Elon Musk’s SpaceX Angers Its Competitors for Broadband Subsidies

The federal government is now planning a final round of investigations before giving major input that Mr. Musk’s technology can reduce the persistent gaps in the US high-speed Internet service. The bulk of the $ 9.2 billion in subsidies awarded by the Federal Communications Commission was earmarked for more established technologies, including companies laying fiber optic cables.

The FCC requires SpaceX and others to be eligible for grants to demonstrate their financial and technical tools to build a network, and Friday was the deadline to submit those plans.

SpaceX rival dollar rivals are appealing to the FCC and its new leadership under the Biden administration to take a closer look at the plans, and they are stepping up their support on Capitol Hill.

More than 150 members of Congress wrote to the FCC on January 19 urging ‘to thoroughly veterinarian the bidders to ensure they are capable’ and to ‘consider opportunities for public input on the applications’.

The letter, in which SpaceX or other companies were not named, was subsequently promoted online by two trading groups that competed for federal subsidies: the National Rural Electric Cooperative Association and the Rural Broadband Association.

“We’re actually funding an experiment here,” said Jim Matheson, chief executive of the National Rural Electric Cooperative Association, which also represents electricity suppliers for subsidies to expand fiber-optic broadband networks. “We do not know if it works or not,” he said in an interview, referring to the SpaceX system.

Representatives of SpaceX, whose official name is Space Exploration Technologies Corp., did not respond to requests for comment.

Supporters of the SpaceX plan say that the delivery of broadband via satellite could have the potential to reach isolated homes and businesses at significantly lower costs.

Meanwhile, federal subsidies could help curb Mr. Musk to strengthen high-speed satellite satellite delivery worldwide, an enterprise that is key to its financial success.

An FCC representative declined to say when the agency would expect to make a decision on the SpaceX plan, citing the agency’s published procedures. They do not provide a timeline for the approval of applications and mention that the applications with detailed plans are usually not made public until they have been approved.

SpaceX is not the only company whose satellites use satellites, nor is it the only winner that generates controversy. Mr. Matheson pointed to large sums funded by ISPs using so-called fixed-wireless technology, which apparently eliminates fiber-based providers, although fiber technology is usually considered faster.

According to the FCC, SpaceX plans to use the money to provide broadband to more than 640,000 locations in 35 states that do not yet have fast access. Many of these are homes and businesses in rural areas where the cost of building a high-speed network has so far exceeded the potential revenue that broadband businesses could fetch.

In a January 22 submission to the FCC, SpaceX pointed to initial deployments in states like Washington.

“SpaceX is continuing the rapid deployment of its next-generation satellite system and is already bringing high-throughput and low-latency broadband service to otherwise unattended Americans across the country,” the company said.

In a documentary last year, it cited its technology as a service to the “most difficult-to-reach Americans in rural areas, for whom access has been unreliable for too long, excessively expensive or completely unavailable.”

FCC Commissioner Jessica Rosenworcel, a Democrat who serves as acting chairwoman while the new government decides on the candidate, declined to comment. She was critical of the FCC, which continued with the subsidies last year, and said the agency should wait until it has better information on where broadband is needed.

FCC Commissioner Brendan Carr, a Republican who helped develop rules for the subsidy program, said the program allows suppliers using different technologies to compete against each other, which reduces subsidy costs for the government. “There will be a range of different technologies that will be best suited” to close gaps in different locations, he said.

SpaceX’s move to secure broadband funding is part of a broader Washington-focused strategy that also includes government contracts for the transportation of astronauts, the launch of satellites for national security, weather forecasting and missile tracking.

During the FCC-controlled broadband auction last year, the bidder offered the fastest internet service at the lowest price in a particular geographic area, access to the federal subsidies, which come from the so-called universal service fees on telephone bills for consumers.

Although SpaceX’s technology is slower than some others, such as fiber optic cables, the bid was successful in areas where faster providers were not interested, including large parts in the Northwest.

The Hawthorne, California-based company, will receive the fourth most funds from any group competing at the auction, and is responsible for nearly 10% of the $ 9.2 billion to be distributed.

SpaceX began offering test versions of its Internet service last year, priced at $ 99 a month with an initial equipment cost of $ 499 for customers, according to reports in October quoting a promotional email from the company word. It is not clear how the new federal subsidies could affect prices.

Washington state public entities, including a school district and an emergency management agency, are already using the service, according to the SpaceX FCC filing on January 22. According to the submission, the company has launched 955 satellites with thousands more planned.

The deployment was not without bumps. SpaceX initially planned to bring the Internet service online as early as 2018, but has faced delays and high costs, The Wall Street Journal reported. Some of the satellites failed. SpaceX has also asked the FCC to make changes to its license, as it is trying to tamper with the system and concerns that the satellites could collide with other objects and thus cause space pollution.

Skyler Ditchfield, CEO of GeoLinks, a fixed-wireless Internet provider in California that also participated in the FCC auction, noted that SpaceX had promised to build the network before obtaining subsidies.

‘To pay extra funds to them to do something for which they have already committed [do] does not seem to me to be in the best interest of the public, ”he said in an interview.

Nearly 13% of the money allocated to SpaceX, about $ 111 million, is earmarked for groups of census blocks that include urban areas, according to an analysis of public data by Free Press, an advocacy group that criticizes the FCC’s auction process.

Many of the groups are close to areas served by existing providers, such as cable companies. It appears to be inconsistent with the FCC’s stated goal of allocating money to unoccupied rural areas, although Free Press has said it finds no evidence of breach of rules. The FCC did not comment.

Mr. Carr, the Republican FCC commissioner, said the government is getting something for its money.

“Now we have a legally binding commitment that they all serve in those areas,” he said. “We have to hold every entity that has won accountable, and we have to take very strong enforcement action against any entity, any technology that falls short.”

Write to Ryan Tracy by [email protected]