Subsidy blow for Elon Musk raises questions over orbital broadband

The Federal Communications Commission withdrew nearly $900 million in subsidies that had been granted to satellite operator Starlink to bring the internet to 642,000 remote, rural locations. The FCC subsidy was key anchor revenue for a new satellite broadband constellation that has to heavily subsidize customer terminals — priced in most markets at $599 — in order to expand the service. The FCC, in reversing a December 2020 decision, called proposals from Starlink and another subsidy candidate “risky," and questioned Starlink’s ability to deliver a reliable and affordable offer. The latest decision cast a cloud not only over Starlink, which may still appeal, but over the many satellite broadband hopefuls around the world that are making a business case out of connecting the world’s 2.9 billion unconnected people. Acknowledging that “Starlink’s technology has real promise,” FCC Chairwoman Jessica Rosenworcel indicated the agency was not willing to “publicly subsidize its still developing technology.” Any government considering subsidies for new low earth orbit (LEO) broadband providers will have to weigh this trade-off between the cost and sustainability of an unproven business model and rapid internet access for the underserved.