FCC denies SpaceX and LTD $2.2 billion in broadband funding

SpaceX and LTD Broadband were in line to receive $2.2 billion in rural broadband funding, but the US government has decided it will not hand over the cash after all.

The pair were among the big winners in a $9.2 billion funding allocation process at the back end of 2020, the first phase in the Federal Communications Commission’s Rural Digital Opportunity Fund (RDOF) programme, a $20 billion-plus project set out two years ago with the goal of addressing the digital divide in the US.

LTD Broadband, a rural broadband specialist and fixed wireless provider, was one of three players to win north of $1 billion in phase one, having successfully bid for $1.32 billion of funding to cover more than half a million locations across 15 states with high-speed broadband. Elon Musk’s SpaceX, meanwhile, came away with $885.5 million to help it supply broadband connectivity across 35 states.

What we didn’t realise at the time was that the funding awards were subject to analysis of the companies’ long-form applications. And apparently those of LTD and SpaceX did not come up to snuff.

“After careful legal, technical, and policy review, we are rejecting these applications,” said FCC chairwoman Jessica Rosenworcel. “We must put scarce universal service 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.”

In Starlink’s case, the biggest question mark appears to be over the cost of consumer premises equipment.

“Starlink’s technology has real promise,” Rosenworcel said. Damning the satellite player with faint praise, perhaps? “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.”

Essentially, the FCC believes that consumers in rural areas will not shell out that much for the kit, therefore it will not hand over the cash for the network build.

LTD Broadband, meanwhile, which the FCC reminds us was actually the biggest winner in the phase one contest, has not secured the licences it needed for its planned network build in seven states, making it ineligible to receive state support in those areas and throwing its whole project into doubt.

“Ultimately, the FCC review concluded that LTD was not reasonably capable of deploying a network of the scope, scale, and size required by LTD’s extensive winning bids,” the regulator said.

The news doubtless comes as a blow to both companies, although they have yet to make an official comment on the matter.

It also appears to have come as a shock to one member of the FCC.

“I am surprised to find out via a press release—while I am on a work trip to remote parts of Alaska—that the FCC has made this significant decision,” said Commissioner Brendan Carr. “I will have more to say because we should be making it easier for unserved communities to get service, not rejecting a proven satellite technology that is delivering robust, high-speed service today.”

With political infighting having long been characteristic of the FCC, Carr’s ire is hardly unexpected. But it does suggest that this story is perhaps not over yet.

Meanwhile, the FCC’s chair is focusing on the companies that have made the grade.

Rosenworcel noted that the FCC is ready to give the go-ahead to hand over $21.1 million in broadband funding to three companies planning to cover 15,000 locations in Tennessee, Texas, Utah, and Wyoming.

The RDOF programme has authorised over $5 billion in funding to date, primarily for fibre, with hundreds of carriers having begun rollout, the FCC added.

Good news for those living in the 3 million locations covered. But scant consolation for SpaceX and LTD.

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