FCC Officially Rejects Ajit Pai’s Boondoggle To Supply Elon Musk With Nearly A Billion Dollars In Subsidies
Elon Musk hates government subsidies. That's what he says, right? He claims that we should just delete them all," and that the federal budget deficit is insane." Of course, the world's richest man (for now) has received many billions in government subsidies for his companies. Indeed, you could argue that his success was very much predicated on getting so much in subsidies to pump up his companies when they were in trouble otherwise.
Given his professed (but not observed) hatred of subsidies, it seemed weird that one of Ajit Pai's final moves as FCC chair was to dole out billions in subsidies under the Rural Digital Opportunity Fund (RDOF) to places that didn't actually need it - including nearly $900 million to Musk's Starlink operation, a part of his SpaceX company.
Last summer, the now Pai-less FCC decided to revisit some of those announced grants, telling SpaceX it needed to reapply for the funds, because it wasn't clear that the company's plans for the funds actually met the qualifications. Mr. Delete All The Subsidies" could have simply dropped the request. But he didn't.
And last week the FCC officially rejected the the renewed application, with current FCC chair Jessica Rosenworcel noting that Starlink failed to demonstrate" that it could live up to the promises it made, and given the limited resources here, the money was better spent elsewhere.
After careful legal, technical, and policy review, we are rejecting these applications. Consumers
deserve reliable and affordable high-speed broadband," said Chairwoman Rosenworcel. 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. We cannot afford to subsidize ventures
that are not delivering the promised speeds or are not likely to meet program requirements."
Starlink's technology has real promise," continued Chairwoman Rosenworcel. 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."
In the official notice, the FCC noted:
Starlink,relying upon a nascent LEO satellite technology and the ability to timely deploy future satellites tomanage recognized capacity constraints while maintaining broadband speeds to both RDOF and non-RDOF customers, seeks funding to provide 100/20 Mbps low latency service to 642,925 estimatedlocations in 35 states. The Bureau has determined that, based on the totality of the long-formapplications, the expansive service areas reflected in their winning bids, and their inadequate responses tothe Bureau's follow-up questions, LTD and Starlink are not reasonably capable of complying with theCommission's requirements. The Commission has an obligation to protect our limited Universal ServiceFunds and to avoid extensive delays in providing needed service to rural areas, including by avoidingsubsidizing risky proposals that promise faster speeds than they can deliver, and/or propose deploymentplans that are not realistic or that are predicated on aggressive assumptions and predictions. We observethat Ookla data reported as of July 31, 2022 indicate that Starlink's speeds have been declining from thelast quarter of 2021 to the second quarter of 2022, including upload speeds that are falling well below 20Mbps. Accordingly, we deny LTD's and Starlink's long-form applications, and both are in default on allwinning bids not already announced as defaulted.
So, congrats to Elon Musk on not getting the subsidy that your company didn't deserve and couldn't qualify that you surely didn't actually want, even though you applied (and re-applied) for it.