FCC rescinds nearly $1 billion in Space X subsidies for rural broadband

The Federal Communications Commission (FCC) has rescinded nearly $1 billion in rural broadband subsidies to Space X‘s Starlink satellite service.

In a news release, the agency said that it determined that applications from Space X and another firm, LTD Broadband, failed to meet the requirements for government funding for its Rural Digital Opportunity Fund (RDOF) program. 

The FCC previously awarded Space X nearly $886 million in 2020 in an effort to expand high-speed internet access to rural areas through its Starlink satellite service.

The agency also awarded LTD Broadband $1.32 billion for the same purpose, but the Las Vegas-based business struggled to expand its service, failing to receive eligible telecommunications carrier status in seven of fifteen states. 

“After careful legal, technical, and policy review, we are rejecting these applications. Consumers deserve reliable and affordable high-speed broadband,” FCC Chairwoman Jessica Rosenworcel said in a statement on Wednesday.  

“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,” Rosenworcel added. “We cannot afford to subsidize ventures that are not delivering the promised speeds or are not likely to meet program requirements.”

Rosenworcel added that Space X’s Starlink service has real potential, but noted that the agency questioned subsidizing a service that required its customer to purchase a $600 satellite dish for access. 

LTD Chief Executive Corey Hauer told the Wall Street Journal his company was disappointed by the decision.

“I don’t believe the FCC fully appreciated the benefits LTD Broadband would bring to hundreds of thousands of rural Americans,” he said.

The federal RDOF program has authorized more than $5 billion in funding to deliver better broadband services to over 30,000 locations across 47 U.S. states. Hundreds of carriers have begun the process of deploying the networks to unserved areas.

The Hill has reached out to Space X for comment.