Topline
The Federal Communications Commission has denied SpaceX’s application to receive $888.5 million in funding to bring its Starlink satellite broadband internet service to rural areas, the agency announced Wednesday, a major blow for the company founded and led by the world’s richest man, Elon Musk.
A SpaceX Starlink internet terminal installed in Ukraine.
Key Facts
FCC Chairwoman Jessica Rosenworcel said in a statement Starlink’s subpar Internet speeds and high user costs led to the rejection, though she noted “Starlink’s technology shows real promise.”
The FCC’s decision comes after SpaceX initially won the nearly billion-dollar subsidy in December 2020, as part of the FCC’s $20.4 billion Rural Digital Opportunity Fund to bring faster internet to underserved parts of the country.
Forbes has reached out to SpaceX for comment.
The FCC also rejected the application of fixed wireless provider LTD Broadband, which was initially awarded $1.3 billion in funding, the most of any provider, determining the company did not have the capacity to adequately build out its broadband services.
Key Background
Starlink users must have a $599 satellite dish, known as a user terminal, and pay $110 in monthly fees to use the broadband service. SpaceX’s 2020 winning bid for the FCC subsidy was hailed as a major win for the company, and Quilty Analytics senior analyst Caleb Henry said at the time the deal was “great for SpaceX because now they have an anchor customer” and an “assured source of revenue.” Musk told SpaceX employees in June he hopes to spin off Starlink as a public company “three or four years from now,” CNBC reported, delaying his prior plans to take Starlink public as soon as 2022.
Big Number
$125 billion. That’s SpaceX’s latest valuation, making it the second-most valuable start-up in the world, according to CB Insights. Musk owns 47.4% of the company, according to a 2020 FCC filing and Forbes estimates Musk is worth $263.3 billion.
Further Reading
Elon Musk’s SpaceX Wins $885 Million In FCC Subsidies To Give Rural Areas Broadband Access (Forbes)
Source: https://www.forbes.com/sites/dereksaul/2022/08/10/spacex-misses-out-on-8885-million-government-subsidy-for-starlink/