Starlink won—and then lost—$886 million in connectivity funds

If Starlink’s broadband coverage claims sounded too good to be true, that’s because they were, according to a decision released Tuesday by the Federal Communications Commission.

The agency affirmed that Elon Musk’s satellite connectivity company is not eligible for nearly $900 million in rural broadband infrastructure subsidies it initially won in an auction. Although the company appeared to possess the prerequisite “legal, technical, and financial qualifications,” the FCC said that ultimately, “Starlink failed to demonstrate that it could deliver the promised service.”

The FCC “has a responsibility to be a good steward of limited public funds meant to expand access to rural broadband, not fund applicants that fail to meet basic program requirements,” Chairwoman Jessica Rosenworcel said in a statement.

The agency specifically disqualified Musk’s company from receiving money from the Rural Digital Opportunity Fund, a $6 billion pool of subsidies aimed at delivering high-speed internet service to places that are completely disconnected. The company made initial commitments to serve nearly 643,000 locations across 35 states, qualifying on its face for $886 million in infrastructure funds.

However, when the FCC examined Starlink’s application more closely—as it did for all subsidy recipients—it concluded Starlink’s technology simply couldn’t get the job done.

The FCC noted that it was already suspicious of whether low-earth orbit satellite constellations could provide high-speed internet service, because “it was unaware of any real-world examples of LEOs providing the low-latency service” as required by the fund’s benchmarks.

The FCC’s two Republican commissioners dissented from the decision, saying it’s another example of the Biden administration’s unnecessary, politically motivated scrutiny of Musk’s enterprises.

According to FCC Republican Brendan Carr, the agency should’ve been more open-minded about giving emerging technologies a chance to connect rural America. Based on Starlink’s own performance data in Europe and speed tests in the US, he said it’s shown more than enough promise.

“In the case of technologies like Starlink’s LEO system, progress is not measured in a straight line,” he said.

It’s true that Starlink has had a good year. The company is handling nearly three times the global internet traffic as it did a year ago, according to Cloudflare, including 2.5 times more traffic in the US. (The IT security firm is reportedly working with Starlink to speed up its internet service.)

However, satellite internet is still a relatively untested source for high-speed broadband on a large scale, as the FCC noted, and current users say the services can be so unreliable that it’s unusable.