SpaceX’s Starlink isn’t getting the massive government funding windfall that many expected, even after the Trump administration rewrote the rules for a $42 billion broadband grant program. Despite changes designed to favor satellite internet, states are still overwhelmingly choosing to build fiber networks instead of giving Elon Musk’s company the big paycheck it was hoping for.
The drama centers around the Broadband Equity, Access, and Deployment (BEAD) program, which was created to bring high-speed internet to rural and underserved areas across America. When Trump’s team announced their overhaul of the program earlier this year, industry watchers thought SpaceX could pocket anywhere from $10 billion to $20 billion. Musk certainly seemed to expect a big payday.
But reality isn’t matching those expectations. Three states have now revealed their updated plans, and the results aren’t what SpaceX wanted to see. West Virginia just announced it’s directing 99 percent of its $624.7 million allocation to fiber projects, with Starlink getting just $6.4 million. That means fiber will reach about 94 percent of eligible locations, while Starlink gets the remaining 6 percent.
Fiber Optic vs. Starlink: West Virginia Sides With Fiber Over Satellite for Internet Expansion
This follows similar decisions in Virginia and Louisiana, where SpaceX also received much smaller allocations than it requested. The company offered to serve nearly all eligible households in Virginia for $60 million but only received $3.26 million. SpaceX isn’t taking this lying down it’s threatening to ask the Trump administration to reject these state plans entirely.
Consumer advocate Gigi Sohn, a former Federal Communications Commission official, says West Virginia’s fiber-heavy approach makes perfect sense. “If you have ever tried to make a cellphone call anywhere in West Virginia, you can understand why the state awarded fiber at 94% of eligible locations,” she explained. West Virginia’s mountainous terrain and heavy forest coverage make satellite internet less reliable than fiber connections.
The Trump administration told states to take a “tech-neutral approach” and choose the lowest-cost options. But states can still consider local geography, weather patterns, tree coverage, and other factors when making their decisions. This gives them wiggle room to justify choosing fiber over satellite in challenging terrain.
Starlink’s Funding Loophole: States Skeptical as SpaceX Seeks Grants
SpaceX argues that states are wasting money on expensive fiber projects when Starlink can serve the same areas for much less. The company claims it’s offering significantly lower costs than what states are spending on fiber networks. But states seem skeptical about whether satellite grants actually provide residents anything they don’t already have, since Starlink is already available nationwide.
There’s an interesting contradiction in how the program treats satellite internet. The government doesn’t count existing satellite service when determining if an area needs broadband, but satellite companies can still get funding to serve those supposedly “unserved” areas. Analyst Blair Levin calls this an “accounting trick” that benefits satellite providers.
This creates a situation where SpaceX can claim areas are underserved and need funding, even though its service is already available there. Meanwhile, states prefer to build fiber networks that don’t currently exist in these areas.
The Battle for Broadband in Western States
SpaceX still has a chance to win big in western states, where low population density makes fiber more expensive per household. Colorado is already shifting away from fiber, with the percentage of locations getting fiber dropping from 70 percent to about 40 percent.
The final decision rests with Commerce Secretary Howard Lutnick, who could force states to give satellite companies more money. Legal experts predict he’ll try to find state-by-state compromises rather than completely rejecting plans or giving SpaceX everything it wants.
States that reduce their overall costs while sticking mainly with fiber have a good chance of getting their plans approved. After all, they’re meeting the Trump administration’s main goal of cutting spending. The question now is whether political pressure from SpaceX will override the technical and economic arguments states are making for fiber networks.
