SpaceX Faces Setback as FCC Rejects $886 Million Starlink Broadband Grant Appeal.

FCC Denies SpaceX’s Appeal Amid Controversy

In a blow to SpaceX’s Starlink project, the Federal Communications Commission (FCC) has refused to allocate the $886 million broadband grant that was tentatively awarded to the satellite provider during the previous administration. The decision, which was announced yesterday, follows a careful legal and technical review by the FCC. FCC states that SpaceX failed to meet the requirements for nearly $900 million in universal service funds over almost a decade, according to FCC Chairwoman Jessica Rosenworcel.

Background of the Disputed Grant

The controversy dates back to December 2020 when, under the leadership of then-FCC Chairman Ajit Pai, Starlink was tentatively granted $885.51 million in broadband funding from the Rural Digital Opportunity Fund (RDOF). However, the grant required FCC approval of a long-form application for the money to subsidize broadband deployment in areas lacking high-speed access. In August 2022, the Rosenworcel FCC rejected Starlink’s long-form application, prompting SpaceX to appeal the decision.

Major Changes to Broadband Grants

The denial of Starlink’s appeal is one of the two significant rejections in a $9.2 billion round of grants, leading to criticisms that the program was poised to fund broadband in well-served urban areas. The FCC also rejected the long-form application of fixed wireless provider LTD Broadband, now called “GigFire,” which was initially slated to receive $1.3 billion.

SpaceX’s Strong Reaction

Expressing deep disappointment and perplexity, SpaceX responded swiftly, criticizing the FCC’s decision as undermining the very goal of the Rural Digital Opportunity Fund. SpaceX argued that Starlink is a vital option, if not the only viable one, to connect rural and remote areas where high-speed, low-latency Internet has been unreliable or completely unavailable. The company questioned the FCC’s rationale and its commitment to connecting unserved and under served Americans.

FCC’s Concerns and SpaceX’s Capacity Limits

The FCC’s rejection cited concerns about Starlink’s “nascent LEO satellite technology” with recognized capacity constraints. Questions were raised about Starlink’s ability to consistently provide the required high-speed, low-latency service throughout the supported areas. SpaceX CEO Elon Musk has previously acknowledged Starlink’s capacity limits, acknowledging potential challenges as the user base grows.

FCC Decision Spurs Political Discontent

The FCC’s decision to reject Starlink’s appeal was not unanimous, with Republican Commissioners Brendan Carr and Nathan Simington dissenting in a 3-2 vote. Carr accused the FCC of regulatory harassment, fitting a pattern of actions against Elon Musk’s businesses. Simington argued that SpaceX’s technology is proven, with millions of subscribers receiving high-quality broadband service through Starlink.

SpaceX Criticizes FCC’s Reliance on Speed Tests

In response to the rejection, SpaceX criticized the FCC’s reliance on Ookla speed tests, calling it arbitrary and unfairly applied. The company argued that it had dedicated significant resources to meeting its obligations, submitting a long-form application in compliance with program rules. The FCC defended its decision, stating that it used the most recent available data to evaluate network performance, pointing to declining Starlink speeds based on Ookla’s user-initiated speed tests.

FCC’s Comparison to Fiber Services

The FCC unfavorably compared Starlink to fiber services, noting that Starlink failed to provide examples where its technology matched the required service levels in the United States. Starlink countered, stating that it would meet the required Rural Digital Opportunity Fund obligations by 2025. The FCC defended its decision, stating that Bureau officials used the best available data to make a predictive judgment.

In the wake of this decision, the future of Starlink’s broadband deployment to over 600,000 rural homes and businesses in 35 states remains uncertain. SpaceX has not confirmed whether it plans to appeal the FCC’s decision in court. The dispute highlights the ongoing challenges and controversies surrounding the distribution of broadband grants and the deployment of high-speed internet services in underserved areas.