FCC Decision On SpaceX Broadband Subsidies Delayed

The Federal Communications Commission has delayed its final decision regarding SpaceX’s qualification to receive subsidies from the $16 billion in funding earmarked for rural broadband expansion.

What Happened

SpaceX is using low-Earth orbiting satellites to offer broadband service around the world. The company calls this service Starlink. It is pushing the FCC to put it at par with other broadband providers using more conventional technologies to qualify for subsidies, according to The Wall Street Journal.

The FCC finalized the rules for fund distribution on Tuesday. The agency plans to disperse the funds over a period of ten years, pending the results of an auction to be held in October this year.

Why It Matters

The auction rules favor companies that provide the fastest broadband technology in each tier, such as low-latency.

While Elon Musk’s SpaceX claims its technology should be considered low-latency, the company’s rivals disagree.

“This will be a political disaster if Elon F’ing Musk gobbles up billions of dollars of the public’s money," a congressional aide told industry lobbyists in one of the emails, according to WSJ.

In a statement, Ajit Pai, chairman of the FCC, said it was important that the agency not “entirely close the door on low earth orbit satellite providers bidding in the low-latency tier.”

Pai laid down a caveat, saying, “The purpose of the Rural Digital Opportunity Fund is to ensure that Americans have access to broadband, no matter where they live. It is not a technology incubator to fund untested technologies. And we will not allow taxpayer funding to be wasted.” 

Analysts reason that SpaceX’s value is largely within the Starlink low-latency broadband system, and if the project takes off, it could achieve a $120 billion valuation, or else its worth could drop to $5 billion.

Correction: A previous version of this story incorrectly attributed the email quote about Elon Musk to Jonathan Chambers, a former FCC official and partner at Conexon LLC.