Elon Musk's SpaceX Wants A Slice Of $20.4B Federal Subsidies Pie

SpaceX has asked the Federal Communications Commission to propose a policy change regarding federal subsidies awarded to internet service providers covering remote areas.

What Happened

Space Exploration Technologies Corp. (SpaceX) wants to compete for federal subsidies given to rural broadband providers. The company wrote a letter to the FCC last month and has met with Commission officials. SpaceX claims its satellite system has demonstrated the ability to provide a high-speed internet connection, reported the Wall Street Journal.

Starlink, the company’s global internet project, will use low orbit satellites to deliver global connectivity.

The FCC has not yet announced its decision on whether SpaceX will receive anything from the $20.4 billion earmarked to improve internet access to the rural U.S. over the next decade. The funding is to be distributed in October this year to low bidders. It will be made available in two phases: Phase I funding is $16 billion, while Phase II will be $4.4 billion.

Rivals are less than pleased with SpaceX’s plans to receive a share of the Rural Digital Opportunity Fund, a brainchild of Ajit Pai, the FCC Chairman. Jonathan Chambers, a partner at a rural internet company Conexon LLC, said, “We don’t let people speculate with the public’s money.” Also a congressional aide was quoted by the Journal as saying, “This will be a political disaster if Elon F’ing Musk gobbles up billions of dollars of the public’s money.”

Why It Matters

The FCC had published guidelines that barred satellite internet providers from participating in the bidding for subsidies citing technical reasons. The Commission noted that while medium earth orbit satellites and hybrid satellite technologies have the “potential” to deliver high-speed broadband to unserved rural areas these technologies have not been deployed widely to serve residential customers.

The Commission has stated however, that it may reconsider the feasibility of modifying its standards to accommodate satellite providers for Phase II of the Rural Digital Opportunity Fund.

What Else Is There

SpaceX has no plans to spin-off Starlink satellite-to-earth internet project into a separate company or to take it public.