SpaceX Wins $ 900 Million In Grants To Bring Internet To Rural America

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The company will receive a total of $ 856 million, one of the largest grants awarded by the Federal Communications Commission under a new program designed to encourage businesses to expand broadband access in the most areas. underserved in the United States over the next 10 years.

SpaceX’s victory is notable because the company competed against more established Internet service providers, such as Charter Communications and CenturyLink, which rely on traditional fiber-optic cables to provide high-speed Internet access to customers. SpaceX’s Starlink Internet service, which is currently in beta testing and is not yet fully operational, relies on an experimental swarm of nearly 1,000 satellites hissing around Earth at over 17,000 miles per hour as they broadcast the Internet. towards high-tech antennas mounted on people. houses.

The FCC gave most of the $ 9 billion in subsidies to more traditional suppliers. Charter, for example, has received more than $ 1.2 billion to bring high-speed internet to over a million neighborhoods. And the Rural Electric Cooperative Consortium, a joint offering of regional small businesses, has received $ 1.1 billion in more than 618,000 neighborhoods.

Allowing SpaceX to participate in the grant program was controversial. Traditional telecommunications companies and some broadband advocates have argued that SpaceX’s Starlink network is too new and unproven. Essentially, the FCC is betting that SpaceX’s Starlink service will work as the company has promised, but if that turns out not to be the case, it could mean longer delays in getting internet coverage in some of the more popular areas. most needy in the United States.

But, if SpaceX’s Starlink service works as expected, it could be a major boon to rural economies in the United States and abroad. This is because the company’s unique satellite system is designed to cover the entire planet in terms of connectivity, rather than wiring cables to individual rural areas.

Why is this important

The Federal Communications Commission estimates that 21 million Americans – about 1 in 15 people – still do not have high-speed internet access. The actual number could be much higher, or even double the FCC’s estimate, according to a study by BroadbandNow. And a 2018 Pew Research study found that accessing high-speed internet is a problem for nearly 60% of rural Americans.

The problems caused by the digital divide are more evident than ever in the time of Covid-19. Some families have been forced to sit in school parking lots so that they can work remotely, search for a job or take online classes.

The problem with traditional broadband internet service is that extending underground cables to areas where there are not many customers is expensive, time consuming, and it does not make financial sense for operators who focus on short-term rather than long-term benefits. term investments. That’s why the FCC and a handful of other government programs have worked for years to subsidize the upfront costs.

Meanwhile, older satellite Internet services have a reputation for slowing down speeds and slowing down delays.

In fact, the FCC initially said satellite Internet services could not get subsidies. But the commission reversed course in June after SpaceX lobbied against the move.

SpaceX promises that its network will be as fast as the best fiber-based services. Its satellites fly much closer to the ground than most other telecommunications satellites, which the company says will eliminate frustrating delays.

At this time, it is not clear exactly how the network will operate. Beta testers reported top-end speeds, but they would also experience intermittent blackouts because SpaceX didn’t launch enough satellites to ensure continuous coverage. We also have to see how affordable SpaceX’s service will be. CNBC reported in October, citing emails shared with those who have expressed interest in becoming Starlink customers, that the service could cost around $ 99 per month, plus a one-time fee of around $ 500 for the router and antenna. .

If the Starlink network does not perform as expected, people in the rural areas the network was supposed to serve may never receive premium Internet service, said Shirley Bloomfield, CEO of NTCA – the Rural Broadband Association. , which represents hundreds of community telecommunications providers.

“People will never be able to get more government support to come in and build a more sustainable network,” Bloomfield told CNN Business. “We have to focus on getting it right the first time. ”

Some policy experts, including Ernesto Falcon, senior legislative adviser to the San Francisco-based Electronic Frontier Foundation, a nonprofit open Internet advocacy organization, also claim that Starlink’s success or failure has not not important. If Americans want sustainable broadband service and ultimately a 5G network, fiber optic cables are the only solution, Falcon believes. And that’s why he says RDOF funds shouldn’t have been used on alternative technologies.

“You don’t have to replace [fiber optic] son anytime in my life once it’s built. It will be something my grandchildren’s children could use, ”Falcon said.

But others, including FCC Commissioner Mike O’Reilly, who helped lead the campaign to allow SpaceX to join the FCC grant program, argue that Starlink could offer a unique solution to a troubling problem. .

“The real reality is that we don’t have enough money to connect every home to fiber. It’s not in the cards, ”he told CNN Business in an interview in August.

And that, he said, is reason enough to take a risk on SpaceX, a company already well known for its technological talents and proving its critics wrong.

And if the Starlink network is affordable and works well, O’Reilly said, the payoff could be huge. Not only would this provide coverage to areas targeted by the FCC with its RDOF grants, but it would bring connectivity to every person in the United States and possibly the world.

“The dirty little secret is – after you finish [RDOF] – we’re probably looking at a bunch of sites that are really expensive and very difficult to serve, and no one “wants to pay to bring internet service there,” O’Reilly said. ” How can you get service in these hardest to serve areas and get them as quickly as possible? Satellite is one of those options. ”

Even O’Reilly, however, acknowledges that for the people in the areas Starlink is supposed to serve through this grant program, the success of the network depends in large part.

It could “really cause heartache,” O’Reilly said. “This is the hardest part for a policy maker. ”

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