Starlink appeals FCC rejection of $886 million grant, calls cancellation 'grossly unfair'

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SpaceX's Starlink division has appealed the Federal Communications Commission's decision to bar it from receiving $885.51 million in broadband funding. Starlink called the funding reversal "grossly unfair" and "both legally and politically flawed".

The appeal filed Friday asks the commission to overturn the Competition Bureau's ruling on FCC cables from last month. The FCC is unlikely to reverse its decision, as it had the public support of Chairman Jessica Rosenworcel. But SpaceX's action could be a precursor to filing a lawsuit against the FCC.

In its conclusion, SpaceX said that "the Board should reverse the Bureau's decision by finding that SpaceX is reasonably capable of meeting its performance obligations in its winning bidding areas," and direct the Bureau to 'access SpaceX's application.

Starlink tentatively received the money from the Rural Digital Opportunity Fund (RDOF) in December 2020 through a reverse auction in which ISPs offered grants organized by census blocks. In July 2021, six months after taking office as Chairman, Rosenworcel announced that the auction overseen by former Chairman Ajit Pai had major issues and needed cleaning up.

At the time, Rosenworcel's FCC cited "complaints that the program was poised to fund broadband to parking lots and well-served urban areas." When later rejecting SpaceX funding entirely, Rosenworcel called Starlink's technology promising, but said the FCC should not "publicly subsidize its still-in-development technology for consumer broadband - which requires users buy a $600 dish - with nearly $900 million in universal service funds through 2032. ."

The FCC also rejected a planned $1.3 billion for LTD Broadband, a provider of fixed wireless services. Overall, current FCC management has approved approximately $6 billion of the $9.2 billion originally granted to ISPs by the Pai FCC.

Starlink's complaints

Starlink claimed that the FCC "misused data outside of the record to penalize SpaceX alone for its current system speeds, which are irrelevant to whether SpaceX can meet RDOF speed requirements from now in three years, as is really necessary". Starlink continued:

The RDOF was, by design, intended to provide funding (and time) to participating service providers to meet these requirements. Indeed, most RDOF candidates currently provide no service in many/none of their RDOF areas today. The Bureau's reliance on unauthorized outdoor speed tests without even informing SpaceX that its decision was based on those tests only compounds the error.

The FCC funding decision called into question Starlink's ability to consistently deliver low-latency service with the required 100Mbps download speeds and 20Mbps upload speeds. The FCC cited Ookla speed test data showing a drop in Starlink speeds in the second quarter of 2022, "including download speeds that drop well below 20 Mbps".

Starlink also accused the FCC of "ignoring strong evidence of SpaceX's proven ability to rapidly expand and upgrade its network," citing the company's rapid schedule of rocket launches. "This world-class launch rate gives SpaceX unparalleled ability to deploy its satellites and has enabled SpaceX to launch more than 3,000 satellites to date," the company said. "SpaceX's satellites have also operated with over 99% reliability since being licensed by the FCC in 2018, far exceeding the deployment and reliability requirements of its FCC license and demonstrating that it will easily exceed all RDOF deployment."

Starlink defends prices

Starlink also said the FCC "failed to accurately compare SpaceX's transparent all-inclusive pricing to opaque pricing, which masks the true cost of consumption...