(Credit: Brian Westover/PCMag)
Back in June, the Trump administration overhauled a $42.5 billion federal fund for high-speed internet, opening the door for satellite providers, such as SpaceX’s Starlink, to potentially receive a larger slice of the pie. Now the changes are starting to play out in Virginia, where Starlink and Amazon’s rival Project Kuiper have been bidding for the funding.
This week, Virginia announced the winners of $613 million from the US’s Broadband Equity, Access, and Deployment program (BEAD). But in a surprise, the state awarded most of its funding, at around 80%, to fiber internet installations, rather than satellite internet providers.
(www.dhcd.virginia.gov)According to a budget document, Virginia only plans on using $7.7 million to provide satellite connections to 12,000+ underserved locations in the state, out of a total of 133,000. Starlink gets just under $3.3 million to serve 5,579 locations (about $584 per site), and Amazon’s Project Kuiper gets $4.4 million for about 7,000 locations (about $641 per BEAD site).
That's a relatively small share, despite the Commerce Department revising the BEAD program to adopt “technology neutrality,” and place satellite technology on a level playing field with fiber installations.
The Benton Institute for Broadband and Society, a group focused on expanding affordable high-speed internet, has criticized the BEAD changes as bad for consumers. That’s because fiber internet, although more expensive to install, can deliver gigabit speeds. In contrast, Starlink delivers slower broadband while also facing capacity constraints if a surrounding area becomes over-subscribed. In the Pacific Northwest, Starlink has even been charging an extra $1,000 demand surcharge to prevent new users from overloading the satellite network.
Still, the Commerce Department revised the BEAD program, citing satellite internet as “cost-effective” technology that can be easier to deploy. But it looks like Virginia decided fiber is the best option for most of the state’s underserved locations. For example, the state is paying fiber provider All Points Broadband over $171 million to bring high-speed internet to 19,801 locations, or about $8,655 per site. In certain locations, it appears All Points Broadband will even supply 10 gigabit speeds.
(Photo by Jakub Porzycki/NurPhoto via Getty Images)Drew Garner, a director at the Benton Institute, says Virginia has been prioritizing “speed, latency, and scalability” in the broadband deployments, rather than just costs. Its bidding process, for example, considered the "ease of scalability to meet projected demand for current and future users" and even factored in “tree coverage,” since Starlink can suffer interruptions if its view of the sky is blocked. It might explain why SpaceX went out of its way last week to tout the company’s beam-switching tech, which can help Starlink bypass tree obstructions.
For eligible Virginia users, the BEAD funding means they can expect to receive a free Starlink dish from SpaceX during the 10-year service period. However, the revised BEAD program stripped away a state's ability to set the pricing for internet plans meant for low-income users. An ISP needs to only “offer at least one” low-cost internet plan to eligible users, but it can be an existing one.
On the plus side, the BEAD program will require SpaceX to “reserve sufficient capacity,” ensuring it can deliver 100Mbps in downloads and 20Mbps in uploads to the eligible users. However, the Benton Institute's Garner still questioned the value of the BEAD funding for SpaceX, which is already available across the US and has been offering free Starlink dishes to certain users in the US.
“Starlink already has a $120-per-month plan, which is quite expensive,” he said. “For many communities, the cost of service is the number one barrier they can’t get online. It’s not a lack of infrastructure; they just can’t afford it.”
SpaceX and Amazon didn’t respond to a request for comment, making it unclear how they plan on pricing their BEAD-related initiatives to consumers. In the meantime, Evan Feinman, the former director for the BEAD Program who left in protest of the revisions, takes issue with Starlink securing some of the funding in Virginia.
“I think Governor Youngkin and his team, led by Dr, Tamarah Holmes, did a good job building on the legacy of Governor Northam and getting the best outcome the new rules permit for Virginia," he told PCMag. "That said, I'm disappointed that the Trump Commerce Department forced Virginia to take fiber connections away from 12,000 Virginia families, sticking them with higher monthly bills for slower satellite service."
However, a supporter of the BEAD changes, Joe Kane, a director at the Information Technology and Innovation Foundation think tank, said: "Virginia looks like a success story. Less than $5,000 per location is much more reasonable than many proposed awards under the old BEAD guidance."
In a statement, Virginia Governor Glenn Youngkin added: "With the new rules approved by [Commerce] Secretary Lutnick that cut red tape, we are able to do it while saving $200 million taxpayer dollars, a 25% savings."
Time will tell how other US states use their BEAD funding, which the Commerce Department must approve. The agency has given states until Sept. 4 to submit their final proposal, although they can request an extension. Meanwhile, in Texas, SpaceX has been spotted bidding with other ISPs to serve over 244,000 locations through the state’s BEAD program while Project Kuiper has bid on over 160,000.