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Major blow for Elon Musk as Starlink broadband is REJECTED by authorities and users may struggle to access it

SPACEX has been denied its near-billion-dollar subsidy for Starlink broadband services.

The bid, received in December of 2020 from the Federal Communications Commission, would have allowed the company to be a service provider to 35 underserved internet states.

Elon Musk's SpaceX company Starlink was denied its previously-granted near-billion-dollar subsidy from the FCC for coming up short on their serviceCredit: Reuters

Initially, SpaceX received $885.5 million from the FCC.

Their Rural Digital Opportunities Fund held a $9.2 billion auction.

SpaceX was seeking funding to give satellite internet service to a whopping 650,000 locations via its broadband provider Starlink, NBC says.

FCC subsidies exist to provide a motivation for internet service providers to branch into areas that see inadequate internet service. 

In a press release, the FCC calls out both Starlink and LTD Broadband. 

Chairwoman Rosenworcel says in the release: “After careful legal, technical, and policy review, we are rejecting these applications.

“Consumers deserve reliable and affordable high-speed broadband.”

“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.” 

While the chairwoman acknowledges that Starlink shows “real promise,” she states that the decision against granting the funds came in contrast to what it could cost users. 

Starlink would require “that users purchase a $600 dish.”

The press release notes that LTD was quite a small provider before the auction, but was the winner of the largest bid for subsidies in the auction itself. 

Essentially, LTD’s stripping of promised funds boils down to their failure to “ timely receive eligible telecommunications carrier status in seven states, rendering it ineligible in those states for support.”

While many different qualities come into play, Small Biz Trends notes that the state with the best internet coverage is Rhode Island. 

This is both due to its consistently wide availability, which the site notes to be an impressive 98.7%, with a download speed averaging 433.3 megabytes per second, and a cost per megabit is just $0.63.

Montana, by contrast, shows broadband availability to only 61.8% of residents, a slow 110.5 megabytes per second, and a sky-high average cost of $7.28 per megabit, Small Biz says. 

The FCC reported that about six percent of the population (19 million Americans) still lack adequate internet coverage and speeds. 

Separately, “The Commission…announced that is ready to authorize $21,112,263 in broadband funding to three companies to deploy gigabit service to almost 15,000 locations in four states Tennessee, Texas, Utah, and Wyoming,” the press release states.

“To date, the RDOF program has authorized more than $5 billion in funding to bring primarily fiber gigabit broadband service to over 3,000,000 locations in 47 states.

“With support from this program, hundreds of carriers have already begun deploying these future-proof networks to connect unserved areas.”

Had the grant been successful, Starlink would have been able to provide 650,000 locations across 35 states with internet service, so long as users purchase a $600 satellite dishCredit: Getty