SpaceX is subtly suggesting it could bail from a federal program to expand high-speed internet in the US, unless Starlink and other satellite internet services receive exemptions to certain rules.
The company is poised to receive $661 million from the Broadband Equity, Access, and Deployment (BEAD) program, which was overhauled last year to prioritize more funding for satellite internet systems. In return, SpaceX is supposed to offer free Starlink dishes to over 470,000 locations across the country while guaranteeing speeds of at least 100Mbps for downloads and 20Mbps for uploads.
But SpaceX has since been spotted sending a letter to state broadband offices, essentially asking for waivers to some BEAD requirements. The nonprofit Benton Institute for Broadband and Society received a copy of SpaceX’s letter, which says: “a number of issues remain that, if unaddressed, could render LEO (low-Earth orbit) participation in the program untenable.”
Among the changes SpaceX is asking for include US states paying 50% of the federal funds to the company upfront. It would then receive the remaining half in quarterly installments subject to reaching subscriber milestones. That’s a major change considering US states’ plan on distributing the BEAD funds to internet service providers by using the subscriber milestones as a metric, according to Drew Garner, a director at the Benton Institute.
(Starlink)
However, SpaceX’s letter justifies the exemption, saying the company “was in most instances awarded the most remote and difficult areas to serve among all other providers. SpaceX is up to the task of ensuring success in these challenging areas, however, it cannot undertake this mission without certainty of consistent payments to compensate such work.”
Under the BEAD program, SpaceX is also required to reserve internet capacity to serve the 470,000 locations. But SpaceX’s letter asks for an exemption to the capacity reservation requirement, calling it “wasteful, inefficient, and does not reflect a LEO provider’s ability to dynamically allocate capacity where needed.”
“Instead, SpaceX will include the capacity needs of BEAD users into its network planning efforts,” the letter adds. “These activities are multifaceted and include real time capacity allocation at the network level, launch activities, and sales efforts. As a result, there is no single ‘document’ evidencing the reservation of capacity.”
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Starlink and Amazon Leo will serve about 22.5% of all the underserved locations covered by the BEAD program. (Wes Robinson)
SpaceX’s request would also apply to rival Amazon Leo, an upcoming satellite internet service on track to receiving an estimated $302 million through the BEAD program. However, Garner argues SpaceX is essentially calling for reduced oversight. This includes minimizing a state’s ability to penalize Starlink for defaulting or failing to comply with contract requirements.
“In the past, subscriber growth has caused Starlink’s service to slow due to increased network congestion. Will the network be able to accommodate BEAD’s influx of subscribers, especially considering BEAD’s speed and latency requirements?” he wrote. Starlink currently has over 2 million active users in the US.
According to Garner, SpaceX’s request also underscores compatibility problems with the Trump administration’s decision to revamp the BEAD program, which previously focused on supplying ground-based fiber internet. The Commerce Department defended the restructuring, saying it would cut costs by reducing reliance on expensive fiber deployments. But other critics blasted the changes for taking funding away from gigabit fiber when Starlink offers slower speeds and is already available to any consumer across the country.
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SpaceX and the US’s National Telecommunications and Information Administration, which oversees the BEAD program, didn’t immediately respond to a request for comment. In the meantime, SpaceX has posted more details about its proposed exemptions in a separate attachment, called a contract rider, which first leaked to Broadband.io.
The document indicates SpaceX plans on mailing a Starlink dish to interested users who request service in the BEAD locations. But the company wants to be waived from a rule that required it to “perform a standard installation for each customer.” Instead, the contract rider proposes that SpaceX “may choose to offer the subscriber professional services for permanent installation” but for an additional fee.
The document also notes SpaceX plans to offer a low-cost Starlink service option for eligible BEAD locations “at a monthly cost of $80 or less.” But the company is already offering three plans for the Starlink Residential tier, a 100Mbps plan for $50-per-month, a 200Mbps plan for $80-per-month and the Residential Max plan, which offers the fastest speeds at up to 400Mbps, but at the cost of $120-per-month.
Still, the company has only been offering the 100Mbps and 200Mbps plans in areas where it has excess network capacity. In places where Starlink use is high, SpaceX can sometimes charge a one-time congestion related charge for new sign-ups, which can reach as high as $1,500. To add more capacity and offer faster speeds, the company recently received regulatory clearance to launch upgraded Starlink satellites meant to deliver gigabit internet.
About Our Expert
Michael Kan
Senior Reporter
Experience
I’ve been a journalist for over 15 years. I got my start as a schools and cities reporter in Kansas City and joined PCMag in 2017, where I cover satellite internet services, cybersecurity, PC hardware, and more. I’m currently based in San Francisco, but previously spent over five years in China, covering the country’s technology sector.
Since 2020, I’ve covered the launch and explosive growth of SpaceX’s Starlink satellite internet service, writing 600+ stories on availability and feature launches, but also the regulatory battles over the expansion of satellite constellations, fights with rival providers like AST SpaceMobile and Amazon, and the effort to expand into satellite-based mobile service. I’ve combed through FCC filings for the latest news and driven to remote corners of California to test Starlink’s cellular service.
I also cover cyber threats, from ransomware gangs to the emergence of AI-based malware. Earlier this year, the FTC forced Avast to pay consumers $16.5 million for secretly harvesting and selling their personal information to third-party clients, as revealed in my joint investigation with Motherboard.
I also cover the PC graphics card market. Pandemic-era shortages led me to camp out in front of a Best Buy to get an RTX 3000. I’m now following how President Trump’s tariffs will affect the industry. I’m always eager to learn more, so please jump in the comments with feedback and send me tips.
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