SpaceX, Charter, Verizon, CenturyLink, Frontier, Cox, and about 500 other companies are seeking government funding to provide broadband in rural areas. The Federal Communications Commission yesterday released a list of applicants for the first phase of the Rural Digital Opportunity Fund (RDOF), which is set to pay up to $16 billion to Internet service providers over 10 years.
SpaceX would be the first low Earth orbit (LEO) satellite provider to get FCC rural-broadband funding. The RDOF and predecessor programs generally fund expansion of wired or terrestrial wireless services by paying ISPs to expand their networks into rural areas where they would not otherwise have built.
As a satellite provider, SpaceX won’t need to install wires or wireless towers in any particular area. But traditional satellite providers have obtained FCC funding before despite already offering service throughout the United States. For example, the FCC’s Connect America Fund last year awarded $87.1 million to satellite operator Viasat on condition that it provide service in specific parts of 17 states at lower prices and with higher data caps “than it typically provides in areas where it is not receiving Connect America Fund support.”
SpaceX could follow a similar model, seeking FCC funding to offer lower-priced broadband in census blocks that lack service, meeting the FCC’s speed standard of 25Mbps downloads and 3Mbps uploads. We asked SpaceX about its plans for the FCC funding today and will update this article if we get a response. SpaceX Starlink prices have not been revealed yet, so we don’t know what Starlink will cost either at full price or if subsidized by FCC funding.
Ookla speed tests of SpaceX’s Starlink service during the current beta trials recently found download speeds of 11Mbps to 60Mbps and upload speeds of 5Mbps to 18Mbps. Another set of speed tests at TestMy.net found SpaceX averages of 39.6Mbps downstream and 10.7Mbps upstream.
SpaceX must prove latency claims
The FCC released lists of 121 complete applications and 384 incomplete applications. SpaceX is on the incomplete list, which includes ISPs that did not “provide the certifications and basic information required by the Commission’s competitive bidding rules for participation in the auction” and ISPs that have “not been determined to be financially and/or operationally qualified to bid in all the states or for all the performance tier and latency combinations it selected,” the FCC said.
SpaceX may go through a more extensive vetting process than wireline providers because of the FCC’s skepticism that LEO satellite networks can meet the low-latency standard of 100ms and below. No traditional satellite provider using geostationary orbits (like Viasat and Hughes) could meet that standard, but SpaceX says it will easily beat it, and early speed tests support SpaceX’s case.
SpaceX and other ISPs have a better chance of getting funded if they are allowed to bid in the low-latency tier. The FCC said in June that LEO satellite operators “will face a substantial challenge demonstrating to Commission staff that their networks can deliver real-world performance to consumers below the Commission’s 100ms low-latency threshold.”
FCC plans several speed tiers, up to a gigabit
The list of incomplete applications also includes Altice USA, CenturyLink, Charter (which filed under the name “CCO Holdings”), Cincinnati Bell, Cox, Frontier, Hughes, US Cellular, Verizon, Viasat, Windstream, and many smaller companies. Each company on the list of incomplete applicants will receive a notice detailing its application’s shortcomings and have until September 23 to resubmit. In addition to the big ISPs, there are many local companies that would likely bid for funding in small geographic areas. OneWeb and Amazon, which also plan LEO satellite constellations but aren’t as far along as SpaceX, did not appear on either list of applicants. However, Hughes is investing $50 million in OneWeb and has said it intends to use OneWeb capacity as part of its bid to get RDOF money.
ISPs can bid to provide service in several speed categories ranging from 25/3Mbps to 1Gbps/500Mbps. Funded ISPs will be allowed to impose data caps of 250GB per month on the 25/3Mbps and 50/5Mbps speed tiers, but they must offer at least 2TB a month on the 100/20Mbps and 1Gbps/500Mbps tiers. Satellite providers are not allowed to bid in the gigabit tier.
Verizon could bid for funding using either its wired broadband services or the fixed wireless service that connects to its cellular network. Cable companies like Altice and Charter would presumably use funding to expand their cable networks, traditional phone companies could expand either fiber or DSL networks, and traditional satellite providers like Hughes and Viasat could provide discounts or other incentives for new customers. There are also many fixed wireless companies that could expand into additional rural areas that don’t have fast wired service.
The FCC plans to begin the reverse auction on October 22 and award funding for up to 6 million homes and businesses in census blocks that completely lack 25/3Mbps service. With the $16 billion being spread out over 10 years, winning bidders will get a total of $1.6 billion a year and face a series of deadlines requiring deployment to specified numbers of homes and businesses. There will eventually be a second, smaller auction to pay for broadband in additional areas, after the FCC collects more accurate data on which parts of the country lack broadband service.
Like other Universal Service programs run by the FCC, the RDOF is paid for by Americans through fees imposed on phone bills.
Disclosure: The Advance/Newhouse Partnership, which owns 13 percent of Charter, is part of Advance Publications. Advance Publications owns Condé Nast, which owns Ars Technica.