What do Starlink’s latest Ookla results mean for its $886 million Rural Digital Opportunity Fund winnings?

Ookla released a new batch of Speedtest results which showed median download speeds for SpaceX’s Starlink satellite broadband service jumped 38 percent year on year in the US in first quarter 2022. Even with that boost, the service still only delivered downstream rates of 90.55 Mbps, leaving it well short of the 144.2 Mbps median posted by the industry as a whole. And Starlink’s upload speeds actually dropped 33 percent year on year to 9.33 Mbps in the recent quarter. All of this data begs the question: What happens if Starlink can’t meet the 100/20 Mbps speed obligations attached to its Rural Digital Opportunity Fund (RDOF) projects? In December 2020, SpaceX emerged as a top winner in the Federal Communications Commission’s RDOF auction, which was designed to provide billions of dollars to support broadband deployments in unserved parts of the US. Of the $9.2 billion awarded in the Phase I auction, SpaceX won $885.5 million and committed to use the money to deliver its Starlink service to 642,925 locations across 35 states. RDOF rules set speeds of 25/3 Mbps as the minimum allowed for broadband service delivered by winners. However, participants were permitted to bid at four different performance tiers: 25/3 Mbps, 50/5 Mbps, 100/20 Mbps and 1 Gbps/500 Mbps. When the auction closed, the FCC noted 99.7 percent of locations were bid at 100/20 or higher, with 85 percent bid at the gigabit tier. That means Starlink will need to provide speeds of at least 100/20 in order to meet its obligations.