Elon Musk’s SpaceX faces rivals for broadband subsidies

The federal government is now planning a final round of verification before betting heavily that Musk’s technology could help close persistent gaps in the United States’ high-speed internet service. Most of the $ 9.2 billion in grants from the Federal Communications Commission went to more established technologies, which included companies that install fiber optic cables.

The FCC is demanding that SpaceX and other companies in the grant line demonstrate their financial and technical resources to build a network, and Friday was the deadline for submitting these plans.

SpaceX rivals for grant dollars are calling on the FCC and its new leadership under the Biden administration to take a look at these plans, and are garnering support for their cause on Capitol Hill.

More than 150 members of Congress wrote to the FCC on January 19 urging it “to scrutinize winning bidders to ensure they are capable” and “to consider opportunities for public input on applications”.

The letter, which did not mention SpaceX or other companies by name, was later promoted online by two commercial groups that competed for federal subsidies: the National Rural Electric Cooperative Association and the Rural Broadband Association.

“We are actually funding an experiment here,” said Jim Matheson, chief executive of the National Rural Electric Cooperative Association, which represents electricity providers who also want subsidies 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 of SpaceX, whose official name is Space Exploration Technologies Corp., did not respond to requests for comment.

Proponents of SpaceX’s plan say that providing broadband via satellite has the potential to reach isolated homes and businesses at significantly lower cost.

In the meantime, federal subsidies may help boost Musk’s plans to provide high-speed satellite internet around the world, an undertaking deemed critical to its financial success.

An FCC representative declined to say when the agency expected to make a decision on SpaceX’s plan, pointing to the agency’s published procedures. They do not provide an application approval schedule and state that applications with detailed plans are generally not public until they are approved.

SpaceX is not the only company whose system uses satellites – nor is it the only winning bidder to generate controversy. Mr. Matheson pointed to large amounts of funding guaranteed by ISPs using so-called fixed wireless technology, apparently outperforming fiber providers, although fiber technology is generally considered to be faster.

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

In a January 22 filing with the FCC, SpaceX pointed to initial deployments in states like Washington.

“SpaceX continues its rapid deployment of its next generation satellite system and is already bringing a high throughput and low latency broadband service to unattended Americans across the country,” said the company.

In a lawsuit last year, he publicized his technology as serving “the hardest-to-reach rural Americans for whom access for a long time was unreliable, prohibitively expensive or completely unavailable”.

FCC commissioner Jessica Rosenworcel, a Democrat who is serving as interim president while the new government decides on her nominee, declined to comment. She criticized the FCC for advancing subsidies 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 suppliers using various technologies to compete with each other, reducing the cost of government subsidies. “There will be a range of different technologies that will be more appropriate” to close service gaps in different locations, he said.

SpaceX’s move to secure broadband funding is part of a broader Washington-focused strategy that also includes government contracts for the transportation of astronauts, launching national security satellites, weather forecasting and missile tracking.

At the FCC broadband auction last year, the bidder offering the fastest internet service at the lowest price in a given geographic area gained access to federal subsidies, which come from so-called universal service charges on consumer phone bills .

Although SpaceX’s technology is slower than some competitors, such as fiber optic cable, the company’s offerings have been successful in areas where the fastest providers were not interested, including large extensions in the northwest.

The Hawthorne, Calif.-Based company is expected to receive the fourth largest amount of funds from any group competing in the auction, accounting for nearly 10% of the $ 9.2 billion to be distributed.

SpaceX started offering trial versions of its internet service last year, priced at $ 99 a month with an initial equipment cost of $ 499 for customers, according to October reports that cited an e- company promotional email. It is not clear how the new federal subsidies can 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 January 22 FCC filing. The document informs that the company launched 955 satellites with thousands of others planned.

The launch did not go smoothly. SpaceX initially 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 has also requested the FCC to modify its license while it modifies the system and tries to resolve concerns that satellites could collide with other objects, creating space debris.

Skyler Ditchfield, chief executive of GeoLinks, a fixed wireless internet provider in California that also competed in the FCC auction, noted that SpaceX promised to build the network before securing subsidies.

“To pay them additional funds to do something they’ve already committed to [do] it doesn’t seem to be in the public interest, ”he said in an interview.

Almost 13% of the money granted to SpaceX, about $ 111 million, goes to groups of census blocks that include urban areas, according to an analysis of public data from Free Press, a defense group that has criticized the process of FCC auction.

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 unmet rural areas, although the Free Press said it found no evidence of a breach of rules. The FCC did not comment.

Carr, the Republican FCC commissioner, said the government is getting something for its money.

“We now have a legally binding commitment that they serve everyone in these areas,” he said. “We need to hold each entity that has won responsible and we must take very strong enforcement measures against any entity, any technology that is insufficient.

Write to Ryan Tracy at [email protected]