If Satellites Kill Rural Broadband Subsidies, Your Town Pays the Difference

If you sit on a city council, run a county budget, or just care whether the households in your area can get online, there is a regulatory fight happening right now that will land on your desk eventually. SpaceX has filed with the FCC (the Federal Communications Commission, the federal agency that regulates communications networks) arguing that Starlink, its satellite internet service, has made billions of dollars a year in rural broadband subsidies pointless. Why spend public money running cable or building towers, the argument goes, when a dish pointed at the sky already covers those homes? Rural telephone companies 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, meaning everyone who builds networks on the ground, with fiber optic cable or radio towers, is going to lose that argument. I think we should stop spending energy on it and spend it somewhere we can actually win.

Who actually comes out ahead if the FCC buys this?

Obviously, the satellite providers come out ahead. And it's not just the current ones. It's any future satellite provider as well. So not just Starlink, not just Hughes or Viasat, but Amazon Leo and anyone else that pops up a constellation, a fleet of satellites working together as one network, in the future.

The losers are the incumbents: the wireless internet service providers, the local telephone providers, anyone that received any type of government subsidy to help them build out or maintain the network they already have. Municipal broadband loses here too. You've got cities like Pharr, Texas, which 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 federal subsidy or federal funding, either via the USDA or from the FCC, to offset the cost of building something they own and control themselves, whether through the municipality or through a local business that is truly invested in the community.

If the satellite providers get this win, that just means big money gets to keep on doing what it's doing, and it chokes out the smaller local providers who are actually ingrained in the community. The ones who sponsor baseball teams, sponsor local events, give to charities, provide local funding. All of those get washed out and lose 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 number of birds, satellites, these guys can put in space. Once they get the transponders (the onboard radios that receive a signal and relay it back down) transmitting as much data as they possibly can, they don't just deliver high throughput today. Starlink's version 3 satellites are already pushing a terabyte per second, and Amazon Leo is pushing a terabyte. For scale, a terabyte per second is roughly a hundred thousand households streaming high-definition video at the same time.

These constellations push more and more data as the technology gets better, so the same number of satellites can grow in capacity depending on how microchips and communications infrastructure scale. And when you add laser communications between the satellites themselves, beaming data sideways from satellite to satellite rather than bouncing everything off the ground, you've got an almost unlimited amount of data available down to any one satellite, and then down to the end user terminals, meaning the dish on the customer's roof. As terminal technology improves, that continues the scalability of those constellations.

The only time satellite actually failed in rural connectivity was when there was so much latency, the delay between sending a request and getting a response, which older satellites suffered because they orbited so far away, that it couldn't supply the level of service the end user wanted. Now we're seeing low earth orbiting systems, which fly much closer to the ground, and other constellations people are talking about launching, that are going to decrease latency overall. So the use cases are there. It's not really worth arguing anymore about whether it's going to work. From a technology perspective, it's going to work. It's going to do everything they needed it to do.

However, affordability is still going to be one of the biggest issues.

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

So many people say an area is already covered. You go into some of the most economically challenged areas, like in South Texas, and the maps show coverage because there are multiple wireline or wireless providers there. But the problem is bigger 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 from one of the large MNOs, mobile network operators, the big national cell carriers, or whether fiber optic connectivity is available. It's whether the people who live there can actually afford to subscribe. 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 an affordability gap where people can't afford it even though the map shows it's available.

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

If USF dries up, who ends up paying instead?

USF is the Universal Service Fund, the federal pool of money, collected through fees on phone bills, that subsidizes service in high-cost rural areas. The problem with getting rid of USF and similar funding mechanisms is that a lot of the money smaller operators run on comes from there. If that dries up, they'll be relying on other types of grants or economic stimulus to continue their work.

But keep the scale in mind: we're 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 going to end up taking it. In the short game, they'll 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. It feels like local is always supposed to win, even in a day when big money like this comes into play. Local establishments are always going to be more invested in the community than someone like a SpaceX or an Amazon. These are local groups that will always want to do what's right for their communities, for their constituents, for the school students who 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 of fiber 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 aside, there's still a local community that's going to 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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