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Riddle me this, would SpaceX not have built out Starlink if they didn't get this subsidy? Since they already put Starlink satellites in orbit without any guara

Riddle me this, would SpaceX not have built out Starlink if they didn't get this subsidy? Since they already put Starlink satellites in orbit without any guarantees of subsidies, was this good use of government funds?

rictic 6y ago
Two more questions: Can the subsidy be used to accelerate making the service available to more users sooner, and at higher quality? Most likely yes, because with the design of Starlink, more satellites gives better service. A related question: Were early subsidies into solar power a big help in climbing the learning curve while solar power had uncompetitive performance/$, or did advancements in related disciplines like chip manufacturing carry most of the weight?
- aaronblohowiak 6y ago
  Why should rural lifestyle be subsidized ?
  - baq 6y ago
    Because dense urban is unsustainable without sparse rural providing food?
  - giantg2 6y ago
    Why should any lifestyle be subsidized? Subsidies happen for rural and urban individuals.
  - stetrain 6y ago
    Because not everyone has full freedom in deciding where to live, and access to broadband is a positive factor for financial mobility and economic activity.
  - serf 6y ago
    (playing devils' advocate) City/population-center living is wildly inefficient for a host of reasons, and a dollar of urban development towards a major metropolis goes much less far than a dollar of urban development for a rural community. We deal with the inadequacies of living in such big population dense areas because we want to; not because it's efficient. Turns out it's not efficient to stack up as many people vertically as possible. It over-burdens local municipal systems to the point of skyrocketing economic costs, creates more job scarcity due to sheer population and high real-estate costs, and creates untenable situations during times where population density is a net-negative, like during a pandemic. Rural living has major problems too; lack of access to high quality services and travel come to mind -- but these are things that can be improved upon, and by every metric these things are improving. There is no such game-plan for dealing with the burdens of heavy density populations mid-city; it's considered to be a fact of life.
    - xxpor 6y ago
      >We deal with the inadequacies of living in such big population dense areas because we want to; not because it's efficient. >Turns out it's not efficient to stack up as many people vertically as possible. >It over-burdens local municipal systems to the point of skyrocketing economic costs, creates more job scarcity due to sheer population and high real-estate costs, and creates untenable situations during times where population density is a net-negative, like during a pandemic. These are all exactly the opposite of true? It's very efficient to stack people vertically. What's not efficient is delivering sewer service to people whose houses are a half mile apart or having someone drive 60 miles round trip in a single occupancy vehicle to get to work every day.
    - gamegoblin 6y ago
      Can you provide a source with actual numbers on the inefficiency of cities?
- btilly 6y ago
  To answer your related question, I believe that the answer is yes. As https://rameznaam.com/2020/05/14/solars-future-is-insanely-cheap-2020/ https://rameznaam.com/2020/05/14/solars-future-is-insanely-c... explains, Wright's law says that while a technology is improving, we generally get a fixed percentage drop in cost every time we double production. Therefore the production increases thanks to subsidies caused those cost drops to come much sooner than they would have otherwise.
tw04 6y ago
>Riddle me this, would SpaceX not have built out Starlink if they didn't get this subsidy? I feel like that's a rhetorical question, but the obvious answer is yes. >Since they already put Starlink satellites in orbit without any guarantees of subsidies, was this good use of government funds? I suppose that depends: if Space-X's original timeline was 10 years... is it more or less valuable to the US to have broadband access on an accelerated timeline? My guess is, especially in the face of covid, the more access to high speed the better. Would you rather have had those funds going to Frontier and Comcast? The funds are GOING to be spent, the only question is how. Not having rural broadband has been deemed an unacceptable outcome by the majority of Americans. The way the funds have been spent to date have definitely been a mixed bag. https://www.washingtonpost.com/technology/2020/12/07/fcc-digital-divide-spacex-broadband/ https://www.washingtonpost.com/technology/2020/12/07/fcc-dig...
smithza 6y ago
I don't think the logic holds up here. It is conceivable that SpaceX could have entered into the market to disrupt the relatively lo-tech GEO options without FCC subsidy options (I think you agree here). Hughes (a GEO provider) themselves received a subsidy despite their being well established in North America. To ask that about SpaceX is to ask the same question about Hughes. In the age of COVID-19, any investment in ISP infrastructure is beneficial.
- iptrans 6y ago
  The Hughes grant is highly questionable too. Luckily they only got about a million. > In the age of COVID-19, any investment in ISP infrastructure is beneficial. Not if you end up having nothing to show for it.
btilly 6y ago
SpaceX has had 42,000 satellites approved. They have just under 1000 operational and are about half-way to phase 1. Which will only be able to provide broadband for a limited number of users at latitudes for Canada and some northern US states. (That is why they are doing beta programs, they don't have the capacity for more.) Money to launch more satellites will give the company the ability to get broadband for more people in more of the rural USA much more quickly. It also helps Starlink through a chicken and egg problem where they can't make money unless they have satellites up, and they can't put satellites up unless they get money.
- iptrans 6y ago
  Not quite. The subsidy isn't large enough to pay for all the satellites they need. They have money to launch more satellites and will be doing more launches subsidy or no subsidy. The subsidy will only go directly to their bottom line.
  - btilly 6y ago
    Your reasoning has several holes. First, the fact that they have the money to launch more satellites does not mean that they have the money to launch ALL the satellites that the full system needs. Indeed their projected cost for fully setting up Starlink is $10 billion dollars, which is more than the projected operating profit that they have had over their entire history. So it is easy to see that they won't be able to complete unless they get more money along the way. In fact there is a significant risk that if they make less than they hope, that the company runs out of money and goes out of business. This subsidy reduces that risk, and therefore makes them more likely to complete, and likely to complete faster. To achieve this purpose, the subsidy should be sized to help them over the hump, and not to pay all their costs. (Whether we should be handing out subsidies is a different question that I'm ignoring. Our government has chosen to, and the question is how to succeed.) Therefore there is nothing odd about the fact that it is less than 10% of the total amount of money that they think they will need. They aren't doing Starlink in the hopes of getting the subsidy. But the subsidy improves their odds of succeeding at Starlink. And finally, you claim that the subsidy will only go directly to their bottom line. Which is to say that it shows up as profit and goes to Elon and other shareholders in the company. It is true that plenty of companies operate that way. However after 20 years of running companies, it is extremely safe to say that Elon does not. In fact he tends to take every scrap of money that his company is generating, finds ways to borrow or raise more, and then reinvests it into even more ambitious projects. So he won't be taking it as profit. What will he use it on? Well, the three big projects that Elon is working on right now is building Starship, building Starlink, and preparing to settle Mars. Of those, Starship is required to finish Starlink at a price point where it is a viable business, and Starlink is required to fund Mars. Therefore it is essentially certain that he will pour this money directly into Starship and Starlink, rather than taking any of it as immediate profit. Therefore we have good reason to believe that this money will be used for its intended purpose. We have good reason to believe that this money will in fact improve the odds of success, and enable them to deliver that success sooner. And therefore this money actually helps achieve the goal that the US government has set.
simonh 6y ago
The objective of the government is not just to ensure that one or even two companies have infrastructure reaching most or all rural areas, but to ensure enough players in this field to establish a genuinely competitive market for pervasive rural internet access. The FCC has decided that without this subsidy there would not be enough companies offering enough access to enough areas to meet their mandate. Given this goal, it’s simply unreasonable to deny funds to a company that has already set up that access, but only grant funds to new entrants. That clearly screws over the existing companies, which now can’t afford to compete on price with the new government funded entrants. The only way to establish a level playing field and not penalise companies that already invested heavily is to give the grants regardless of past investment. Then you can genuinely allow the competitive market to establish fair and competitive prices for these customers. Free market principles should in theory ensure that this price competition should recoup a significant proportion of the subsidy costs for consumers and tax payers.
- iptrans 6y ago
  I think you have misunderstood the purpose of RDOF grants. The RDOF grants are not there to establish competition. RDOF grants exist purely for some company to provide broadband service where there is none. If anything it's funding a local monopoly.
  - simonh 6y ago
    If that wee true, since Starlink will reach everywhere, they would only need to fund Starlink. In fact the OP would be correct and no subsidy would be needed since Starlink is already being built.
    - iptrans 6y ago
      I am glad we agree, me being both the one you are replying to and the OP you are referring to. For the avoidance of doubt, here's the link to the FCC RDOF auction and the relevant quote: "... Rural Digital Opportunity Fund to bring high speed fixed broadband service to rural homes and small businesses that lack it." https://www.fcc.gov/auction/904 https://www.fcc.gov/auction/904
baq 6y ago
You can provide high bandwidth low latency access to the internet in places where not even 1.3B fiber subsidy’s won’t reach or you can build few hundred miles more fiber to mostly nowhere for the same price. The fact is, starlink is the absolute best option in quite a few places - sparsely populated, far from dense urban areas. This is actually the best way to spend government money for that purpose even if it ends up in subsidizing terminal purchases.
- iptrans 6y ago
  > The fact is, starlink is the absolute best option in quite a few places - sparsely populated, far from dense urban areas. If it were only subsidized there. Some of the Starlink areas are next door neighbours to subsidized fiber builds.
deleted 6y ago
[deleted]
adventured 6y ago
If it helps ensure the diversity of ISP competition in the US market, then yes. $886m is a bargain if it helps meaningfully with that (assuming it's not a frequent subsidy). There is a large difference between putting up a few percent of their constellation to reach initial minimum viability and putting up enough satellites to properly cover the rest of the world (a very expensive endeavor that will take years). Plus, the US Government may directly benefit in a very big way from utilizing Starlink and that may make it a bargain compared to the alternatives. If US defense contractors were building that constellation, they'd be spending ten times what SpaceX is. And that's before we get to the potential for intelligence gathering globally. The powers that be will be all over that, no matter what SpaceX claims to the contrary (SpaceX will have a gun to their head and will not have a choice, just as the Prism gang had no choice).
- iptrans 6y ago
  > If it helps ensure the diversity of ISP competition in the US market, then yes The US ISP market is already fairly diverse. There are some 3000 ISPs in the US. > $886m is a bargain if it helps meaningfully with that (assuming it's not a frequent subsidy). Aye, therein lies the rub. Starlink will require a frequent and recurring subsidy, unless it can become profitable on its own. Each and every satellite they put up will burn up in five years. > There is a large difference between putting up a few percent of their constellation to reach initial minimum viability and putting up enough satellites to properly cover the rest of the world (a very expensive endeavor that will take years). Maybe Starlink should have been required to demonstrate viability before allowing it to qualify for government subsidies? > Plus, the US Government may directly benefit in a very big way from utilizing Starlink and that may make it a bargain compared to the alternatives. If US defense contractors were building that constellation, they'd be spending ten times what SpaceX is. > > And that's before we get to the potential for intelligence gathering globally. The powers that be will be all over that, no matter what SpaceX claims to the contrary (SpaceX will have a gun to their head and will not have a choice, just as the Prism gang had no choice). If the DoD wants Starlink then they should pay for it themselves.

rictic 6y ago

Two more questions: Can the subsidy be used to accelerate making the service available to more users sooner, and at higher quality? Most likely yes, because with the design of Starlink, more satellites gives better service. A related question: Were early subsidies into solar power a big help in climbing the learning curve while solar power had uncompetitive performance/$, or did advancements in related disciplines like chip manufacturing carry most of the weight?

aaronblohowiak 6y ago
Why should rural lifestyle be subsidized ?
- baq 6y ago
  Because dense urban is unsustainable without sparse rural providing food?
- giantg2 6y ago
  Why should any lifestyle be subsidized? Subsidies happen for rural and urban individuals.
- stetrain 6y ago
  Because not everyone has full freedom in deciding where to live, and access to broadband is a positive factor for financial mobility and economic activity.
- serf 6y ago
  (playing devils' advocate) City/population-center living is wildly inefficient for a host of reasons, and a dollar of urban development towards a major metropolis goes much less far than a dollar of urban development for a rural community. We deal with the inadequacies of living in such big population dense areas because we want to; not because it's efficient. Turns out it's not efficient to stack up as many people vertically as possible. It over-burdens local municipal systems to the point of skyrocketing economic costs, creates more job scarcity due to sheer population and high real-estate costs, and creates untenable situations during times where population density is a net-negative, like during a pandemic. Rural living has major problems too; lack of access to high quality services and travel come to mind -- but these are things that can be improved upon, and by every metric these things are improving. There is no such game-plan for dealing with the burdens of heavy density populations mid-city; it's considered to be a fact of life.
  - xxpor 6y ago
    >We deal with the inadequacies of living in such big population dense areas because we want to; not because it's efficient. >Turns out it's not efficient to stack up as many people vertically as possible. >It over-burdens local municipal systems to the point of skyrocketing economic costs, creates more job scarcity due to sheer population and high real-estate costs, and creates untenable situations during times where population density is a net-negative, like during a pandemic. These are all exactly the opposite of true? It's very efficient to stack people vertically. What's not efficient is delivering sewer service to people whose houses are a half mile apart or having someone drive 60 miles round trip in a single occupancy vehicle to get to work every day.
  - gamegoblin 6y ago
    Can you provide a source with actual numbers on the inefficiency of cities?
btilly 6y ago
To answer your related question, I believe that the answer is yes. As https://rameznaam.com/2020/05/14/solars-future-is-insanely-cheap-2020/ https://rameznaam.com/2020/05/14/solars-future-is-insanely-c... explains, Wright's law says that while a technology is improving, we generally get a fixed percentage drop in cost every time we double production. Therefore the production increases thanks to subsidies caused those cost drops to come much sooner than they would have otherwise.

tw04 6y ago

>Riddle me this, would SpaceX not have built out Starlink if they didn't get this subsidy? I feel like that's a rhetorical question, but the obvious answer is yes. >Since they already put Starlink satellites in orbit without any guarantees of subsidies, was this good use of government funds? I suppose that depends: if Space-X's original timeline was 10 years... is it more or less valuable to the US to have broadband access on an accelerated timeline? My guess is, especially in the face of covid, the more access to high speed the better. Would you rather have had those funds going to Frontier and Comcast? The funds are GOING to be spent, the only question is how. Not having rural broadband has been deemed an unacceptable outcome by the majority of Americans. The way the funds have been spent to date have definitely been a mixed bag. https://www.washingtonpost.com/technology/2020/12/07/fcc-digital-divide-spacex-broadband/ https://www.washingtonpost.com/technology/2020/12/07/fcc-dig...

smithza 6y ago

I don't think the logic holds up here. It is conceivable that SpaceX could have entered into the market to disrupt the relatively lo-tech GEO options without FCC subsidy options (I think you agree here). Hughes (a GEO provider) themselves received a subsidy despite their being well established in North America. To ask that about SpaceX is to ask the same question about Hughes. In the age of COVID-19, any investment in ISP infrastructure is beneficial.

iptrans 6y ago
The Hughes grant is highly questionable too. Luckily they only got about a million. > In the age of COVID-19, any investment in ISP infrastructure is beneficial. Not if you end up having nothing to show for it.

btilly 6y ago

SpaceX has had 42,000 satellites approved. They have just under 1000 operational and are about half-way to phase 1. Which will only be able to provide broadband for a limited number of users at latitudes for Canada and some northern US states. (That is why they are doing beta programs, they don't have the capacity for more.) Money to launch more satellites will give the company the ability to get broadband for more people in more of the rural USA much more quickly. It also helps Starlink through a chicken and egg problem where they can't make money unless they have satellites up, and they can't put satellites up unless they get money.

iptrans 6y ago
Not quite. The subsidy isn't large enough to pay for all the satellites they need. They have money to launch more satellites and will be doing more launches subsidy or no subsidy. The subsidy will only go directly to their bottom line.
- btilly 6y ago
  Your reasoning has several holes. First, the fact that they have the money to launch more satellites does not mean that they have the money to launch ALL the satellites that the full system needs. Indeed their projected cost for fully setting up Starlink is $10 billion dollars, which is more than the projected operating profit that they have had over their entire history. So it is easy to see that they won't be able to complete unless they get more money along the way. In fact there is a significant risk that if they make less than they hope, that the company runs out of money and goes out of business. This subsidy reduces that risk, and therefore makes them more likely to complete, and likely to complete faster. To achieve this purpose, the subsidy should be sized to help them over the hump, and not to pay all their costs. (Whether we should be handing out subsidies is a different question that I'm ignoring. Our government has chosen to, and the question is how to succeed.) Therefore there is nothing odd about the fact that it is less than 10% of the total amount of money that they think they will need. They aren't doing Starlink in the hopes of getting the subsidy. But the subsidy improves their odds of succeeding at Starlink. And finally, you claim that the subsidy will only go directly to their bottom line. Which is to say that it shows up as profit and goes to Elon and other shareholders in the company. It is true that plenty of companies operate that way. However after 20 years of running companies, it is extremely safe to say that Elon does not. In fact he tends to take every scrap of money that his company is generating, finds ways to borrow or raise more, and then reinvests it into even more ambitious projects. So he won't be taking it as profit. What will he use it on? Well, the three big projects that Elon is working on right now is building Starship, building Starlink, and preparing to settle Mars. Of those, Starship is required to finish Starlink at a price point where it is a viable business, and Starlink is required to fund Mars. Therefore it is essentially certain that he will pour this money directly into Starship and Starlink, rather than taking any of it as immediate profit. Therefore we have good reason to believe that this money will be used for its intended purpose. We have good reason to believe that this money will in fact improve the odds of success, and enable them to deliver that success sooner. And therefore this money actually helps achieve the goal that the US government has set.

simonh 6y ago

The objective of the government is not just to ensure that one or even two companies have infrastructure reaching most or all rural areas, but to ensure enough players in this field to establish a genuinely competitive market for pervasive rural internet access. The FCC has decided that without this subsidy there would not be enough companies offering enough access to enough areas to meet their mandate. Given this goal, it’s simply unreasonable to deny funds to a company that has already set up that access, but only grant funds to new entrants. That clearly screws over the existing companies, which now can’t afford to compete on price with the new government funded entrants. The only way to establish a level playing field and not penalise companies that already invested heavily is to give the grants regardless of past investment. Then you can genuinely allow the competitive market to establish fair and competitive prices for these customers. Free market principles should in theory ensure that this price competition should recoup a significant proportion of the subsidy costs for consumers and tax payers.

iptrans 6y ago
I think you have misunderstood the purpose of RDOF grants. The RDOF grants are not there to establish competition. RDOF grants exist purely for some company to provide broadband service where there is none. If anything it's funding a local monopoly.
- simonh 6y ago
  If that wee true, since Starlink will reach everywhere, they would only need to fund Starlink. In fact the OP would be correct and no subsidy would be needed since Starlink is already being built.
  - iptrans 6y ago
    I am glad we agree, me being both the one you are replying to and the OP you are referring to. For the avoidance of doubt, here's the link to the FCC RDOF auction and the relevant quote: "... Rural Digital Opportunity Fund to bring high speed fixed broadband service to rural homes and small businesses that lack it." https://www.fcc.gov/auction/904 https://www.fcc.gov/auction/904

baq 6y ago

You can provide high bandwidth low latency access to the internet in places where not even 1.3B fiber subsidy’s won’t reach or you can build few hundred miles more fiber to mostly nowhere for the same price. The fact is, starlink is the absolute best option in quite a few places - sparsely populated, far from dense urban areas. This is actually the best way to spend government money for that purpose even if it ends up in subsidizing terminal purchases.

iptrans 6y ago
> The fact is, starlink is the absolute best option in quite a few places - sparsely populated, far from dense urban areas. If it were only subsidized there. Some of the Starlink areas are next door neighbours to subsidized fiber builds.

deleted 6y ago

[deleted]

adventured 6y ago

If it helps ensure the diversity of ISP competition in the US market, then yes. $886m is a bargain if it helps meaningfully with that (assuming it's not a frequent subsidy). There is a large difference between putting up a few percent of their constellation to reach initial minimum viability and putting up enough satellites to properly cover the rest of the world (a very expensive endeavor that will take years). Plus, the US Government may directly benefit in a very big way from utilizing Starlink and that may make it a bargain compared to the alternatives. If US defense contractors were building that constellation, they'd be spending ten times what SpaceX is. And that's before we get to the potential for intelligence gathering globally. The powers that be will be all over that, no matter what SpaceX claims to the contrary (SpaceX will have a gun to their head and will not have a choice, just as the Prism gang had no choice).

iptrans 6y ago
> If it helps ensure the diversity of ISP competition in the US market, then yes The US ISP market is already fairly diverse. There are some 3000 ISPs in the US. > $886m is a bargain if it helps meaningfully with that (assuming it's not a frequent subsidy). Aye, therein lies the rub. Starlink will require a frequent and recurring subsidy, unless it can become profitable on its own. Each and every satellite they put up will burn up in five years. > There is a large difference between putting up a few percent of their constellation to reach initial minimum viability and putting up enough satellites to properly cover the rest of the world (a very expensive endeavor that will take years). Maybe Starlink should have been required to demonstrate viability before allowing it to qualify for government subsidies? > Plus, the US Government may directly benefit in a very big way from utilizing Starlink and that may make it a bargain compared to the alternatives. If US defense contractors were building that constellation, they'd be spending ten times what SpaceX is. > > And that's before we get to the potential for intelligence gathering globally. The powers that be will be all over that, no matter what SpaceX claims to the contrary (SpaceX will have a gun to their head and will not have a choice, just as the Prism gang had no choice). If the DoD wants Starlink then they should pay for it themselves.