5 ms·

SpaceX has been awarded $885.51 million by the Federal Communications Commission to provide Starlink broadband to 642,925 rural homes and businesses in 35 state

by lgats 6y ago

SpaceX has been awarded $885.51 million by the Federal Communications Commission to provide Starlink broadband to 642,925 rural homes and businesses in 35 states. That's $1376.52 in subsidies per customer

smithza 6y ago
There is nothing in the article about customers personally benefiting from this. SpaceX could take the money and put it towards ground infr., etc., customers only seeing reduced payments due to NRE/maintenance subsidies. It sounds like SpaceX has quite a bit of autonomy here.
veilrap 6y ago
My initial reaction agrees that does sound quite high. However, I wonder what the alternative strategy costs for rural broadband are. My guess is that laying a lot of cable to remote locations could possibly be even higher than the $1376.52 per customer cost? It seems like something like Satelite internet connections could be less to set up, but it's not clear to me the cost of the equipment, installations and upkeep are in that case? Also 1376 / 12 months averages out to only about $110 per month per customer for just one year. Which honestly doesn't sound too bad.
- myself248 6y ago
  I wonder, what're the costs of providing fixed landline service, even in a city? From burying the lines or stringing them on poles, to wiring up each drop into each dwelling, all the splices and repeaters and what-not, to the central office building and equipment and power and stuff, and maintaining that entire physical plant for years, it's all got to add up. I'd imagine it's well within an order of magnitude.
  - maccam94 6y ago
    Don't forget that the poles are usually owned by an existing power or telecom company, and if they even let you use their poles, you have to pay rent on the pole. Same for conduits. Building new poles and conduits can also be legally difficult and expensive.
- maccam94 6y ago
  The subsidy is spread over 10 years, so they only get $88.5M/year.
baldeagle 6y ago
It is also over 10 years... so maybe a set of free equipment and $8 off a month? Note: a traditional cable company got more than $1B is subsidies, so maybe the distributed model is actually cheaper. Depends on replacement costs and lifecycle (in both cases).
- Tuna-Fish 6y ago
  The subsidy goes to SpaceX, in exchange for offering service at the required locations at the required performance. There is no requirement whatsoever for SpaceX to pass any of it on to the customers, and in fact doing so would be against the spirit of the offering. It's meant for incentivizing the buildout of infrastructure, not for passing on savings to consumers.
deleted 6y ago
[deleted]
leecb 6y ago
That's $11.47 per month, per customer. Slightly over 10% of current pricing. > Funding is distributed over 10 years, so SpaceX's haul will amount to a little over $88.5 million per year.
xoa 6y ago
The beta terminal cost is $500, and beta service is $100/month (at up to ~150 Mbps or so right now?). So the money would cover the terminal cost to those customers and then full freight 8 months of service at current pricing. Alternatively/in addition, and more similarly to traditional in-ground service, it may also simply help fun actual infrastructure in the form of more/faster deployment of ground stations and sats. SpaceX may also (and it seems likely) have more standard service tiers for full general release, so something at 25 Mbps for $25/month say, and then working their way up. If they use this money to cover the minimum tier and then let people choose to pay the difference for more if they desired, then that'd bump the coverage to close to 3 years. For the level of service they're offering that seems pretty reasonable honestly, and a much more efficient use of dollars than typical efforts (though WISPs might do even better in certain areas, they have different trade offs). Since it appears how the companies make use of the money is fairly flexible SpaceX will probably deploy it towards a few different metrics. The $500 upfront capex is probably the biggest impediment for a lot of people so getting that down is important, but if internally they had any issues with getting their sat shells filled out that'd be a good upfront usage too. This is also spread out over 10 years, so where the most bang for buck is delivered will probably vary over time, by 2025 let alone 2030 SpaceX's economics will certainly look quite different with Starship deployment and filled shells/done ground stations.
- jjeaff 6y ago
  I don't believe the subsidies are meant to subsidize the customer. Rather they are subsidizing the upfront capital cost to build out infra. In other words, they get all the money, even if no one subscribes.
  - xoa 6y ago
    From the article: >FCC funding can be used in different ways depending on the type of broadband service. Cable companies like Charter and other wireline providers generally use the money to expand their networks into new areas that don't already have broadband. But with Starlink, SpaceX could theoretically provide service to all of rural America once it has launched enough satellites, even without FCC funding. >One possibility is that SpaceX could use the FCC money to lower prices in the 642,925 funded locations, but the FCC announcement didn't say whether that's what SpaceX will do. SpaceX is still in the painful bootstrapping phase of things, and their cost structure right now is still higher then what they ultimately hope for. But from the sound of it they've got a lot of flexibility in how they deploy this money so long as they ultimately meet service targets, and they're only one player amongst many even for this subsidy money. If they're satisfied with service people don't tend to casually switch providers, so there is real value in being first. I think therefore SpaceX may consider using some of the money at least to lower the bar of someone signing up and try to get currently underserved households onboard as customers faster. Additionally, don't forget this is only the first round, there is even more money available next time. Given the nature of bidding, I assume strategic calculations about how to win more next time will also play a role.
reportingsjr 6y ago
Welcome to the US, where cities are constantly sucked dry of money to pay for people to move in to rural areas and destroy nature. Yay!

by lgats 6y ago

smithza 6y ago

There is nothing in the article about customers personally benefiting from this. SpaceX could take the money and put it towards ground infr., etc., customers only seeing reduced payments due to NRE/maintenance subsidies. It sounds like SpaceX has quite a bit of autonomy here.

veilrap 6y ago

My initial reaction agrees that does sound quite high. However, I wonder what the alternative strategy costs for rural broadband are. My guess is that laying a lot of cable to remote locations could possibly be even higher than the $1376.52 per customer cost? It seems like something like Satelite internet connections could be less to set up, but it's not clear to me the cost of the equipment, installations and upkeep are in that case? Also 1376 / 12 months averages out to only about $110 per month per customer for just one year. Which honestly doesn't sound too bad.

myself248 6y ago
I wonder, what're the costs of providing fixed landline service, even in a city? From burying the lines or stringing them on poles, to wiring up each drop into each dwelling, all the splices and repeaters and what-not, to the central office building and equipment and power and stuff, and maintaining that entire physical plant for years, it's all got to add up. I'd imagine it's well within an order of magnitude.
- maccam94 6y ago
  Don't forget that the poles are usually owned by an existing power or telecom company, and if they even let you use their poles, you have to pay rent on the pole. Same for conduits. Building new poles and conduits can also be legally difficult and expensive.
maccam94 6y ago
The subsidy is spread over 10 years, so they only get $88.5M/year.

baldeagle 6y ago

It is also over 10 years... so maybe a set of free equipment and $8 off a month? Note: a traditional cable company got more than $1B is subsidies, so maybe the distributed model is actually cheaper. Depends on replacement costs and lifecycle (in both cases).

Tuna-Fish 6y ago
The subsidy goes to SpaceX, in exchange for offering service at the required locations at the required performance. There is no requirement whatsoever for SpaceX to pass any of it on to the customers, and in fact doing so would be against the spirit of the offering. It's meant for incentivizing the buildout of infrastructure, not for passing on savings to consumers.

deleted 6y ago

[deleted]

leecb 6y ago

That's $11.47 per month, per customer. Slightly over 10% of current pricing. > Funding is distributed over 10 years, so SpaceX's haul will amount to a little over $88.5 million per year.

xoa 6y ago

The beta terminal cost is $500, and beta service is $100/month (at up to ~150 Mbps or so right now?). So the money would cover the terminal cost to those customers and then full freight 8 months of service at current pricing. Alternatively/in addition, and more similarly to traditional in-ground service, it may also simply help fun actual infrastructure in the form of more/faster deployment of ground stations and sats. SpaceX may also (and it seems likely) have more standard service tiers for full general release, so something at 25 Mbps for $25/month say, and then working their way up. If they use this money to cover the minimum tier and then let people choose to pay the difference for more if they desired, then that'd bump the coverage to close to 3 years. For the level of service they're offering that seems pretty reasonable honestly, and a much more efficient use of dollars than typical efforts (though WISPs might do even better in certain areas, they have different trade offs). Since it appears how the companies make use of the money is fairly flexible SpaceX will probably deploy it towards a few different metrics. The $500 upfront capex is probably the biggest impediment for a lot of people so getting that down is important, but if internally they had any issues with getting their sat shells filled out that'd be a good upfront usage too. This is also spread out over 10 years, so where the most bang for buck is delivered will probably vary over time, by 2025 let alone 2030 SpaceX's economics will certainly look quite different with Starship deployment and filled shells/done ground stations.

jjeaff 6y ago
I don't believe the subsidies are meant to subsidize the customer. Rather they are subsidizing the upfront capital cost to build out infra. In other words, they get all the money, even if no one subscribes.
- xoa 6y ago
  From the article: >FCC funding can be used in different ways depending on the type of broadband service. Cable companies like Charter and other wireline providers generally use the money to expand their networks into new areas that don't already have broadband. But with Starlink, SpaceX could theoretically provide service to all of rural America once it has launched enough satellites, even without FCC funding. >One possibility is that SpaceX could use the FCC money to lower prices in the 642,925 funded locations, but the FCC announcement didn't say whether that's what SpaceX will do. SpaceX is still in the painful bootstrapping phase of things, and their cost structure right now is still higher then what they ultimately hope for. But from the sound of it they've got a lot of flexibility in how they deploy this money so long as they ultimately meet service targets, and they're only one player amongst many even for this subsidy money. If they're satisfied with service people don't tend to casually switch providers, so there is real value in being first. I think therefore SpaceX may consider using some of the money at least to lower the bar of someone signing up and try to get currently underserved households onboard as customers faster. Additionally, don't forget this is only the first round, there is even more money available next time. Given the nature of bidding, I assume strategic calculations about how to win more next time will also play a role.

reportingsjr 6y ago

Welcome to the US, where cities are constantly sucked dry of money to pay for people to move in to rural areas and destroy nature. Yay!