With $42 billion up for grabs, Starlink might miss out on federal broadband funds, again

Last year the Biden administration announced a new program aimed at connecting more Americans with high-speed broadband internet. The Broadband Equity Access and Deployment (BEAD) program will provide $42 billion to help connect an estimated 8.5 million households. Each US state is developing its own plan and selecting its preferred vendors.

Starlink, with its virtually global coverage, might seem like an obvious choice as a preferred vendor. Their low Earth orbit satellite constellation has been providing high-speed, low latency internet for years. But SpaceX, Starlink’s parent company, might miss out on yet another round of federal funding thanks to rising performance standards.

RDOF rejection

In 2023, the FCC denied Starlink’s application for the Rural Digital Opportunity Fund (RDOF), causing Starlink to miss out on $900 million. The FCC found that Starlink did not meet its technical program requirements. Starlink applied as a provider that could deliver 100 Mbps download, 20 Mbps upload speeds. After reviewing performance data collected by Ookla, the FCC found that during 2021 and 2022, median Starlink speeds did not meet the performance requirements. Starlink requested a review of the decision, arguing that it could meet performance requirements by 2025 when the program ultimately kicks off. Starlink did not provide any evidence to support the assertion that median speeds would improve by 2025.

You can read the FCC’s final report here.

Will BEAD be any different?

SpaceX has another shot at federal dollars with the BEAD program. The bad news, though, is that the program requirements are the same 100/20 speeds that caused Starlink to miss out on the RDOF funds. Even though each state is developing their own plan and selecting vendors, the plan still needs FCC approval before money is handed over.

There is more bad news for Starlink. Their average network performance in the US hasn’t improved enough. According to the latest Ookla broadband report, median Starlink download speeds are still well below 100 Mbps, coming in at 64 Mbps in Q3 2023. That’s an improvement from a year earlier in 2022, but not enough to qualify Starlink as a BEAD vendor. Although Ookla’s Q4 2023 report isn’t available yet, data shows median speeds have continued to improve, reaching almost 80 Mbps near the end of 2023:

Even Starlink’s own data shows a performance problem. An interactive map on their website shows performance data for each state. The map displays real user speeds, with the data representing the 20th to 80th percentile. In most states, the bottom 50% of users get below 100 Mbps. In fact, Starlink’s specifications for the Standard service plan show that users should only expect 25-100 Mbps download, and 5-10 Mbps upload speeds:

Starlink seems to be in the same situation they were in with the RDOF. Their expectations are that speeds will improve above 100 Mbps in the coming years. However, expectations don’t count as evidence when it comes to the FCC handing out taxpayer money. The data currently available shows that Starlink isn’t fast enough to be eligible for federal broadband funding.

The only hope for Starlink is that they have the ability to do something nobody else has been able to do. Starlink can provide high-speed, low latency internet to virtually anywhere in the country, as long as there is a clear view of the sky. No additional infrastructure is required. That has caused some states to list Starlink as an alternative technology to be considered for locations that exceed cost thresholds for fiber.

Fiber is the gold standard for internet connectivity, and is preferred because of its speed and reliability. But for some locations, running fiber will be impractical due to the cost. Starlink might be selected as an alternative provider in the BEAD program, assuming they can quickly improve speeds to meet the FCC’s requirements.

Does Starlink even need federal funds?

Starlink has made one really good point so far. They are the only internet provider that has been able to provide access at a global scale in a very short amount of time. Presently, no matter where you are in the United States, you can get Starlink.

The service might not meet the FCC’s requirement for broadband, but the reality is, Starlink is the only fast internet option for millions of Americans. Their fast rollout across the country has shown that SpaceX doesn’t really need federal funding to capture their target market. Starlink isn’t trying to compete with fiber or other terrestrial broadband options. Starlink’s focus is the people left behind, with no other decent options.

In terms of providing internet access, Starlink is already doing what needs to be done, without federal dollars. With federal funding, however, Starlink could ultimately make improvements, like lowering the monthly service fee, and building additional ground stations to improve performance.