DIGITAL LIFE

Free Starlink dish and 100 Mbps downloads trump fiber in federal subsidy push to cover rural areas

The SpaceX undertaking of Elon Musk is winning the federal government's Broadband Equity Access and Deployment (BEAD) program allocation with its offer of free Starlink Standard Kit. A recent change in broadband service definitions for rural areas paved the way for Starlink's federal subsidy success.

Starlink has won another state auction to provide broadband Internet to the so-called "underserved locations," mainly rural regions in sparsely populated states where laying costly fiber would not be economically viable if not for federal subsidies.

The government's Broadband Equity Access and Deployment (BEAD) program dispersed more than $42 billion to all US states and territories with the goal to provide broadband Internet access to every American, including those living in remote locations.

During Elon Musk's brief stint at the White House, BEAD tweaked its broadband Internet definitions to accommodate satellite Internet providers like Starlink. The controversial change was met with incredulity from terrestrial fiber optics Internet providers, as it puts their costly endeavors into funding disadvantage.

Ohio got $793 million allocated under the BEAD program, for instance, but will make do with only $227 million under the state's final proposal by paying Starlink $53 million to cover 43% of the Broadband Serviceable Locations (BSL) for which the government funding goes.

    Starlink won the highest number of the Broadband Serviceable Locations (BSL) in Ohio's proposal(image above)

In comparison, Ohio will pay Spectrum the highest share of allocated funds, or more than $80 million, to cover 14% of the BSL roster with fiber. Under the new BEAD guidelines, satellite Internet providers like Starlink could score every time, as they did in Montana, where Starlink got $119 million in federal subsidies for 28% of the local BSL portfolio, while Amazon's Project Kuiper got only $26 million of the local funding for 37% of BSLs.

States are understandably prioritizing ease and speed of rollouts rather than the quality of the Internet service that will go to rural and underserved locations. Satellite Internet providers would win every time against fiber under those metrics, as the requirement for Starlink in Ohio is to only provide a free dish and 100 Mbps download speed, rather than discount the monthly service fee. That is the cheapest way for Starlink to grow, as it often cuts the price of its Standard Kit to sell it at cost and use it as a gateway promo to collect hefty monthly fees anyway. 

In contrast, fiber can provide up to 1 Gbps speeds, a feat that will only be possible for Starlink next year when it starts launching its V3 satellites with the Starship 3 rocket, and only if one buys the pricey Performance dish that will certainly be out of reach for the federal BEAD program.

mundophone