SpaceX gets FCC approval to bid in $16 billion rural-broadband auction

By | October 14, 2020
A SpaceX Starlink user terminal, also known as a satellite dish, seen against a city's skyline.
Enlarge / A SpaceX Starlink user terminal/satellite dish.

SpaceX is one of the 386 entities that have qualified to bid in a federal auction for rural-broadband funding.

SpaceX has so far overcome the Federal Communications Commission’s doubts about whether Starlink, its low-Earth orbit (LEO) satellite service, can provide latency of less than 100ms and thus qualify for the auction’s low-latency tier. With the FCC’s Rural Digital Opportunity Fund (RDOF) set to distribute up to $16 billion to ISPs, the FCC initially placed SpaceX on the “incomplete application” list, which includes ISPs that had not shown they were qualified to bid in their desired performance and latency tiers. The FCC also said that LEO providers “will face a substantial challenge” obtaining approval to bid in the low-latency tier because they must “demonstrat[e] to Commission staff that their networks can deliver real-world performance to consumers below the Commission’s 100ms low-latency threshold.”

That changed yesterday when the FCC announced the list of bidders that qualified for the auction that is scheduled to begin on October 29. Besides SpaceX, qualified bidders include Altice USA, CenturyLink, Charter, Cincinnati Bell, Cox, Frontier, Hughes, US Cellular, Verizon, Viasat, Windstream, and many smaller companies. There were 119 applicants that did not make the final list.

SpaceX appears to be the only LEO satellite provider in the approved list of applicants, with a partial exception: Hughes, a traditional satellite provider, is an investor in OneWeb and has said it will use OneWeb’s LEO capacity as part of its bid to get RDOF money. OneWeb, which is in bankruptcy, is not bidding in the auction itself. Viasat is considering a move into LEO satellites but, like Hughes, Viasat today uses geostationary satellites with poor latencies of around 600ms.

SpaceX’s Starlink service is in a limited beta and appears to be providing latencies well under the 100ms threshold. SpaceX still isn’t guaranteed to get FCC funding. After the auction, winning bidders will have to submit “long-form” applications with more detail on how they will meet deployment requirements in order to get the final approval for funding.

$16B directed at wholly unserved areas

The $16 billion available in the auction will be distributed to ISPs over ten years, paying all winning bidders combined up to $1.6 billion a year to deploy broadband in specified areas. SpaceX satellite service could theoretically be made available anywhere and doesn’t require wiring up individual homes, so this funding won’t necessarily expand the areas of availability for Starlink. But satellite operators can use FCC funding as subsidies allowing them to charge lower prices in areas that lack modern broadband access.

SpaceX CEO Elon Musk says the company has launched enough satellites for a “fairly wide public beta” that will be available to more customers in the northern US and “hopefully” in southern Canada. That doesn’t mean SpaceX will be limited to bidding in the northern US, as the company will be able to expand availability as it launches more of the nearly 12,000 satellites it is authorized to deploy.

The $16 billion in funding will be directed to census blocks where no provider reports offering home-Internet speeds of at least 25Mbps downstream and 3Mbps upstream. The list of approved census blocks contains 5.3 million unserved homes and businesses.

FCC Democrats have criticized Chairman Ajit Pai for proceeding with the auction without first completing the pending collection of more accurate broadband-availability data. Pai is pressing forward with the auction, but he also laid the groundwork for a second phase of the RDOF that should eventually distribute at least $4.4 billion in areas that are found to be unserved after the data collection. The FCC’s current data counts a census block as served even if only one home in the block has service—the new data that ISPs must submit will include geospatial maps to identify more unserved homes and businesses.

The RDOF, like the FCC’s other universal service programs, is paid for by Americans through fees on their phone bills.