funded by Musk without the government's help. To get money from the government, Musk's Starlink promised it could deliver 100 Mbps to each consumer. And while users on the largely empty network are seeing those speeds, another report this week suggested they'd probably never hit that benchmark for most users:

"Boiled down further, the study estimates that 56% of SpaceX's RDOF locations in a "low capacity" use case (average data usage of 15.3 Mbit/s per location) and 57% of locations in a "high capacity" use case (average data usage of 20.8 Mbit/s per customer) "will experience service degradation during peak times and not meet the RDOF public interest requirements." The Cartesian study also estimates that 25% to 29% of locations will receive an average of less than 10 Mbit/s of capacity during peak times."

To be clear, some of these critics are companies that are simply worried about having to compete with Starlink. I imagine that smaller WISP CEOs aren't sleeping particularly well right now. Traditional satellite providers, whose costly, capped, and high latency services have been mocked for decades, aren't going to enjoy competition from Starlink either. Rural cellular companies are also probably going to lose some subscribers. Especially if Starlink winds up being easy to use and delivers consistent speeds (which we won't see until they launch a fully loaded commercial network).

But that still doesn't really address that the planet's second wealthiest man shouldn't be subsidized for a project he would have paid to deploy anyway, and is only likely to put a small dent in the overall problem. One more time for scale: Starlink will probably help serve somewhere between 485,000 to 1.5 million subscribers. There are 42 million in the US without broadband, 83 million stuck under a monopoly, tens of millions more stuck under duopoly, and then countless millions more who can't afford service due to monopolization. Starlink will be helpful, but it's a drop in the bucket.

There's a lot of middle and last-mile fiber-based broadband solutions that will have a lot more capacity, being pushed by companies for which a few million bucks is a life or death equation. Instead we're throwing a billion at a billionaire for a service that's not really all that affordable, and, once fully loaded to capacity is very likely to come with all manner of throttling, deprioritization, and other restrictions in the post net neutrality era. Add in an FCC whose broadband maps suck and auction processes are completely broken, and you can probably see how this isn't a recipe for success.

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Filed Under: elon musk, starlink, subsidies
Companies: space x, starlink

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  1. identicon
    brent, 11 Feb 2021 @ 2:22pm

    Re: Real satellite coverage > Hypothetical fiber coverage

    I agree with your basic premise. How much have the major telcom companies received in the past 20 years to "eliminate the digital divide". AT&T barely maintains their POTS lines here and fiber? Don't make me laugh.

    I'm all for supporting local ISP efforts but in my area no one wants to invest. And the FCC's model for the past twenty years has been to assume that money expended equals results.

    At least Musk is deploying something.

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