The FCC rejected a proposal from Starlink, a subsidiary of Elon Musk's SpaceX (opens in new tab), which would have given the company nearly $1 billion in subsidies for offering broadband internet services to rural areas in the United States from the RDOF (Rural Digital Opportunity Fund).
The official FCC (opens in new tab) statement (via Slashgear (opens in new tab)) says that Starlink's technology "has real promise," but ultimately that the US government cannot "afford to subsidize ventures that are not delivering the promised speeds or are not likely to meet program requirements."
The RDOF (opens in new tab) (Rural Digital Opportunity Fund) is a $20 billion fund that started in 2020 for constructing broadband networks in rural areas across the US. Companies bid to secure the funding with the caveat that they need to prove they can provide internet at the speeds they promised. SpaceX had won its bid for $883 million to provide rural broadband via its Starlink satellite internet service.
The program requires internet service providers like Starlink, to show that the service provides a minimum 100Mbp download/ 20Mbps upload speeds. A recent speed report from Ookla (opens in new tab) showed that Starlink's speeds could not meet the 100/20Mbps threshold to become eligible for the funds, which FCC chairwoman Jessica Rosenworcel cited in the statement.
"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," said the chairwoman.
To use Starlink, a user must pay $600 for a dish and a monthly fee of $110 for the service the chairwoman called a "still developing technology."
To add insult to injury, the FCC wrote in a report included in the official statement that it had an obligation to protect "our limited Universal Service Funds" by staying away from "risky proposals that promise faster speeds than they can deliver, and/or propose deployment plans that are not realistic or that are predicated on aggressive assumptions and predictions."
The FCC also rejected LTD Broadband's $1.3 billion proposal because it could not "deploy a network of the scope, scale, and size required by LTD’s extensive winning bids."
Starlink can once again put in a bid in the next set of RDOF auctions. The RDOF has already authorized over $5 billion to bring fiber gigabit internet to 47 states, which means $15 billion is still up for grabs.