Annoyance Builds At Elon Musk Getting A Billion In Subsidies For Starlink Broadband

from the not-really-helping dept

So we’ve noted a few times how Elon Musk’s Starlink is going to be a great thing for folks stuck out of reach of traditional broadband options. Though with a $600 first month price tag ($100 monthly bill and $500 hardware charge) it’s not some magic bullet for curing the “digital divide.” And without the capacity to service more densely populated areas, the service is only going to reach several million rural Americans. That’s a good start, but it’s only going to make a tiny dent for the 42 million Americans that lack access to any broadband, or the 83 million currently stuck under a broadband monopoly (usually Comcast). Starlink is going to be a good thing, but not transformative or truly disruptive to US telecom monopolies.

There are a few other issues with the tech as well. One is the creation of light pollution that’s harming scientific research (which US regulators have absolutely no plan to mitigate). Then there’s the fact that Musk’s Starlink recently gamed the broken FCC auction process to nab nearly a billion dollars it doesn’t really deserve. Consumer group Free press did a good job breaking down how we’re throwing a billion dollars at the second richest man on the planet via an FCC RDOF auction that’s very broken, and by proxy easily exploitable by clever companies:

“But lest I be accused of West-Coast bias, here?s a parking lot outside the Pentagon, where Elon Musk?s Starlink is getting scarce ratepayer funds to offer his ?coming soon? satellite service, one that he?s previously said was intended to bring broadband to the hardest-to-reach rural areas. Apparently Uncle Sam wants you to pay for completely unnecessary satellite-internet service to an urban parking lot a few feet from one of the most connected properties on the planet.

Again there’s really no reason to be subsidizing Musk here. Especially for somebody that has lots of deep thoughts on stuff like “socialism.” Needless to say, there’s a growing roster of companies and broadband co-ops that also aren’t particularly keen on Elon Musk getting money that could be going to truly struggling local broadband providers, many of which operate on highly restrictive budgets, and are deploying actual fiber connections:

“SpaceX?s broadband-from-orbit ?is a completely unproven technology,? said Jim Matheson, chief executive officer of the National Rural Electric Cooperative Association, which has members that vied for the funding. ?Why use that money for a science experiment?”

I think it’s less about the tech not working (early beta reports are pretty great), and more about not throwing a billion dollars at a billionaire for a low orbit satellite technology that’s both inferior to fiber, and easily funded by Musk without the government’s help. To get money from the government, Musk’s Starlink promised it could deliver 100 Mbps to each consumer. And while users on the largely empty network are seeing those speeds, another report this week suggested they’d probably never hit that benchmark for most users:

“Boiled down further, the study estimates that 56% of SpaceX’s RDOF locations in a “low capacity” use case (average data usage of 15.3 Mbit/s per location) and 57% of locations in a “high capacity” use case (average data usage of 20.8 Mbit/s per customer) “will experience service degradation during peak times and not meet the RDOF public interest requirements.” The Cartesian study also estimates that 25% to 29% of locations will receive an average of less than 10 Mbit/s of capacity during peak times.”

To be clear, some of these critics are companies that are simply worried about having to compete with Starlink. I imagine that smaller WISP CEOs aren’t sleeping particularly well right now. Traditional satellite providers, whose costly, capped, and high latency services have been mocked for decades, aren’t going to enjoy competition from Starlink either. Rural cellular companies are also probably going to lose some subscribers. Especially if Starlink winds up being easy to use and delivers consistent speeds (which we won’t see until they launch a fully loaded commercial network).

But that still doesn’t really address that the planet’s second wealthiest man shouldn’t be subsidized for a project he would have paid to deploy anyway, and is only likely to put a small dent in the overall problem. One more time for scale: Starlink will probably help serve somewhere between 485,000 to 1.5 million subscribers. There are 42 million in the US without broadband, 83 million stuck under a monopoly, tens of millions more stuck under duopoly, and then countless millions more who can’t afford service due to monopolization. Starlink will be helpful, but it’s a drop in the bucket.

There’s a lot of middle and last-mile fiber-based broadband solutions that will have a lot more capacity, being pushed by companies for which a few million bucks is a life or death equation. Instead we’re throwing a billion at a billionaire for a service that’s not really all that affordable, and, once fully loaded to capacity is very likely to come with all manner of throttling, deprioritization, and other restrictions in the post net neutrality era. Add in an FCC whose broadband maps suck and auction processes are completely broken, and you can probably see how this isn’t a recipe for success.

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Companies: space x, starlink

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Comments on “Annoyance Builds At Elon Musk Getting A Billion In Subsidies For Starlink Broadband”

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Anonymous Coward says:

Real satellite coverage > Hypothetical fiber coverage

Sadly I suspect that Starlink will be a miracle in practice for FCC funding rate of return. While they certainly /can/ roll out more fiber for better service in practice they don’t. They have had decades to roll out more fiber and yet they haven’t. Google Fibre failed to do so against those incumbents (of course they also infamously have tissue paper wills).

The real question about the billion they are whining about not going to small companies – why haven’t they already taken the money to roll out rural coverage? For all of the sins of the Starlink approach narrow coverage isn’t one of them.

This comment has been deemed insightful by the community.
brent says:

Re: Real satellite coverage > Hypothetical fiber coverage

I agree with your basic premise. How much have the major telcom companies received in the past 20 years to "eliminate the digital divide". AT&T barely maintains their POTS lines here and fiber? Don’t make me laugh.

I’m all for supporting local ISP efforts but in my area no one wants to invest. And the FCC’s model for the past twenty years has been to assume that money expended equals results.

At least Musk is deploying something.

OGquaker says:

Re: Re: Re: Re:

The DOD has a big woody for his system and has been testing and putting in $$, thus the parking lot. For the major US airports with international traffic, his system will have little or no external vulnerability, thus that part of the government boost. My pets love me when i remove a infected thorn from their foot or tummy but I have yet to get a curtsy.

Anonymous Coward says:

The Biden fcc needs to look at the problem of
Lack of competition , lack of investment , laws blocking municipal networks , mergers that reduce competition in the mobile telecom sector ,
But maybe no politican wants to attack big telecom because they make donations
and have strong lobbying power
Companys should not be getting paid for providing satellite acess in areas where there’s faster fibre networks available
And stop giving massive tax breaks to company’s who
Do not actually build out new fibre networks to consumers

aerinai (profile) says:

Yeah but...

So, we could pay a company that has promise, is geographically diverse, and would force innovation, or we could give the same amount of money to Charter/Verizon/Frontier to do… checks notes… promise the world and do nothing after taking the money.

Having an option in a rural area is amazing. If the subsidies help speed things up, or, at least give less to these grift-taking monopolies, I say Godspeed.

Just because it isn’t optimal, no one is offering any other alternatives. Him being rich shouldn’t have anything to do with the conversation.

"How dare he be competent and take money from the incompetent telcos that refuse to honor their commitments!" /s

This comment has been deemed insightful by the community.
That One Guy (profile) says:

Re: Yeah but...

Just because it isn’t optimal, no one is offering any other alternatives. Him being rich shouldn’t have anything to do with the conversation.

Community broadband. TD has posted a number of articles in the past about local communities tired of getting gouged if not flat out ignored by the major ISP’s deciding to do it themselves(often facing stiff hurdles by those same companies who don’t want to compete), and who would likely really appreciate a chunk of that billion and could put it to good use.

Bruce C. says:

Re: Yeah but...

Musk/Starlink have clearly studied the market and competition and learned from their practices.

There’s also the element that Starlink is part of SpaceX, and all of this is probably part of a broader move to take SpaceX public. A profitable internet service would be a good way to boost revenue.

That said, on the spectrum from no internet to gigabit internet, complaining that Starlink doesn’t have the capacity to solve the digital divide all by itself is a bit of a strawman. The whole point is to serve rural customers. Given the number of states that have made community broadband impossible, Starlink is proving that serving these customers without community broadband is possible. Looking at the ISP market as it is, rather than as it should be, Starlink will fill an underserved niche.

Yeah, starlink is being overpaid for this level of service, but much of the blame for that is in the auction and subsidy process itself. All of the incumbent ISPs have carefully lobbied to build an FCC process that pays them cash for minimal deployment. Starlink had to fight to get the FCC to even consider them eligible for the rural broadband subsidies ( , so it’s ironic to see the slant of the story morphed to Starlink taking advantage of the FCCs subsidy process.

To be fair TD has always been skeptical about the hype around Starlink. And Elon Musk is a hypester on the same level as Steve Jobs — he’s able to make you "need" something you didn’t even realize you wanted. But both Jobs and Musk also have a reputation for delivering a real product or service that meets enough of the hype to convince people to buy it.

OGquaker says:

Re: Yeah but... WhatAboutBlackLivesMatter?

Fairchild got Govmnt’ money to develop the integrated circuit. RCA got subsidized by the Govmnt’ to kill off Marconi’s radio patents. Thompson, Ramo & Wooldridge got paid by the Govmnt’ to steal computer image Patents. Standard Oil of New Jersey got Govmnt’ money to fire-bomb fake Jap’ cities in Utah with Harvard’s Govmnt’ Napalm. Boeing and Northrop and Lockheed got billions O Govmnt’ monies to inject millions of pounds of toxic solids into the stratosphere with the maybe-someday Orion($12b spent) was Constellation($230b spent, cancelled) became Ares-V(Cancelled) became S.L.S.($21b spent) then mostly Cancelled February 2021: Ask 34 year Senator Shelby(D)(R) about Govmnt’ subsidies. The man knows, It’s his $263b.

Who Cares (profile) says:

Needless to say, there’s a growing roster of companies and broadband co-ops that also aren’t particularly keen on Elon Musk getting money that could be going to truly struggling local broadband providers, many of which operate on highly restrictive budgets, and are deploying actual fiber connections

Can I go conspiracy theorist on this? No matter here it is:
Seeing that the process is broken (as claimed earlier) the majority of the money wasn’t meant for them. They are just being used as a smokescreen by the usual suspects who are now complaining that someone managed to get the money that was meant for them.

This comment has been deemed insightful by the community.
That One Guy (profile) says:

Re: Re: Re:

Any time you post a comment with formatting it’s always a good idea to use the ‘Preview’ option to make sure it comes out as desired. It won’t catch everything but it should allow you to avoid bigger errors.

As for the idea in your comment, little of column A, little of column B I’d think, with some smaller ISP’s honestly angry that an insanely rich person is being thrown a billion dollars that they could use more and others annoyed that they didn’t get as much free money as they wanted and their complaints merely sour grapes.

OGquaker says:

Re: Re: Re: an insanely rich person is.. WhatAboutHillery?

That guy put a thousand (short operational life) satellites into low earth orbit, insanely expensive. Adding laser interconnects and hundreds of ground stations and ten thousand customers? Our market economy loves it. It’s our fraudulent "Capitalism" that is scared shitless.
NO consumer satellite data or phone service has yet to survive at a profit: Motorola’s system was sold for a penny-on-the-dollar to some guy living on Palos Verdes peninsula; basically the CIA.
P.S. Musk was worth a tiny fraction when the commitment to build an ISP was made, and he was worth $0 in Christmas of 2008.
Since, Tesla has built 1.2 million cars, GM built less that a thousand EV-1s. The confusion is what a market is.

Anonymous Coward says:

A point to be considered is that where Starlink spends money to build a ground station is determined by availability and access to the fibre backbone, and an ability to see satellites over an area they want serve, or when they get satellite to satellite links working, with a relay distance of one or two satellites to reach the target service area. I don’t know slant ground station slant range Starlink will get, but it will be better than the user terminals, because they can use more and better aerials.

I expect that the ground station can be 60 or more miles from a targetted service area. Also, the immediate area round where they are build will have good fibre connectivity, because that is also what the ground station needs.

Anonymous Coward says:

Also for scale

$1B / 500,000 = ~ $2,000 per subscriber.

A friend of mine, in underserved (but not unserved) parts of rural Washington (but < 10 miles from a significant town) was asked for something like $10,000 to have 1 mile of fiber laid up his driveway.

Just briefly browsing the web, some folks get charged $5,000 to get hooked up even though the service provider has a manhole in the street outside the house. In another case, a homeowner was given an offer of $32,000 for a half-mile (or so) cable lay (and some new hardware on the provider’s side).

So sure, $1 billion doesn’t go very far in the overall picture. But even if say the ISPs are doubling the cost in order to show profit (which they probably are not), how far would it go, in the physical-cable world?

That One Guy (profile) says:

'You get the money when you offer the service, no sooner.'

While the money would be better off spent on community broadband efforts if they’re absolutely dead-set on giving someone who could consider a billion dollars a rounding error the money and want it to actually help it seems to me that all of it should be earmarked to help pay for the hardware involved on the customer’s side, as even at the max estimate of 1.5 million subscribers a billion dollars would be more than enough to cover the equipment costs for all of them, which is set to be the major financial hurdle for prospective customers, allowing more people to be able to afford to use the service.

This would allow Musk to put his money into actually setting the service up while allowing potential customers who might otherwise be unable to spare several hundred dollars to sign up the ability to do so, reducing the risk of yet another ‘throw money at rich company only to see them pocket it’ debacle that so plagues the ISP market.

OldMugwump (profile) says:

Annoyance at Musk is misdirected

It’s perfectly reasonable for people to be upset that our broadband subsidy schemes aren’t working and are poorly designed.

But I don’t think it’s reasonable to be annoyed at Musk, or anybody else, who follows the rules-as-written and picks up the money we the public, thru our elected representatives, foolishly left on the table.

Esp. if those picking up the money didn’t lobby for the rules to be written that way in the first place.

FWIW, Starlink is in fact solving much of the problem with rural broadband access – not just in the US, but worldwide.

The "digital divide" is a separate problem – for the most part, the problem is that there are lots of people who can’t afford broadband. And if you think subsidy is justified to fix that, then give them money – not subsidized broadband.

(If people choose to spend that money on things other than broadband, well maybe they need those other things more than they need broadband.)

That One Guy (profile) says:

Re: Annoyance at Musk is misdirected

But I don’t think it’s reasonable to be annoyed at Musk, or anybody else, who follows the rules-as-written and picks up the money we the public, thru our elected representatives, foolishly left on the table.

If I set up a food kitchen in an area with a lot of homeless people the fact that I didn’t explicitly spell out that if someone makes several hundred thousand if not a million-plus a year the food on offer is not for them would not make it less of a dick move if someone who falls into that category decided to show up and pick up a free lunch. Musk is anything but hurting for money, the fact that he can apply for government money does not make his doing so any less deserving of condemnation.

Anonymous Coward says:

Re: Re: Annoyance at Musk is misdirected

Your analogy isn’t a very good one for the RDOF. The RDOF is more like a banquet held in a marquee set up on the prettiest location in a park, with a big sign saying "free fancy food for a better class of people" with a few tables set up down by a stinking, mosquito-ridden swamp in case some poor people wander in uninvited.

Yes, the whole thing is corrupt as hell, but why is it OK to criticise the one person in the marquee who is doing something that helps some people, even if not everyone, like running telephone wirew to streets on the "wrong side of the tracks" and ignore all the other fat cats who aren’t doing a thing to help anyone?

OldMugwump (profile) says:

Re: Re: Annoyance at Musk is misdirected

The food kitchen analogy is inappropriate here.

SpaceX (which owns Starlink) is a corporation with many owners, of which Musk is merely the largest.

For the investors to forego picking up money on the table to which they are legally entitled merely because the largest investor happens to be very wealthy, would be kind of crazy.

These subsidies are offered for the purpose of influencing business decisions – to get firms to make investments the government would like them to make. Not because the firms that will receive the subsides are "needy".

As such, SpaceX is as entitled as anyone to receive the subsidy, if they follow the rules as set out by the government.

If you think those rules are stupid (they often are, IMHO), your beef is with those who made the rules, not those who play the game.

As I said, annoyance at Musk is misdirected.

sumgai (profile) says:

I have to applaud Musk for at least doing something, which is miles better than any of the big ISP’s. I’ll let the subsidy business ride for a moment, ’cause I want to look at the very first figures posted by Karl:

$600 first month;
$100 a month after that;
$500 hardware charge

That’s $1100 bucks just to say "I do", and another hundred smackers a month after that. What’s not known to me at this time is, does the hardware charge mean it’s yours forever, or is that a "deposit" in case something goes pear-shaped in the future? But as much or more to the point, I’m assuming that theses dollars are what an actual customer will pay in order to get Starlink into his/her home, yes? Well, let’s observe the demograpics along side of the geographics, eh.

In order to live in the targeted service area, aka the "out back", where connectivity is spotty or non-existent, you have to be in one of two classes – you’re so rich that you can afford to have water trucked into your compound every other day, or you’re so poor that you can’t afford to live where they tax you half way to death before you even get out of bed in the morning. That second set of citizens has learned to make the land provide for them, and while they may not be happy about it, they’re dealing with it as best as they can. But that money charge? That’s off the table for them, you can make bank on that one. Unless that’s part of what’s called the subsidy…. If so, then I’ll back off quietly, TYVM.

Otherwise, we’er right back where we started; same shit, different target of whining.

Anonymous TD vet says:

Fact check please

I used to be a major reader here but less so these days as Mike.has shrunk away. The tame but misplaced vitriol at the “second wealthiest man” is kind of indicative of that point. This network is not being run by Bezos & Co. It is is being operated by Musk. A man that is by no means destitute, and has his own agenda (who doesn’t), is not even in the top ten. He is otherwise pushing the envelope in ways that are beneficial. Like all things he should be watched and scrutinized, but fact check please

Mike Masnick (profile) says:

Re: Fact check please

I used to be a major reader here but less so these days as Mike.has shrunk away. The tame but misplaced vitriol at the "second wealthiest man" is kind of indicative of that point. This network is not being run by Bezos & Co. It is is being operated by Musk. A man that is by no means destitute, and has his own agenda (who doesn’t), is not even in the top ten. He is otherwise pushing the envelope in ways that are beneficial. Like all things he should be watched and scrutinized, but fact check please

You’re right that it deserves a fact check. He isn’t the 2nd wealthiest man. He’s the 1st:

Not sure why you say he’s not in the top 10. He’s at the top of the list.

Anonymous Coward says:

Re: Re: Fact check please

I guess it depends on the source and the last time one checks that source. Been a couple of months and hard to believe but it looks as though I stand corrected one my main point. I stand behind giving him slack though. Nothing shady about using a system, as it is designed, in full public view and the system operators not reacting

Hi Mike!

Anonymous Coward says:

Re: Re: Fact check please

AFter a stock market crash, a decade or two ago, the late Sam Wall was asked how he felt about losing (IIRC) hundreds of millions of dollars. He basically shrugged and said "it was in my pocket before the crash and it isn’t in my pocket now". His wealth was on paper only.

At the moment Musk is the "richest" man on Earth, but that’s entirely theoretical and he’s one bad day trading on Tesla shares from being out of the top ten. He doesn’t draw a salary from either SpaceX or Tesla and lives on personal borrowing (which he can do because of the, perhaps insane, Tesla share valuation). As for "giving money to the richest man on Earth", that simply isn’t true. It’s going to SpaceX, which has a number of owners besides Musk. He’s rolling the dice with Starlink and the whole company could easily go bust. Saying he should pay to build Starlink is very much like saying Amazon should pay Blue origin to build the new Shepard, which is not only unreasonable, it would probably be illegal – or at least a civil tort.

Personally I don’t think SpaceX should be getting this subsidy. But that’s because I don’t think it should exist at all, given how fraudulently previous rounds have been used. However, I find this article to be truly lousy reporting, missing all the nuance, placing all the blame on SpaceX for a broken FCC process and ignoring the almost guaranteed fact that if this money had not gone to SpaceX, it would almost certainly have gone to companies like Charter (who was a significantly bigger beneficiary anyway) than to deserving entities like community broadband. And yes, fact check. Elon Musk is NOT being paid anything by the FCC. Not a penny will end up in his pockets. He may benefit from an eventual share price, but saying that he is being paid – whether by "having money thrown at him" or by "being subsidized" is simply lying.

OldMugwump (profile) says:

Re: Re: Fact check please

He is at the top.

The fact that his business (primarily Tesla) has been wildly successful, leading to a high market value, does not change Musk’s moral status.

As if being the 20th wealthiest person of the world is fine, but moving to the #1 spot somehow makes him evil.

Way too many people assume that wealth comes from theft. This is obviously false – the world is filled with wealth, yet 1000 generations ago it was not. Somehow that wealth got CREATED, not simply moved around.

People create wealth. Billionaires are especially good at it. Without that wealth, we’d still be living in caves. People shouldn’t let envy cloud their view.

Ehud Gavron (profile) says:

Multiple issues here

Should people make more money – yes.
Should StarLink provide connectivity to underprovided people – yes.
Should StarLink get money from tax funds just like other last-mile providers – yes.

This has nothing to do with Elon Musk’s net worth or how much stock he has.

I hold IBM stock. Should I give up some of my income to pay their employees? No. What if I was CEO? Still no. I also hold stock in Microsoft. Should I pay to develop Windows to have less bugs? No. Should I pay their staff? No. What if I was the CEO? Still no.

Musk is not PERSONALLY LIABLE for his corporation’s success or failure. (Neither, by the way, is Jeff Bezos or Larry Ellison personally liable).

If this is confusing… that’s why we form corporations — we remove personal liability (except in cases of fraud, material misrepresentation, failure to do fiduciary duty, etc.) from the PERSON and leave it with THE CORPORATION (or LLC if such a thing exists in your area).

I know I’ll get hear for offering an opinion that is based in law and not in "morality". When one buys stock (or otherwise acquires stock, whether through inheritance, options, gift, etc.) one does not also get liabilities. There’s an exception to this which is NONPUBLIC companies where a "call option" exists which one must affirmatively sign on to.

Sorry. I hope the tax funds help SL provide a service to underserved people. I hope that the employees get paid fair pay. It has no matter as to where Elon Musk personally sits on this earth in his personal earnings or "worth."



randydutton says:

Starlink Subsidies will benefit taxpayers

The last 2 miles of my rural road do not have fiber. The CenturyLink estimate was $250,000. But NOW, nearly every resident of the last two miles HAS Starlink, thus saving taxpayers the need to subsidize fiber installation. Repeat this scenario across America and you’ll find Starlink saving much more in not having to build out fiber. Additionally, we in the Pacific Northwest coastal area are anticipating an eventual megaquake and tsunami (called a Cascadia Subduction Zone event) that will severely damage our infrastructure (cell towers, cable installations, power, roads, etc.) according to FEMA which has said communications could be down for months. Starlink will remain working as long as one has generator power, thus helping to improve our Disaster Response capability.

randydutton says:

Fiber Industry is Lobbying Politicians

My own Congressman (Derek Kilmer) has received over $100,000 in contributions for the 2020 election cycle. He is a big supporter on massive subsidies to fiber buildout, but hasn’t once mentioned Starlink despite my prodding him to reconsider his one-sided support. Follow the money! The Cable Alliances, MSM, and big spending politicians support fiber because it adds to their power. Elon Musk is an outlier who does what’s right, rather than what maximizes his profit.

Ehud Gavron (profile) says:


Elon Musk didn’t get any money. A corporation he heads did.

There’s no monopoly here, and Comcast is not relevant to whether StarLink deserves the same benefits to get their network up. Underserved communities really don’t care about what other companies won’t serve them… they care about the one that will.

The link that says he "gamed the system" actually takes you to another article written by the same author that says… nothing about gaming the system.

Whether or not the satellites reflect light is also irrelevant to whether or not they provide underserved customers Internet service and should be able to get broadband funding.

But hey, hate on Elon all day long. At the end of the day the company he runs is bringing broadband service to lots of underserved if not unserved people. I’m sure he really cares that someone chose to make it about him or reflections or monopolies or other entirely unrelated and irrelevant things.

He brings Internet to people who don’t have it.



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