Satellite Already Won the Scalability Argument. Affordability Is the Fight That Matters

SpaceX has told the FCC that Starlink has made billions a year in rural broadband subsidies pointless, and rural telcos and electric co-ops are pushing back on the technical merits. You can read the filing coverage over at Light Reading. I want to skip past the part everybody is arguing about, because I think the terrestrial side is going to lose that argument, and I think we should stop spending energy on it.

Who actually comes out ahead if the FCC buys this?

Obviously, the satellite providers come out ahead on that one. And it's not just the current satellite providers, it's any of the future satellite providers as well. So it's not just Starlink, it's not just Hughes or Viasat, it's Amazon Leo and anyone else that is gonna pop up a satellite constellation in the future.

The losers here are the incumbents, the wireless Internet service providers, the local telephone providers, anyone that had received any type of government subsidy to help them build out or maintain the network that they already have. You also have municipal broadband that becomes the losers here. You've got cities like Pharr, Texas, which has built its own municipal fiber network to connect everyone in one of the most broadband-challenged communities in the United States. These are areas that would no longer receive any type of federal subsidy or any type of federal funding, either via USDA or from the FCC, to offset the cost of what they could build to own and control themselves, whether through the municipality or through a local business entity that's truly invested in the community.

If the satellite providers get this win, that just means that big money gets to keep on doing what they're doing, and it chokes out any of the other local smaller providers who actually get ingrained in the community, who sponsor baseball teams or sponsor local events or give back to charities or provide local funding. All those get washed out and lose all their government subsidies.

What are terrestrial operators getting wrong about scale?

They're just not thinking large enough. Satellite is infinitely scalable, it seems, because there's no stopping the amount of birds that these guys can put in space. Once they get the transponders transmitting as much data as they possibly can, not only can they provide high throughput as it is, but we're already seeing Starlink v3 pushing a terabyte per second, and we're seeing Amazon Leo pushing a terabyte. These constellations are pushing more and more data as the technology gets better, so the same number of satellites in a constellation can grow in capacity depending on how microchips and communications infrastructure scale. When you talk about laser communications in between each one of those satellites themselves, you've got an almost unlimited amount of data available down to one of the satellites and then down to the end user terminals. As technology for the end user terminal improves, that's just gonna continue the scalability of those constellations.

The only time that satellite actually failed in rural connectivity is when there was so much latency that it wasn't able to supply the level of service that the end user wanted. Now we're seeing the low earth orbiting systems, and we're seeing the other constellations people are talking about launching that are gonna decrease the amount of latency overall. So the use cases are there for people to use it, and that's kind of a moot point. It's not really worth it to argue anymore whether it's going to work. From a technology perspective, it's gonna work, it's gonna do everything they needed it to do. However, the affordability is still gonna be one of the biggest issues.

What do you actually measure to test whether a county is covered?

There's so many people that say it's already covered. You go into some of the most economically challenged areas, like in South Texas, and it shows that there's coverage because there are multiple wireline or wireless providers in that area. However, the problem becomes more than the ability to get connected. There may be fiber optic service everywhere, and there's still an affordability gap that creates a much bigger issue.

When you're dealing with true coverage, it's not just about whether there's a signal available from one of the large MNOs, or whether fiber optic connectivity is available. It's whether the people that live there can actually afford to subscribe to that service. That's another angle you have to think about on the satellite side, because these services are $100 a month or $50 a month, whatever they are. In a lot of communities, that still creates that affordability gap where people can't afford it even though the map shows it's available.

Compare that to dealing with local municipal providers, or with local providers generally. Some of them have special plans for their community, or some of them offer them through the municipality, so that people can stay connected. That affordability component is essential in making sure that connectivity is available to everyone.

If USF dries up, who ends up paying instead?

The problem with getting rid of USF and getting rid of all those funding mechanisms is that a lot of the money smaller operators run on comes from there. If that dries up, people are gonna be relying on other types of grants or other types of economic stimulus to continue to do their work. But we're still talking about smaller Internet service providers where the cost to start up pales in comparison to the cost of launching rockets and putting satellites in space. So if USF dries up, the people with the money are gonna end up taking it. In the short game, they're gonna be able to deploy more broadband and connectivity. But in the long run, small investments over time will probably yield a better result for the community.

Does a co-op breaking ground next quarter need to change plans?

No. They should just go ahead and move forward with it. It feels like local is always supposed to win, even in a day where big money like this comes into play. Local establishments are always gonna be more invested in the community than someone like a SpaceX or an Amazon. These are gonna be local groups that are always going to want to do what's right for their communities, for their constituents, for the school students that live in their area.

At the end of the day, you can always rely on your neighbor in your community more than you can rely on a corporation to do what's right for your area.

Do this

• Keep your fixed wireless or fiber build on schedule, even if this filing succeeds, and don't pause on the assumption that federal money is the only thing making it viable.
• When someone claims your county is covered, measure whether residents can afford to subscribe, not just whether a signal or a strand exists.
• Build and publish community-specific or municipality-backed pricing plans, because that is the real differentiator against a $50 or $100 satellite bill.
• Stop arguing that satellite can't scale, and start arguing the part you can actually win on.
• Start mapping out the grant and economic stimulus paths you would use if USF funding goes away, rather than waiting to find out.
• Keep your eye on the prize, because no matter how much federal funding gets pulled to the side, there's still a local community that's gonna demand that service.

There's no better thing than serving your community. At the end of the day, are those households going to be able to rely on the larger corporations deploying the satellite constellations, or are they going to be able to look at their neighbors, the people down the street whose kids go to school with each other, and get connectivity from them?

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