Elon Musk’s SpaceX confuses its rivals for broadband subsidies

The federal government is now planning a final round of vetting before betting big that Mr. Musk’s technology can help close stubborn gaps in US high-speed Internet service. Most of the $ 9.2 billion in grants awarded by the Federal Communications Commission went to more established technologies, including companies that laid fiber optic cables.

The FCC is demanding that SpaceX and others qualify for grants to demonstrate their financial and technical resources to build a network, and Friday was the deadline for submitting those plans.

SpaceX’s rivals for subsidy dollars are calling on the FCC and its new leadership under the Biden government to take a closer look at those plans, drumming support for their cause on Capitol Hill.

More than 150 members of Congress wrote to the FCC on Jan. 19, urging “a thorough investigation of the winning bidders to ensure they are capable” and “consider opportunities for public input on the applications.”

The letter, not identifying SpaceX or other companies by name, was then promoted online by two trade groups vying for the federal grants: the National Rural Electric Cooperative Association and the Rural Broadband Association.

“We’re basically funding an experiment here,” said Jim Matheson, chief executive of the National Rural Electric Cooperative Association, which represents electricity providers who are also eligible for grants to deploy fiber optic broadband networks. “We don’t know if it works or not,” he said in an interview, referring to the SpaceX system.

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

Proponents of the SpaceX plan say that providing broadband via satellite has the potential to reach isolated homes and businesses at a significantly lower cost.

Meanwhile, federal grants could contribute to Musk’s company plans to provide high-speed satellite Internet worldwide, a venture considered key to its financial success.

An FCC representative declined to say when the agency expected to make a decision on the SpaceX plan, pointing to the agency’s published procedures. They do not provide a timeline for the approval of requests and state that the requests with detailed plans are generally not public until they are approved.

SpaceX isn’t the only company whose system uses satellites, nor is it the only winning bidder causing controversy. Mr. Matheson pointed to large amounts of funding secured by ISPs using so-called fixed-wireless technology, seemingly beating fiber-based providers, although fiber-optic technology is generally considered to be faster.

SpaceX plans to use the money to provide broadband to more than 640,000 locations in 35 states that don’t yet have high-speed access, the FCC said. 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 revenues that broadband businesses can expect.

In a Jan. 22 filing with the FCC, SpaceX pointed to the first deployments in states such as Washington.

“SpaceX continues the rapid rollout of its next-generation satellite system and already provides high-throughput, low-latency broadband service to Americans who would otherwise not have been serving nationwide,” the company said.

In a filing last year, it praised its technology as a service to “the hardest-to-reach rural Americans, whose access has been unreliable, unaffordable, or not available at all for too long.”

FCC Commissioner Jessica Rosenworcel, a Democrat who serves as acting chairman while the new government makes a decision on the candidate, declined to comment. She was critical of the FCC’s progress on the grants last year, saying the agency should wait until it has better data on where broadband is needed.

FCC Commissioner Brendan Carr, a Republican who helped develop rules for the grant program, said the program allowed providers of different technologies to compete with each other, reducing the cost of the grants to the government. “There will be a range of different technologies that will be best suited” to close service 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 to transport astronauts, launch national security satellites, weather forecasts, and track missiles.

During last year’s FCC-led broadband auction, the bidder offering the fastest internet service at the lowest price in a given geographic area was given access to the federal subsidies, which come from so-called universal service charges on consumers’ phone bills.

While SpaceX’s technology is slower than some competing ones, such as fiber optic cable, the company’s bids were successful in areas where faster carriers weren’t interested, including major stretches in the Northwest.

The Hawthorne, California-based company will receive the fourth most funds of any group competing in the auction, accounting for nearly 10% of the $ 9.2 billion distributed.

SpaceX began offering trial versions of its Internet service last year, priced at $ 99 per month with an initial cost of $ 499 in customer equipment, according to October reports citing a promotional email from the company. It’s not clear how the new federal subsidies could affect those prices.

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

The rollout has not gone without bumps. SpaceX initially planned to bring the internet service online as early as 2018, but faced delays and high costs, The Wall Street Journal reports. Some satellites have failed. SpaceX has also asked the FCC for changes to its license, as it is tinkering with the system and trying to allay concerns that the satellites could collide with other objects, causing space junk.

Skyler Ditchfield, CEO of GeoLinks, a California wired wireless internet service provider who also entered the FCC auction, noted that SpaceX promised to build the network before any subsidies came in.

“To pay them extra money to do something they have already committed to [do] does not seem to me in the interest of the public, ”he said in an interview.

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

Many are near areas served by existing carriers, such as cable companies, the group said. That seems to run counter to the FCC’s stated goal of allocating money to unprocessed rural areas, although Free Press said it found no evidence of rules breaking. The FCC had no comment.

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

“Now we have a legally binding commitment that they serve everyone 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 every entity, every technology that falls short.”

Write to Ryan Tracy at [email protected]