Musk’s Starlink Says It’s ‘Unfair’ The FCC Pulled $886 Million In Subsidies Musk Claims He Doesn’t Want Anyway

You might recall that Elon Musk claims that he hates taxpayer subsidies. They should all be deleted." Except for the subsidies given to his companies, apparently.

You might recall that Musk's Starlink gamed the Trump FCC Rural Digital Opportunity Fund (RDOF) to grab $886 million in taxpayer dollars. It was a deal consumer groups noted was a huge waste of money, because the proposal itself - which involved bringing expensive satellite broadband to a lot of places like airport parking lots and traffic medians - wasn't the best use of taxpayer funds.

The Biden FCC noted the problems with the application and forced Starlink to re-apply last summer. Starlink did, but was then rejected last month by the FCC, which stated that they weren't sure Starlink could meet program speed goals, and might not be affordable to the heavily rural, lower income users being targeted (Starlink requires a $600 up front equipment fee and costs $110 a month).

It's worth noting the FCC didn't just single out Starlink, several other companies had their wrist slaps for subsidy applications for projects that made no coherent sense. I tend to think the Biden FCC call on Starlink was the correct one. And given the regulatory earlobe nibbling Musk's companies receive in general (see: auto safety regulations), I'm surprised they even made it.

One, Musk himself has made it clear he's not sure if Starlink will even survive the next five years. Two, Starlink is too expensive for users in many of these rural, lower-income target areas. Three, Starlink capacity (which maxes out at around 800k users for the moment) is only a drop in the bucket in a country where 20-40 million lack access and 83 million live under a broadband monopoly.

The FCC argued that if you're going to spend taxpayer money on broadband, it should likely be prioritized for more affordable, higher capacity, future-proof fiber. Not thrown at a limited capacity satellite broadband service owned by one of the wealthiest, erratic, and subsidy-averse men on the planet:

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."

Needless to say, Starlink isn't happy about losing out on its billion dollar boondoggle. In a new appeal filing with the FCC, Starlink complains that the FCC's rejection was flawed as a matter of both law and policy," erroneous and unreasonable," contrary to the evidence," grossly unfair," and will hurt poor people:

the Bureau Decision, if allowed to stand, would leave the Commission with no plan to connect the many Americans living and working in the areas covered by SpaceX's winning bids, stranding them on the wrong side of the digital divide

There's a pretty broad consensus among consumer groups and telecom experts that the best use of that money was to spend it on more reliable fiber. Again, Wall Street estimates that Starlink's max global capacity is somewhere around 800k users for the time being. The speed at which the service is growing under those limitations means existing users are just starting to see network slowdowns:

Hundreds of miles south near Leonard, Texas, John Lawyer has encountered download rates on his Starlink dish that can dive as low as 1Mbps, especially during the evenings. Speeds are absolutely getting worse," he said. Lawyer and his wife could make do with a download rate as slow as 30Mbps. But we aren't getting even that with any kind of useable consistency," he added.

And again, Starlink's high costs (not many struggling, rural households can afford a $710 first month bill) means it's simply not affordable to these largely rural, poor markets Starlink professes to be such a big fan of. And this is before you return to the fact that Starlink's original application pretty clearly tried to exploit FCC program guidelines to grab money for deployments that made no sense.

Now, Starlink promised that the network would hold up fine as subscriptions soar, that next generation satellites will improve capacity many years from now, and that they'd offer more sensible pricing in some of these areas. And maybe some of those claims are even true. It's a Musk company, so who knows.

But even if Starlink survives and thrives, I still think the FCC made the right bet. Starlink doesn't need taxpayer money. Starlink's CEO is on record repeatedly stating he doesn't want the government's money. But I talk weekly to countless, smaller fiber ISPs (many community owned and operated open access networks) absolutely desperate for money to deliver faster, cheaper, more reliable fiber service.

The broadband subsidy process should prioritize fiber, then fill in the spots with 5G and fixed wireless. Low-orbit billionaire hobbyist services from Starlink and Amazon can come in and fill in any remaining gaps. There's nothing grossly unfair" about that approach. And you'd think a company whose CEO is routinely on record stating he hates government subsidies wouldn't care either way.