Space's Starlink loses $886M in government funding because even satellite internet can’t fix America’s WiFi problem
Back down to Earth... Regulators are pulling the plug on an $886M subsidy for SpaceX's Starlink after the satellite-internet biz failed to reach America’s most isolated areas. ICYMI: the FCC dished out over $9B worth of subsidies to broadband providers in 2020 to help connect millions of remote households and small businesses (see: Rural Digital Opportunity Fund). Now:
- The deal: Starlink was originally awarded $886M over 10 years (one of the largest FCC grants) in hopes of becoming a one-stop internet shop for rural areas. But its high-speed service has slowed from Q4 of last year to now.
- The fallout: Regulators nixed the award Wednesday, blaming Starlink's “still developing” tech and pricey subscription for the reversal.
- The status: Starlink has nearly 2K low-Earth-orbiting satellites providing internet to 400K+ people worldwide. The basic service costs $110/month, plus a one-time $600 satellite fee.
America’s digital divide… is growing wider. About 21M Americans — or 1 in 15 people — still don’t have access to high-speed internet. It’s worse in rural areas (think: small towns, farmlands) where more than half of residents have bad service. Some families have had to sit in parking lots to do remote work, job search, and attend online classes. The FCC’s subsidies could help with that:
- OG internet provider Charter received $1.2B in government subsidies and is investing an additional $3.8B of its own money to expand its broadband network in 23 states.
A public-sector failure could affect private funding... SpaceX has raised more than $2B this year, but funds are shared with its pricey next-gen rocket projects. Musk has already delayed Starlink’s IPO twice. And if it can’t meet the government’s expectations, private investors might lose confidence too.