Key Takeaways
- Starlink has won a state auction to provide broadband Internet to underserved rural areas, supported by federal subsidies.
- The Broadband Equity Access and Deployment (BEAD) program has over $42 billion allocated to improve Internet access across the U.S., including satellite providers like Starlink.
- Ohio's proposal includes significant funding for Starlink, with $53 million allocated to cover 43% of eligible locations, while fiber provider Spectrum will receive over $80 million for just 14%.
- The new BEAD rules favor satellite Internet providers for quick rollouts, allowing Starlink to meet basic requirements with minimal costs, while fiber providers face higher standards.
- States are prioritizing speed and cost-effectiveness over quality, with Starlink's current offerings being more accessible compared to fiber's higher capabilities.
Starlink has secured another state auction to deliver broadband Internet to so-called “underserved areas,” which primarily include rural locations in sparsely populated states where installing expensive fiber would not be economically practical without federal subsidies.
Broadband Equity Access and Deployment Program
The Broadband Equity Access and Deployment (BEAD) initiative has allocated more than $42 billion to all US states and territories, aiming to ensure that all Americans, even those in remote areas, have access to broadband Internet.
During Elon Musk's short period at the White House, BEAD adjusted its definitions of broadband Internet to include satellite Internet providers like Starlink. This controversial adjustment was met with disbelief from traditional fiber optics Internet providers, as it places their expensive efforts at a disadvantage when competing for funding.
Funding Allocations in Ohio
For example, Ohio received $793 million under the BEAD program, but will only utilize $227 million in its final proposal, paying Starlink $53 million to cover 43% of the Broadband Serviceable Locations (BSL) eligible for government funding.
In contrast, Ohio plans to pay Spectrum the largest portion of the allocated funds, which is over $80 million, to cover just 14% of the BSL list with fiber. According to the new BEAD rules, satellite Internet providers like Starlink could consistently come out on top, as demonstrated in Montana, where Starlink received $119 million in federal subsidies for 28% of the local BSL, while Amazon's Project Kuiper only got $26 million for 37% of BSLs.
Prioritizing Speed Over Quality
States are understandably favoring quick and easy rollouts over the quality of Internet services provided to rural and underserved areas. Under these conditions, satellite Internet providers will always have the edge over fiber, as the requirements for Starlink in Ohio are simply to provide a free dish and a download speed of 100 Mbps, rather than reducing the monthly service fee. This is the most cost-effective way for Starlink to expand, as they frequently lower the price of their Standard Kit to sell it at cost and use it as a promotional gateway to later charge substantial monthly fees.
In comparison, fiber can offer speeds of up to 1 Gbps, a capability that Starlink will not achieve until next year when it launches its V3 satellites using the Starship 3 rocket. This will only be possible for those who purchase the expensive Performance dish, which may be beyond the reach of the federal BEAD program.
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