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SpaceX is protesting Virginia’s $613 million plan to expand high-speed internet access, accusing the state of deliberately denying a larger slice of the subsidies to Starlink.
On Wednesday, the company blasted Virginia’s plan as a “massive waste of federal taxpayer money” after the state chose Starlink for just 5,579 of the 133,000 locations slated for subsidized broadband installations.
“Simply put, Virginia has put its heavy thumb on the scale in favor of expensive, slow-to-build fiber bias over speedy, low cost, and technology neutral competition,” the company told the state’s government in a 7-page letter shared with the media. “Virginia must immediately revise its final proposal to appropriately consider applications received in line with program rules."
(Photo by Silas Stein/picture alliance via Getty Images)The dispute involves the Broadband Equity Access and Deployment (BEAD) program, a $42.5 billion fund to provide high-speed internet in underserved areas. In June, the Trump administration overhauled the program to shift away from prioritizing fiber installations in favor of “technology neutrality,” opening the door for satellite internet services and fixed wireless to receive more federal funding from each state’s BEAD program.
But despite the policy change, Virginia’s recently announced BEAD proposal relies mostly on fiber, rather than satellite, for the state’s underserved areas. Under the plan, Starlink will receive $3.2 million in funding or what amounts to about $584 per site, a sharp contrast from the more expensive, but faster fiber installations that can cost around $6,000 to $8,000 per site.
Wednesday’s letter from SpaceX reveals the company wanted “to serve virtually every BEAD-eligible household in Virginia with high-speed broadband for $60 million dollars, available to Virginians immediately.
“Instead, Virginia proposes to spend $613 million dollars for connectivity that will be deployed at some point within the next four years, if ever, resulting in taxpayers overspending for connectivity in Virginia by ten times the necessary amount,” SpaceX added.
(Credit: dhcd.virginia.gov)SpaceX goes on to claim Virginia’s BEAD plan “failed to observe technology neutrality,” and argues Starlink could deliver the same results faster and “at one tenth of the cost.”
“The Final Proposal makes clear that Virginia began with a pre-ordained result and then overlaid a paper-thin veneer of ‘analysis’ to unlawfully achieve its preferred outcome —maximum taxpayer spending benefiting specific companies and a misapplication of competitive rules,” the company added.
Virginia’s BEAD program didn’t immediately respond to a request for comment. But according to state documents, Virginia used factors such as “tree cover,” along with “speed, latency, and scalability” in contracting the ISPs for each BEAD location. That could’ve caused Virginia to favor more expensive fiber installations since they can supply gigabit internet speeds and function under heavy tree cover.
In contrast, Starlink can offer internet speeds from 100Mbps to over 300Mbps. Although each Starlink dish requires a view of the sky to receive the broadband, SpaceX recently introduced an upgrade to help the satellite internet perform better under trees.
SpaceX’s letter urges the Commerce Department's National Telecommunications and Information Administration to deny Virginia’s final proposal unless revisions are made. The Commerce Department didn’t immediately respond to a request for comment. But the agency will need to clear Virginia’s BEAD proposal before funding can be awarded.
(Credit: Brian Westover/PCMag)Although the dispute risks holding up Virginia’s BEAD program, SpaceX wrote in the company's letter: “These efforts will not delay BEAD households from receiving much-needed connectivity but will accelerate the program by prioritizing lowest-cost awards to providers like SpaceX that are already deployed and are ready to enroll customers tomorrow, instead of waiting years for terrestrial deployments to materialize.”
Louisiana’s government also awarded most of its BEAD funding to fiber providers over Starlink. The company didn’t respond to a request for comment about whether it’ll also challenge Louisiana's BEAD proposal.
Others critics have denounced the Commerce Department for overhauling the BEAD program to potentially take funds away from faster fiber installations. The Benton Institute for Broadband and Society has also noted that under the BEAD program revisions, SpaceX is only required to provide a free Starlink dish for eligible locations and reserve internet capacity. In addition, the revised BEAD program has revoked a state's ability to set the pricing for internet plans meant for low-income users.
Experts Weigh In
In a post, Gigi Sohn, the Biden administration’s former pick for FCC commissioner, criticized SpaceX's protest as "one of the most intemperate filings I've ever seen in the telecom policy space. Lots of hyperbole and name calling, but not a lot of facts."
"My concern is that this filing is more about saber rattling and frightening other states into granting the company more locations even if they can't provide priority broadband service, which contrary to this filing, isn't met just with 100/20 speeds and 100 millisecond latency. Project Kuiper, another LEO satellite service that also won a bunch of locations (in Virginia) hasn't complained, so this just seems like typical Musk-style bullying," she added.
Drew Garner, a director at the Benton Institute, also noted that SpaceX made no mention of Amazon's Project Kuiper, a rival satellite internet service, that was contracted for nearly 7,000 BEAD locations in Virginia. "In many places, Kuiper is underbidding Starlink. Kuiper also won about 2/3rds of the LEO (low earth orbit satellite) wins in VA. So that's a big factor in Starlink's results."
Meanwhile, Evan Feinman, the former director for the BEAD Program who left in protest of the revisions, told PCMag: "This is what I, and other advocates, predicted and warned the new administration about. Satellite providers flooded the program with applications that far exceed their ability to serve the current needs of those locations, let alone the connectivity needs for those locations for decades. Low earth orbit satellite is a good technology, but it's not a replacement for fiber networks or terrestrial wireless networks, as Elon, himself, has stated repeatedly."
But a supporter of the BEAD changes, Joe Kane, a director at the Information Technology and Innovation Foundation think tank, told PCMag: "The issue here is whether Virginia is, behind the scenes, putting its thumb on the scale against certain technologies, rather than being technology-neutral."
"If Virginia is actually turning down cheaper deployment options that meet the definition of a priority broadband project, then it is wasting funds that could be better used for nondeployment activities that would take a bigger chunk out of the digital divide," he added. "NTIA should be on the lookout for states attempting to circumvent its policies, and it should not approve plans that don't comply."