The company will receive a total of $856 million, one of the largest subsidies handed out by the Federal Communications Commission under a new program designed to encourage companies to extend broadband access into the United States’ most underserved areas over the next 10 years.
SpaceX’s win is notable because the company competed against more established internet service providers, such as Charter Communications and CenturyLink, which rely on traditional fiber optic cables to deliver high-speed internet to customers. SpaceX’s Starlink internet service, which is currently in beta testing and is not yet fully operational, relies on an experimental swarm of nearly 1,000 satellites whizzing around Earth at more than 17,000 miles per hour as they beam the internet to high-tech antennas mounted on people’s homes.
The FCC did award the bulk of the $9 billion worth of subsidies to more traditional providers. Charter, for example, received more than $1.2 billion to bring high-speed internet into more than 1 million neighborhoods. And the Rural Electric Cooperative Consortium, a joint bid from smaller regional companies, was awarded $1.1 billion to more than 618,000 neighborhoods.
But, if SpaceX’s Starlink service does work as intended, it could be a major boon for rural economies in the United States and abroad. That’s because the company’s unique satellite system is designed to blanket the entire planet in connectivity, rather than stringing cables to individual rural areas.
Why it matters
Meanwhile, older satellite-based internet services have a reputation for slow speeds and frustrating lag times.
SpaceX is promising that its network will be just as fast as the best fiber-optic based services. Its satellites are flying much closer to the ground than most other telecommunications satellites, which the company says will eliminate the frustrating lag times.
If the Starlink network doesn’t work as intended, the people in the rural areas that the network was meant to serve may never receive top-of-the-line internet service, said Shirley Bloomfield, the CEO of NTCA – the Rural Broadband Association, which represents hundreds of community-based telecommunications providers.
“People will never be able to get more government support to come in and build a more future-proof” network, Bloomfield told CNN Business. “We have to be focused on how do we do it right the first time.”
“You don’t have to replace [fiber optic] wires anytime in my lifetime once it’s built. It will be something like my grandkids’ kids could use,” Falcon said.
But others, including FCC Commissioner Mike O’Reilly, who helped lead the push to allow SpaceX to join the FCC subsidy program, argue that Starlink could offer a one-stop-shop solution to a troubling problem.
“The true reality is: We don’t have enough money to connect every home to fiber. It’s not in the cards,” he told CNN Business in an August interview.
And that, he said, is reason enough to take a risk on SpaceX, a company already well-known for its technological chops and proving its critics wrong.
And if the Starlink network is affordable and works well, O’Reilly said, the payoff could be massive. Not only would it bring coverage to the areas the FCC is targeting with its RDOF subsidies, it would bring connectivity to every person in the United States and possibly the world.
“The dirty little secret is — after we finish [RDOF] — we’re probably looking at a pool of locations that are really expensive and really hard to serve, and nobody” wants to pay to bring in internet service there, O’Reilly said. “How do you get service to those areas that are hardest to serve and get them as quick as possible? Satellite is one of those options.”
Even O’Reilly, however, acknowledges that, for the people in the areas Starlink is supposed to serve through this subsidy program, a lot is riding on the network’s success.
It could “really cause heartbreak,” O’Reilly said. “That’s the hard part for a policymaker.”