On Wednesday, the Federal Communications Commission rejected SpaceX’s request for over $1 billion in financial support for its Starlink satellite internet network, which serves rural broadband users.
Elon Musk-owned SpaceX received $885.5 million in the FCC’s $9.2 billion auction in December 2020 as part of the agency’s Rural Digital Opportunities Fund. According to the FCC, the company requested financing to offer satellite internet service to almost 650,000 locations across 35 states.
The FCC subsidies are intended to act as a financial incentive for broadband providers to extend service to remote and underserved areas of the country.
Starlink and LTD Broadband, a different business that initially received $1.3 billion in subsidies under the scheme, “failed to establish that the providers could deliver the promised service,” the FCC claimed in a press release.
“As we transition to a digital future that requires ever more powerful and quicker networks, we must use the limited funds for universal service as effectively as possible. In a statement, FCC Chair Jessica Rosenworcel stated, “We cannot afford to support projects that are not delivering the promised speeds or are not likely to meet programme requirements.
Rosenworcel went on to say that Starlink is still “evolving” but that SpaceX’s technology has “great promise.”
CNBC’s request for comment was not immediately answered by SpaceX.
Notably, the $20.4 billion RDOF program’s initial phase was the FCC’s auction in December 2020; thus, SpaceX will probably make a bid for the remaining funds in subsequent auction rounds. Among the 180 bidding businesses, Musk’s company placed fourth in the first auction in terms of reward value.
The company’s idea, called Starlink, is to create a worldwide, interconnected network of satellites that will provide high-speed internet. More than 2,700 Starlink satellites have been sent into orbit by SpaceX, and as of May, the service had more than 400,000 members.
With $2 billion raised just this year, the business has been rapidly raising funds to support the construction of both Starlink and its next-generation rocket Starship.
Soon after receiving a different but equally significant approval from the FCC to offer mobile Starlink internet service to boats, planes, and trucks, SpaceX was denied inclusion in the RDOF programme.