SpaceX was slated to receive a total of $856 million, one of the largest chunks of the $9 billion that was auctioned off.
But that will no longer happen.
“After careful legal, technical, and policy review, we are rejecting these applications,” FCC chairwoman Jessica Rosenworcel said in a statement. “Consumers deserve reliable and affordable high-speed broadband. We must put scarce [subsidy] 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.”
The FCC also observed data that “indicate that Starlink’s speeds have been declining from the last quarter of 2021 to the second quarter of 2022.”
SpaceX has said that it already has more than 400,000 customers across the globe, and the company has poured resources into building up the service. It’s already launched nearly 3,000 satellites, which work in tandem to beam internet access to the ground. That’s a far different approach than traditional high-speed internet, which relies on underground fiber optic cables.
As part of the same announcement, the FCC also said it’s denying a $1.3 billion award earmarked for LTD Broadband, citing the fact that the internet service provider failed to obtain proper status and approvals for service in seven states.
Rosenworcel cited the cost of Starlink as part of the reason for the denial.
“Starlink’s technology has real promise,” she said. “But the question before us was whether to publicly subsidize its still developing technology for consumer broadband—which requires that users purchase a $600 dish—with nearly $900 million in universal service funds until 2032.”
The FCC’s $9 billion subsidy package, called the Rural Digital Opportunity Fund, was funded by fees that are routinely taken from internet customers in the United States. The idea is to siphon funds from urban areas where connectivity is plentiful and use that to subsidize the hefty costs of expanding internet infrastructure into more remote locations.
SpaceX did not respond to a request for comment, nor does it typically respond to press inquiries. LTD did not immediately respond to a request for comment.