FCC rejects SpaceX bid for $886 million in rural subsidies to fund Starlink

Aug. 10 (UPI) -- The Federal Communications Commission announced it is canceling a nearly $1 billion grant for SpaceX to fund the company's Starlink satellite internet network that would expand service for broadband customers in rural areas.

The FCC announced Wednesday that Starlink and a second company LTD Broadband, "failed to meet program requirements and convince the FCC to fund risky proposals," according to a statement.

Starlink, which is controlled by SpaceX and founder Elon Musk, was awarded a Rural Digital Opportunity Fund grant of $886 million in December 2020 to help fund its broadband expansion. To date, SpaceX has launched more than 2,800 Starlink satellites to provide internet services to remote parts of the world.

Starlink submitted a long-form application to receive the FCC subsidies, which are reserved for broadband providers that can "bridge the digital divide" and bring service to areas with little or no high-speed access.

"After careful legal, technical and policy review, we are rejecting these applications. Consumers deserve reliable and affordable high-speed broadband," FCC Chairwoman Jessica Rosenworcel said in a statement Wednesday. "We cannot afford to subsidize ventures that are not delivering the promised speeds or are not likely to meet program requirements."

At issue is the requirement that internet users purchase a $600 dish.

"Starlink's technology has real promise," Rosenworcel said. "But the question before us was whether to publicly subsidize its still-developing technology for consumer broadband -- which requires that users purchase a $600 dish -- with nearly $900 million in universal service funds until 2032."

SpaceX is expected to pursue FCC approval for a separate venture, its new Starlink Maritime service that would provide satellite internet to yachts and oil rigs for $5,000 a month.

The Rural Digital Opportunity Fund held $9.2 billion during the FCC's 2020 auction, of which $5 billion has been committed.

"We must put scarce universal service dollars to their best possible use as we move into a digital future that demands ever more powerful and faster networks," Rosenworcel said.