The Federal Communications Commission (FCC) on Tuesday upheld its decision to deny Starlink $885.5 million in winnings from the Rural Digital Opportunity Fund (RDOF) broadband subsidy auction.
The SpaceX subsidiary initially won its bids on December 7, 2020 to provide 100/20 Mbps service to 642,925 locations across 35 states. It was one of the top ten winners in the auction.
However, in August 2022, the FCC announced Starlink (along with LTD Broadband – which rebranded to GigFire in March 2023) weren’t qualified to provide the services they promised in their RDOF bids. Starlink then filed an appeal for the FCC’s decision.
FCC Chairwoman Jessica Rosenworcel said in a statement Tuesday the Commission “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.”
She added the FCC conducted a “careful legal, technical and policy review” to determine Starlink “failed to meet its burden to be entitled to nearly $900 million in universal service funds for almost a decade.”
When the FCC first issued its rejection of Starlink’s RDOF application, it cited Ookla data between Q4 2021 and Q2 2022 that indicated the provider’s upload speeds fell below the 100/20 Mbps minimum for RDOF projects.
According to an Ookla article published this week, Starlink’s median download performance in the U.S. was 64.54 Mbps in Q3 2023 – “a marginal decline quarter on quarter.”
Ookla Lead Industry Analyst Mark Giles said although Starlink can’t match cable or fiber on median speeds or multi-server latency, it offers a “viable alternative” in locations lacking cable and fiber access networks.
“A big part of this is due to a more uniform distribution of download performance across Speedtest samples, compared to FWA and DSL-based services where distance from the cell site or exchange/DSLAM [digital subscriber line access multiplexer] impacts performance,” Giles wrote.
SpaceX responded to the FCC’s decision in a filing, stating it is “deeply disappointed and perplexed.”
“Starlink is arguably the only viable option to immediately connect many of the Americans who live and work in the rural and remote areas of the country where high-speed, low-latency internet has been unreliable, unaffordable, or completely unavailable, the very people RDOF was supposed to connect,” wrote SpaceX Legal VP Christopher Cardaci.
Cardaci noted Starlink now has more than 2.2 million global customers, with more than 1.3 million in the U.S. He also stated in 2023 alone, Starlink “nearly doubled the number of Americans on the network,” adding customers in all 50 states, including Alaska.
The FCC maintaining its rejection of Starlink’s RDOF application comes about a week after the agency proposed a $22 million fine to LTD and Etheric Communications for defaulting on RDOF bids.
What’s next for Starlink? Recon Analytics’ Roger Entner said while the FCC’s decision was expected, Starlink will continue its deployments “at exactly the same pace as it would have with the money.”
“They wouldn’t launch even a single [additional] satellite if they would have gotten the RDOF money,” Entner told Fierce Telecom. “If RDOF money is supposed to be an incentive to build out something that is otherwise not financially viable then Starlink didn’t need the money.”