Elon Musk’s SpaceX takes away rivals for broadband subsidies

The federal government is currently planning a final round of verification before betting big on whether Mr. Musk’s technology can help fill the persistent gaps in high-speed Internet service in the United States. Most of the $ 9.2 billion in grants awarded by the Federal Communications Commission went to more established technologies, including companies installing fiber optic cables.

The FCC is asking SpaceX and other online grants to demonstrate their financial and technical means to build a network, and Friday was the deadline to submit those plans.

SpaceX’s rivals for grants are asking the FCC and its new leadership under the Biden administration to take a closer look at these plans, and they are supporting their cause on Capitol Hill.

More than 150 members of Congress wrote to the FCC on Jan. 19, urging it “to carefully review successful bidders to ensure they are capable” and “to consider opportunities for public input into nominations.”

The letter, which did not mention SpaceX or other companies by name, was later promoted online by two business groups who vied for federal grants: the National Rural Electric Cooperative Association and the Rural Broadband Association.

“We’re actually funding an experiment here,” said Jim Matheson, chief executive of the National Rural Electric Cooperative Association, which represents electricity providers also online for grants to build fiber-optic broadband networks. “We don’t know if it works or not,” he said in an interview, referring to the SpaceX system.

Representatives for SpaceX, whose official name is Space Exploration Technologies Corp., did not respond to requests for comment.

Supporters of the SpaceX plan claim that providing broadband via satellite has the potential to reach isolated homes and businesses at significantly lower cost.

Meanwhile, federal grants could help bolster Mr. Musk’s company plans to provide high-speed satellite Internet access across the globe, a business seen as key to its financial success.

An FCC official declined to say when the agency plans to make a decision on the SpaceX plan, pointing to procedures released by the agency. They do not give a timeline for approving requests and indicate that requests with detailed plans are generally not public until they are approved.

SpaceX isn’t the only company whose system uses satellites, nor the only controversial winning bidder. Mr. Matheson pointed to significant funding secured by ISPs that use so-called fixed wireless technology, apparently ahead of providers using fiber, even though fiber technology is generally considered faster.

SpaceX plans to use that money to deliver broadband to more than 640,000 locations in 35 states that do not yet have broadband access, according to the FCC. Many of them are homes and businesses in rural areas where the cost of building a broadband network has so far exceeded the potential revenues that broadband businesses could hope to reap.

In a Jan. 22 filing with the FCC, SpaceX highlighted the initial deployments in states such as Washington.

“SpaceX continues its rapid deployment of its next-generation satellite system and is already providing high-speed, low-latency broadband service to otherwise unserved Americans across the country,” the company said.

In a filing last year, it touted its technology as serving “the hardest to reach rural Americans, for whom access has for too long been unreliable, prohibitively expensive, or completely unavailable.” .

FCC Commissioner Jessica Rosenworcel, a Democrat who serves as interim president while the new administration decides on its candidate, declined to comment. She criticized the FCC for going ahead with the grants last year, saying the agency should wait until it has better data on where broadband is needed.

FCC Commissioner Brendan Carr, a Republican who helped develop rules for the subsidy program, said the program allowed vendors using various technologies to compete with each other, lowering the cost of subsidies to the government. “There will be a range of different technologies that are best suited” to fill the service gaps in different locations, he said.

SpaceX’s decision to secure broadband funding is part of a larger Washington-focused strategy that also includes government contracts for transporting astronauts, launching national security satellites, weather forecasting, and tracking. missiles.

In the broadband auction held by the FCC last year, the bidder offering the fastest Internet service at the lowest price in a given geographic area was granted access to federal subsidies, which come from royalties. say universal service on consumers’ telephone bills.

Although SpaceX’s technology is slower than that of some competitors, such as fiber-optic cable, the company’s offerings have been successful in areas where faster vendors were not interested, including large expanses of the Northwest.

The Hawthorne, Calif.-Based company is expected to receive the fourth-highest number of funds of any group vying for the auction, accounting for nearly 10% of the $ 9.2 billion to be distributed.

SpaceX began offering test versions of its internet service last year, priced at $ 99 per month with an initial equipment cost of $ 499 for customers, according to October reports citing an email. promotional company. It is not clear how the new federal subsidies might affect these prices.

Public entities in Washington state, including a school district and an emergency management agency, are already using the service, according to SpaceX’s FCC filing on January 22. The record says the company has launched 955 satellites with thousands more planned.

The deployment has not been smooth. SpaceX originally planned to bring the internet service online as early as 2018, but faced delays and high costs, the Wall Street Journal reported. Some of the satellites have failed. SpaceX also asked the FCC to make changes to its license as it tinkered with the system and tried to address concerns that the satellites could collide with other objects, creating space debris.

Skyler Ditchfield, chief executive of GeoLinks, a fixed wireless internet provider in California that also participated in the FCC auction, noted that SpaceX had promised to build the network before obtaining grants.

“To give them extra funds to do something they are already committed to [do] does not seem to me to be in the best interest of the public, ”he said in an interview.

Almost 13% of the money allocated to SpaceX, or roughly $ 111 million, goes to census block groups including urban areas, according to an analysis of public data from Free Press, an advocacy group that has criticized the FCC auction process.

Many are close to areas served by existing providers, such as cable companies, the group said. This would appear inconsistent with the FCC’s stated goal of allocating funds to unserved rural areas, although Free Press said it could not find evidence of a rule violation. The FCC made no comment.

Mr Carr, the Republican FCC commissioner, said the government was getting its money’s worth.

“Now we have a legally binding commitment that they serve everyone in these areas,” he said. “We have to hold every entity that wins accountable, and we have to take very strong enforcement action against any entity, any technology that doesn’t work.”

Write to Ryan Tracy at [email protected]