Elon Musk’s SpaceX rivals its broadband subsidies

The federal government is now planning a final round of scrutiny before betting that Mr Musk’s technology can help close the persistent loopholes in the US high-speed internet service. Most of the $ 9.2 billion in grants from the Federal Communications Commission was allocated to more established technologies, which included fiber optic cable companies.

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

SpaceX rivals for dollar grants are calling on the FCC and its new leadership under the Biden administration to take a closer look at these plans and gain support for their cause on Capitol Hill.

More than 150 members of Congress wrote to the FCC on January 19, urging it to “carefully examine the winning bidders to make sure they are capable” and “consider opportunities for public contribution to applications.”

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

“We’re actually funding an experiment here,” said Jim Matheson, executive director of the National Rural Electricity Cooperative Association, which also represents electricity suppliers in the line of subsidies for building 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 the SpaceX plan say satellite broadband delivery has the potential to reach isolated homes and businesses at a significantly lower cost.

Meanwhile, federal subsidies could help boost Mr Musk’s plans to provide high-speed satellite internet around the globe, a business considered key to his financial success.

An FCC official declined to say when the agency expected to make a decision on the SpaceX plan, citing procedures published by the agency. It does not provide a timetable for the approval of applications and states that applications with detailed plans are generally not public until after approval.

SpaceX is not the only company whose system uses satellites – nor is it the only winning bidder to generate controversy. Mr Matheson pointed to the large amounts of funding provided by internet providers using so-called fixed-wireless technology, apparently beating fiber-based providers, even though fiber technology is generally considered 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 these 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 expect to reap.

In a January 22 file with the FCC, SpaceX indicated initial implementations in states such as Washington.

“SpaceX is continuing its rapid deployment of its next-generation satellite system and is already offering low-speed, low-latency broadband services to otherwise underserved Americans across the country,” the company said.

In a submission last year, he argued that his technology serves “the hardest to access Americans in rural areas, for whom access has long been unsafe, prohibitively expensive or completely unavailable.”

FCC Commissioner Jessica Rosenworcel, a Democrat who holds the presidency while the new administration decides with its candidate, declined to comment. She criticized the FCC for moving forward with 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 the rules for the grant program, said the program allowed providers using a variety of technologies to compete with each other, reducing government grant costs. “There will be a range of different technologies that will be best suited” to close service gaps in different locations, he said.

The SpaceX measure to secure broadband funding is part of a broader Washington-focused strategy, which also includes government contracts for astronaut transport, the launch of national security satellites, weather forecasting and missile tracking.

In the FCC-led broadband auction last year, the bidder that offered 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 telephone bills for consumers.

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

The company, based in Hawthorne, California, will receive the fourth fund from all the groups participating in the auction, representing almost 10% of the $ 9.2 billion to be distributed.

SpaceX began offering test versions of its Internet service last year at a price of $ 99 per month, with an initial cost of $ 499 for customer equipment, according to October reports citing a promotional email from the company. . It is unclear how the new federal subsidies could affect these prices.

Public entities in Washington State, including a school district and an emergency management agency, are already using the service, according to the January 22 FCC registration of SpaceX. The document said the company launched 955 satellites with thousands more planned.

The launch was not without its bumps. SpaceX originally planned to bring the internet service online as early as 2018, but has faced delays and high costs, The Wall Street Journal reported. Some of the satellites failed. SpaceX has also asked the FCC for changes to its license, as it is working on the system and trying to address concerns that the satellites could collide with other objects, creating space debris.

Skyler Ditchfield, CEO of GeoLinks, a California-based fixed-wireless Internet provider that also competed in the FCC auction, noted that SpaceX promised to build the network before getting grants.

“To pay them extra funds to do something they have already committed to [do] it seems to me that it is not in the interest of the public “, he said in an interview.

Nearly 13 percent of SpaceX’s $ 111 million in money goes to groups of census blocks that include urban areas, according to an analysis of public data by Free Press, an advocacy group that has criticized the FCC’s bidding process.

Many are close to areas served by existing providers, such as cable companies, the group said. This appears to be inconsistent with the FCC’s stated goal of allocating funds to underserved rural areas, although Free Press said it found no evidence of violations. The FCC did not comment.

Mr Carr, the FCC’s Republican commissioner, said the government was receiving some of its money.

“We now have a legally binding commitment that they serve everyone in these areas,” he said. “We have to hold every entity that has won accountable and we should take very strong enforcement action against any entity, any technology that fails.

Write to Ryan Tracy at [email protected]