FCC denies funding to Starlink and LTD, which won rural broadband subsidy auction but don't meet requirements

"LTD Broadband and SpaceX subsidiary Starlink emerged as two of the top 10 winners in the $9.2 billion Rural Digital Opportunity Fund broadband subsidy auction, but the Federal Communications Commission announced they won’t be taking home any winnings," Diana Goovaerts reports for Fierce Telecom. "In a decision issued a year and a half after the auction’s close, the FCC concluded neither would be able to provide the services they promised when bidding in the proceeding."

LTD was in line for $1.3 billion to bring gigabit internet to 528,000 locations in 15 states, but critics questioned whether a small company could provide services at such a scale, Goovaerts reports. Then LTD was unable to complete the paperwork to show it was an eligible telecommunications carrier in seven of those states by the June 7, 2021, deadline. FCC chair Jessica Rosenworcel warned auction winners that they would lose the funding if they couldn't meet their obligations.

With Starlink, which was to get $885.5 million to provide broadband to nearly 643,000 locations in 35 states, the FCC had several concerns. "In a public notice, the FCC cited recent Ookla data which showed Starlink speeds declined" from the fourth quarter of 2021 and the second quarter of 2022, "well below the promised 20 megabits per second," Goovaerts notes. Though signal reliability doesn't appear to have been a factor in the FCC's decision, a telecoms consultant recently warned that Starlink's satellites are too low in the sky to provide an unobstructed signal to many houses.

Starlink's affordability was also a key issue for the FCC, Emma Roth reports for The Verge, "Starlink increased the price of its starter kit and internet service earlier this year. To get set up, Starlink users now have to pay a $599 upfront fee for the satellite dish . . . on top of the $110 per month price for internet service. (It previously cost $499 for the starter kit and $99 per month.)"

Rosenworcel said Starlink's technology is promising, but not ready for large-scale development: "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. We cannot afford to subsidize ventures that are not delivering the promised speeds or are not likely to meet program requirements."